So the main concept of the best trend trading strategy is support and resistance trading. DEFINITION OF SUPPORT LEVEL. A support level is the level at which price bounced up That being said, here are the four trend trading strategies that I like the most: #1 Moving Average Crossover trend trading strategy. This strategy is suitable for beginners because it’s simple 10/4/ · 8. Forex Heiken Ashi Exit Indicator. 9. Forex RoboFx Forex Trading Strategy. 6. Forex MACD Candles v3 indicator. Forex MACD Candles V3 indicator is another brilliant ... read more
In other words, if you see that the price is ascending, you go long. If the price is bearish, you go short. Even though trend reversals come with many trading opportunities, trend-following traders must be very cautious of them.
In the best-case scenario, the trend continues in the same direction for as long as possible to provide great trading opportunities. Also, it uses the most popular technical indicator, which is the Moving Average MA. Remember that MAs are lagging indicators, i. For this strategy, I prefer to use three SMAs with periods 9, 21, and You can use another configuration with similar proportions, such as 10, 20, and This strategy usually works well on any timeframe and any market.
Thus it can be used by swing traders and day traders alike. Naturally, this is a more simplistic view of a moving average trend trading strategy but the general idea is that the crossing of the moving averages provide directional information and also provide an objective way to visualize momentum. In the screenshot above, the first two bullish signals 1 and 2 proved to be profitable, but the third one 3 failed to satisfy us. As for the take profit, you could exit the market right after the first pullback from the upper band, but you can wait until the price clearly corrects and gets closer to the mid-band blue area.
The MACD Moving Average Convergence Divergence is one of my favorite technical indicators because it can act both as an oscillator and as a trend indicator. Here is how you should set your chart:. Again, we use the slow MA to define the general trend direction. Based on our strategy, we should look for bullish opportunities when the price is fluctuating above the MA. In the example above, we get five bearish signals with our strategy in a relatively short period.
And, once again, not all situations would have provided a profitable outcome. Furthermore, a new trend trading strategy should never be used in a live market environment and always tested on demo first! Besides using technical indicators, there are some great strategies that rely on chart patterns. For me, the simplest and most powerful trend continuation patterns are the triangles, although not the symmetrical ones. The ascending and descending triangles suggest that the existing trend will continue in the same direction after a moment of tension between bulls and bears.
In a nutshell, the ascending triangle shows up when the price forms a flat upper resistance line and an ascending lower trendline that is made up of higher highs.
The descending triangle is formed from a descending upper line and a flat lower line. When you spot that the ascending triangle is in the process of formation, it shows you the uptrend finds strong resistance from bears, which is reflected by the flat resistance line.
Impatient traders will often get in too soon but waiting for a confirmed breakout may provide a more robust trading approach. You may set the stop loss in line with the most recent swing low and aim for a take profit that is equal to the distance formed by the first leg of the triangle as shown in the screenshot below:. This strategy is simple to implement if you can accurately spot ascending and descending triangles, which is not a big deal.
These technical indicators can help you filter and confirm buy and sell trend signals. Trend indicators are good at eliminating market noise and give us a better picture of the market trend. Also, read about the Best Forex Indicators to Generate Buy and Sell Signals. If you want to upgrade your method on how to identify a trend you can use an old trend filter used by legendary hedge fund managers.
Professional traders and well-established hedge fund manager uses the key day moving average to establish the direction of the trend. Billionaire trader, Paul Tudor Jones one of the greatest traders of all time has revealed his trend filter tool as being the day moving average:. You play defense, and you get out. Conversely, if the price is below the day EMA we are in a downtrend.
And, one of the best trend indicators that can help you correctly identify how strong or weak a trend is the Aroon Oscillator. Check out top three trading strategies based on Aroon indicator , which you can use to gain more profits. But, the struggle many trend traders face is to exactly pinpoint entries and exit points in order to ride the trend. What if we can help you to develop one simple trend trading strategy that will generate high probability entry signals?
The core of this trend trading system relies on capturing those explosive price movements in the direction of the trend. This trend trading strategy guide will teach you how to increase your risk-reward ratio. Mastering trend trading. To eliminate any element of subjectivity, simply throw on your chart the most influential moving average aka the day EMA.
When the Aroon Up, which measures the strength of the trend, crosses the Aroon down, a buy signal is generated. When the Aroon up line is close to the level, and the Aroon down line is close to the 0 level, then the market is in a strong bullish trend. So, the ideal place to hide your protective stop loss in an uptrend is below the most recent higher low swing point.
