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How to trade forex using the bladerunner strategy

The bladerunner strategy is popular with forex traders. Learn about this strategy and how to use it in your trading.

What is the bladerunner strategy?

The bladerunner strategy is a forex trading strategy which market participants use to determine the best levels at which to enter and exit a trade. It can be used to speculate on prices rising by going long, or falling by going short. Whether you go long or short will depend on whether the bladerunner strategy gives a bullish or bearish signal.

Bladerunner trading strategy top tips

The bladerunner strategy relies on a 20-day exponential moving average (EMA). It doesn’t use any other technical indicator. The EMA is a moving average that places greater significance on the most recent price movements and data points. A 20-day EMA does this over a 20-day timeframe.

Read a trader’s guide to moving averages

You’ll also need to make sure you understand support and resistance levels, and what they mean for a market’s potential future price movements:

  • A level of support is a floor in a market’s historical price movements below which it rarely falls
  • A level of resistance is a ceiling in a market’s historical price movements above which it rarely rises

Typically, when a forex pair’s price falls below support, it’s indicative of lower lows and when it rises above resistance, it’s indicative of higher highs – though this isn’t always the case. This is where the bladerunner strategy gets its name from as the underlying market’s price ‘cuts’ above resistance or below support, with the 20-day EMA serving as the blade.

As a final tip, you’ll need to be aware of whether a session has closed above or below the EMA. If a bullish trend closes below the EMA, it could be indicative of a bearish reversal and if a bearish trend closes above the EMA, it could indicate a potential bullish reversal.

Setting stops and limits on your positions can help to prevent you from being caught out by these reversals if they occur.

Learn more about stops and limits

How to trade using the bladerunner strategy

Now we’ve established what you need to know in order to understand the bladerunner strategy, let’s go through how to trade using it.

Generally speaking and with the information regarding higher highs and lower lows from the previous section in mind, you’d go long and ‘buy’ if the price is above the EMA and retests it to profit from the upward momentum in the market’s price. Or, if the price is currently below the EMA and it remains there, you’d go short and ‘sell’ to profit from any potential declines in value.

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Bladerunner buy trade example

For an example of a bladerunner buy scenario, look to the graphic below. It shows that the market’s price is above the EMA and it is retesting the level of support before rebounding and continuing its upward momentum.

In this case, you’d likely want to open a long or ‘buy’ position when the price retests this level in the hopes that the upward momentum continues. But, keep in mind that if a session closes below the EMA in this scenario, it could be indicative of lower lows and a bearish reversal.

Bladerunner short trade example

As an example of a bladerunner sell scenario, we’ve also included another graphic. This one shows that the market’s price is retesting the 20-day EMA as a level of resistance above which is won’t rise any

further. In this case, you’d likely want to open a short position as the price retests this level in the hopes that it will rebound and continue with the overall bearish trend.

But, again you should keep in mind that if a session closes above the EMA, it could be indicative of a bullish reversal and higher highs. If this happens, you’ll want to close your short position or risk losing money as the price continues to rise.

The bladerunner trading strategy summed up

  • The bladerunner trading strategy combines a 20-day EMA with support and resistance levels
  • The EMA acts as a moving support level in a bullish trend, and a moving resistance level in a bearish trend
  • If a session closes below the EMA level of support during a bullish trend, it could be indicative of a bearish reversal
  • If a session closes above the EMA level of resistance during a bearish trend, it could be indicative of a bullish reversal
  • Both of these scenarios are what gives the bladerunner strategy its name, as the market’s price movements ‘cut’ through the EMA indicating potential reversals

Publication date : 2020-10-13T14:36:20+0100

This information has been prepared by IG, a trading name of IG US LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. Any research provided should be considered as promotional and was prepared in accordance with CFTC 1.71 and designed to promote the independence of investment research. See our Summary Conflicts Policy, available on our website.

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