The video discusses an artificial intelligence Forex Trading strategy that can be used for a variety of Forex pairs, commodities and cryptocurrencies. The video breaks down the rules that need to be followed to apply the strategy and also discusses the most common mistakes that people make. The first indicator required is the machine learning classification, which is complemented by an RSI. The rules of the strategy are simple and easy to follow and when identifying both levels of confluences, the strategy is quite effective. However, one of the issues with this strategy is targeting a finite risk to reward ratio, which may prevent traders from targeting larger gains.

Artificial Intelligence Forex Trading Strategy: A Comprehensive Guide

Introduction

The world of forex trading has never been stagnant, and it’s not unlikely to find new technologies and strategies emerging every day. One of the latest buzzwords in the industry is artificial intelligence (AI) trading. In this article, we’ll discuss an AI forex trading strategy that you can access for free on Training View. We’ll share the rules of the strategy and how to apply them, while also pointing out some common mistakes to avoid.

The AI Forex Trading Strategy

To begin, let’s start with the basics of the AI forex trading strategy. The first step is to access Training View and select the daily timeframe for the GBPUSD forex pair. The machine learning indicator, specifically the Lorenzian classification by JD hoarding, is the first indicator to use along with the relative strength index (RSI).

Adjusting Indicator Settings

We proceed to adjust the indicator settings, starting with the machine learning indicator. Deselecting the labels and tables under style instead provides a kernel regression band, green and red lines that provide buy and sell signals. For the RSI under style, we remove the upper and lower bin but keep the middle bin set to 50, then remove the RSI base moving average.

Next, we move to the RSI inputs, where we set the timeframe to one week, given that we’re on the daily timeframe. The resulting chart comprises a candlestick with the buy and sell signals, kernel regression bands, and RSI. To use the RSI effectively, we identify the current momentum in the market, signifying downward momentum when the RSI is below level 50, indicating lower prices. On the other hand, when the RSI is above level 50, this indicates bullish momentum, pointing to higher prices.

Entering Trades

The AI forex trading strategy is designed to align trades with the prevailing trend in the market. In this case, we analyze the trend to determine whether to enter a buy or sell trade. For example, if the market is in a bearish trend, characterized by lower lows and lower highs, we’ll focus on sell signals to optimize our profits. The converse applies to the bullish trend, where we’ll look for buy signals.

It’s crucial to combine the machine learning indicator and RSI for confirmation before entering a trade. If we get a sell signal, we’ll verify whether the RSI is below level 50 before entering a sell trade. The opposite case applies when we receive a buy signal; we only enter a trade if the RSI is above level 50.

Managing Your Trades

When managing trades, we recommend setting stop-loss orders beyond the level of support or resistance. This tactic is effective in reducing the losses from unfavorable price movements. We also suggest targeting a 1:2 risk-to-reward ratio, where the rewards should be at least double the risks.

It’s crucial to note that a finite risk-to-reward ratio may not be suitable for all market conditions, and it’s essential to focus on the structure when setting your take-profit levels. Furthermore, consistency is often more important than the number of pips you target in each trade. By focusing on structure rather than a finite risk-to-reward ratio, you can target larger gains.

Common Mistakes to Avoid

While the AI forex trading strategy can be highly effective, traders should avoid common mistakes when using it. For instance, it’s vital to stick to the rules of the strategy and not deviate from them. Deviating from the rules could cost you profits, and it’s not advisable.

Additionally, traders should avoid relying on just one strategy in their trading portfolio since markets can be unpredictable. It’s best to have a diversified portfolio to protect yourself from market risks. Lastly, traders should avoid emotions and stick to the plan; discipline and patience are essential ingredients for successful trading.

Conclusion

The AI forex trading strategy is a fascinating approach that blends technology and market analysis to optimize trading profits. While it’s relatively new, the strategy’s simplicity and effectiveness have made it popular among traders. In this article, we’ve highlighted the rules and important factors to consider, alongside common mistakes to avoid. With patience and discipline, this strategy has the potential to boost your forex trading profits.