A technical break below the most recent swing low is a warning sign that the market is starting to develop lower lows. This is a break in the previous price structure. We know that lower lows are found in downtrends. When the Aroon Up crosses below the Aroon Down we like to take profit and liquidate our positions. Get into the mind of the most successful traders and Hedge fund managers by checking the Top Trading Quotes of all Time — Learn to Trade.
Top market wizard Ed Seykota is the father of computerized trend following systems and one of the best traders of our times. He acknowledges that in order to be great at this game you also need to identify counter trend moves. If your answer is: a price move, usually smaller in nature, that is opposite to the prevailing trend, is a counter trend move. Because a counter trend move will usually generate a small amount of pips we need to get in as close as possible from the very start of the counter trend move.
Check the Essential Guide to Chart Patterns: HERE. No matter if you use trend trading vs. counter trend trading strategies makes sure you follow your trading plan. With proper money management, all trend trading strategies have the potential to grow your Forex account relatively fast. The real secret to trend trade successfully is to not close your trade too early. Make sure your trend trade is generating at least a risk to reward ratio. In the currency market, due to the economic forces at work we can see trends being more prevalent.
The long-term trends can last anywhere from a couple of months and can extend into year-long trends. But, most retail traders are only short-term oriented. We specialize in teaching traders of all skill levels how to trade stocks, options, forex, cryptocurrencies, commodities, and more. Our mission is to address the lack of good information for market traders and to simplify trading education by giving readers a detailed plan with step-by-step rules to follow.
This step-by-step guide will show you an easy way to trade with the MACD indicator.
If you are looking for the best trend trading strategy then this forex trading strategy here really fits into the ranks of those forex trading strategies that really work. All you need is price action. You may also be interested in this free price action trading course. You will see that there are times that the market is really trending nicely, either up or down, price will head back up to retest the support level that was broken only to fall down in a downtrend situation.
Similarly, price will head back down to test the resistance level that was broken only to head back up bouncing from that level in an uptrend situation.
Knowing this characteristic of price action, we can make trading rules around such trending situations. So the main concept of the best trend trading strategy is support and resistance trading. A support level is the level at which price bounced up from after it had been going down for some time.
A resistance level is the level at which price bounced down from after it had been climbing up for some time. If the market is trending nicely strong trend , you can see these support and resistance levels being formed and then broken only to have price come back to them later to retest these levels that have been broken.. Now this previous support level at times can act as a resistance level from which price can hit it and fall back down again.
the opposite is also true…when price breaks a resistance level and climbs higher, there will be times when it will fall back down to the previous resistance level that it just broke some time ago.
This previous resistance level at times will act as a support level from which price can bounce back up from. So knowing how price behaves when this happens, trading rules are made based on that.
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That being said, here are the four trend trading strategies that I like the most: #1 Moving Average Crossover trend trading strategy. This strategy is suitable for beginners because it’s simple 10/4/ · 8. Forex Heiken Ashi Exit Indicator. 9. Forex RoboFx Forex Trading Strategy. 6. Forex MACD Candles v3 indicator. Forex MACD Candles V3 indicator is another brilliant So the main concept of the best trend trading strategy is support and resistance trading. DEFINITION OF SUPPORT LEVEL. A support level is the level at which price bounced up ... read more
If the 50 MA is below the price, we may go long when the 9 MA crosses the 21 MA from bottom to top. Forex trend trading strategy is easy to learn and very straight forward. There are other indicators that might be useful when you are trying to spot a trend such as analyzing smaller time frames in detail and detecting a trend that might be going up early on. Donchian channels were invented by futures trader Richard Donchian , and is an indicator of trends being established. The price continued to trend upwards until August 20O8 when the price reversed downwards.Below is a list of trading strategies regarded to be some of the top Forex trading strategies around and how you can trade them, so you can try and find best forex trend trading strategy right one for you. For its greater success rate and reliable performance, we have rated Forex Cornflower Trend Following Strategy 9, best forex trend trading strategy. Advertisement - External Link. Risk of permanent loss of capital. If your Forex trading strategy is well-reasoned and back-tested, you can be confident that you are using a high-quality Forex trading system that works for you. Therefore, a trader using such a strategy seeks to gain an edge from the tendency of prices to bounce off previously established highs and lows. Is there anyway to download this to my FOREX.