The Puria Method: An Indicator Strategy That Works

Hello, fellow Forex traders!

Today we will look at the now-classic Puria indicator strategy. It is very simple and effective, as it uses classic indicators that have stood the test of time. It can be used on any platform, trading both intraday and on higher timeframes. The Puria trading system may be of interest to both beginners and experienced currency speculators – the latter can draw valuable ideas from it or refine the system to suit themselves.

Platform: any
Currency pairs: majors and their cross-pairs
Timeframe: M30 or H1 (depends on the pair)
Trading time: daily and around the clock
Recommended brokers: Alpari, RoboForex, Tickmill

As experts claim, few traders are completely satisfied with their own strategy. This makes many of us remain in a constant search or in the process of creating new trading systems.

The laws of evolution suggest that all theories and practices improve over time. This thesis encourages traders to seek the latest strategies; many “venture” into the wilds of econometrics and artificial intelligence, yet do not find the holy grail there.

The problem is that the philosophy of evolutionary improvement of methods is not suitable for trading. Exchange markets have existed for a second century, the Forex market has a history of less than 40 years, yet traders successfully use the same technical analysis techniques as their colleagues who traded securities and commodities in the early and mid-20th century.

This is eloquently indicated by the profitability results of new 21st-century techniques and time-tested strategies – they are the same. The coincidence in profitability is due to the fact that the driving forces of the market, which influence exchange rates and the value of securities and commodities, remain unchanged over time.

The very first and most popular strategy in technical analysis was the crossover of moving averages. Legend has it that the trading system’s discoverers, traders, made million-dollar fortunes on the intersections of two indicators with different periods.

The strategy still works now, which is why it is present in many trend trading systems. The problem is that crossovers give ideal signals only in trending segments. The task of strategy developers is to find filters that protect against obviously false signals. 

One of the best trading systems that reveals the potential of crossovers is rightly considered to be “Puria,” created by trader Andrey Perfilov. In the 10 years since its appearance, many variations of it have appeared on the internet. However, the current dynamics of the currency market largely coincide with the characteristics of that time, so it is worth returning to the original values of the trading system.

The “Puria” method uses the following indicators: MACD and three moving averages (Moving Average). All indicators can be found in Metatrader under the “Insert” menu, in the “Indicators” option. Moving Average is located in the “Trend” section, and MACD in the “Oscillators” section.

Two types of moving averages: the Simple method, set with periods 75 and 85 for M30 candles on the major currency pairs (for crosses, USDCAD, and NZDUSD, the working timeframe is H1); and the Exponential method, period 5.

MACD settings: 15, 26, 1.

The trading signals are based on the principle of intraday trading in the direction of the medium-term trend. It is determined by two long-period moving averages. Two indicators are needed to avoid flat-market signals. 

MACD serves as an additional trend filter; the author also used the oscillator to obtain leading signals on divergences. You can read more about them in the article on our website.

Despite intraday entries, the trader gets the opportunity to hold positions medium-term during strong trends, gaining profit up to several hundred points.

After placing the three moving averages on the chart and the MACD indicator in the subwindow, the trader opens at market:

General trading rules suggest placing the stop-loss behind the extreme of the first candle before the trade (or the signal candle of the trade itself), provided that its tail lies beyond the lines of the slow moving averages:

The trade can be supplemented with a trailing stop moved along the lines of the MA(85) indicator. The remaining money-management parameters are standard; the principles are described in detail in the article on our website. The lot size depending on the amount of invested capital can be calculated on the calculator.

General trading rules require installationstop lossbeyond the extremum of the first candle beforedeal(or the signal candle itselfdeals) provided that its tail is behind the lines of slow moving averages:

On the chart shown below, at 11-00 two conditions formed for opening a Buy position:

2.   The MACD bar crossed the zero line and closed in the positive zone.

If you calculate the stop-loss level, which according to the strategy author’s recommendation should be no more than 14 points, it will end up above the slow moving averages. It is advisable to place the protective order below these lines, which act as support capable of “stopping” the correction. With such a choice, the stop will end up below the low of the nearest candle to MA(85) from below.

Then the assumed loss will increase to 40 pts, which is unacceptable with a target profit of 25-35 points according to the strategy author’s recommendations.

An example of an ideal long trade:

The position closed by take-profit after three hours. As can be seen from the subsequent dynamics, profitability could have been increased by holding the position. The trend ended only during the American session, and the sideways movement lasted until the opening of the European exchanges the next day

Considering the timeframe scale and the short period of the signal EMA, the position should not be carried over to the next day. If you look at the continuation of the case discussed above, you can see a reversal of the quotes.

Following money-management techniques, the stop-loss should have been moved behind the slow MAs or the position should have been closed at market after MACD moved below zero. In both cases, the trader would have received a profit comparable to three hours of waiting for the pre-set 25-point take-profit.

Those who risked entering such a trade would have been lucky: with a take-profit of 25 points set, the candle’s tail touched that order at the low of the day’s market.

Considering the size of the timeframe and the short period of the signal EMA, the position should not be transferred to the next day. If you look at the continuation of the case discussed above, you can see a reversalquotes.

One of the advantages of the Puria strategy lies in its reliable and simple position-opening rules, thanks to which it can be used by beginner traders. The trading system works with standard indicators, so it is available in any Forex terminal.

Professional traders will have no difficulty modernizing the strategy by adding indicators that filter out flat sections (volatility, Bollinger Bands, oscillators, etc.). This can significantly increase the profitability of the system. 

Forum thread

One of the advantages of the Puria strategy is its reliable and simple rules for opening a position, thanks to which it can be usednovice traders. The trading system works on standard indicators, so it is available in any Forex terminal.

It will not be difficult for professional traders to modernize the strategy by adding indicators that cut off flat areas (volatility, Bollinger Bands, oscillators, etc.). This can significantlyincrease system profitability. 

Forum thread

Best regards, Ivan Petrov
Tlap.io