How to trade forex using the bladerunner strategy

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.

Learn more about the EMA

You’ll also need to make sure you understand support and resistance levels, and what they mean for the potential future price movements of an asset:

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

Typically, when an asset’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 asset’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. A stop will prevent your long positions from incurring a heavy loss if the market turns bearish, and a limit will prevent your short positions from racking up a heavy loss if the market turns bullish.

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 asset’s price. Or, if the asset’s price is currently below the EMA and it remains there, you’d go short and ‘sell’ to profit from any potential declines in value.

Bladerunner buy trade example

As an example of a bladerunner buy scenario, look to the graphic below. It shows that the asset’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 asset 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.

Derivatives like spread bets and CFDs are good for going long because they enable you to speculate without having to take direct ownership of the underlying market. You can trade a whole host of markets with these products, including forex, indices, shares, commodities and more.

Create an account to start trading

Or, if you’re looking to invest in shares, you can open a share dealing account to take direct ownership of company stock. This means you’ll become a shareholder and you’ll benefit from any upwards movements in the stock’s price.

Create a share dealing account

Bladerunner short trade example

As an example of a bladerunner sell scenario, we’ve also included another graphic. This one shows that the 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 asset 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.

Again, spread bets and CFDs are useful products to use when looking to go short, because they’ll enable you to take a speculative position on an asset’s value falling without having to own the asset in question.

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 scenarios are what gives the bladerunner strategy its name, as the asset’s price movements cut through the EMA indicating potential reversals