Trend Following Strategies For Consistent Forex Gains – I’ve written about my higher time frame price action trend following strategy before, and many times have been asked to elaborate a bit more on it, so today I’m going to do just that. I trade this strategy on 4-hour, daily, weekly and monthly chart and as always, mostly with the trend, sometimes there are also setups in intervals or in reversals. My chart setup looks like this… More: Learn Our Complete Trading Strategies I use Bollinger Bands® with a 20 SMA period and 2.5 deviation, like Rolf, plus the 50 SMA and the 10 and 20 EMAs for trend direction. Then I trade pullbacks back to the trend with price action. Very simple and straightforward. Take Profit is in 90% of cases the last swing low in a downtrend or the last swing high in an uptrend. I typically have a Reward:Risk between 2:1 and 5:1 and average about 2 trades a week. I use various entry techniques on classic Price Action bars to ensure a competitive RRR and always have my stop behind the Price Action bars. I will also occasionally trade ranges or reversals if the conditions are right. When I find trades on H4 I will play them Set&Forget. When I find trades on the daily, weekly or monthly charts, I typically scale using techniques on the next-lower time frame. The Price Action bars I use are pin bars, outside bars, inside bars and two-bar reversal. In addition, I use Support & Resistance, Trendlines, Fibonacci ratios and Head & Shoulders (no other patterns). Here are a few examples of entries from the chart above, EURJPY, which is trending nicely at the moment. These are all Pin bar trend continuation trades (Break & Retests). With the right techniques these would produce a solid 2R or more per trade, and play them exclusively Set & Forget with a mechanical break-even rule. And here is one of the entries I love a lot, a cluster of S/R, 50% Fibonacci and pin bars and a series of inside bars. This gave me an easy 5R. I use Bollinger Bands® as a visual guide to where the price cycle is at the moment. Typically, pullback trades from around the middle of the BB are simply the best. The beauty is the simplicity of this strategy, all you need is patience and due diligence to check 60 charts every 4 hours or however many instruments you want to trade. Flipping through all of them and jotting down notes takes me about 5 minutes every 4 hours, so the effort is just fine. Also, I could always choose to only trade this on the daily or higher time frames and have an even more relaxed trading routine. For me it is the perfect addition to my daytrading – moreover, when I see entries on H4, I will very often be able to find entries on M5 as well – of course, I would rather trade my M5 strategy because of the increased RRR. More on how to scale in, how to manage risk on multiple positions, etc. in later articles and on Youtube in future videos. Also check out this video I recently shot on one of the setups.
This week there was a lot of volatility in the markets due to inflation data which made it difficult to find long-term momentum. Therefore, traders would…
Trend Following Strategies For Consistent Forex Gains
We’ve probably all heard of the 90/90/90 rule in trading: 90% of traders lose 90% of their trading capital within the first 90 days. But what…
How To Learn Trend Following In 2023
This post marks the start of a new weekly category here on the website. Starting this week I will be sharing the chart of the week…Let me tell you something before we get started. If you follow the guidelines outlined in this article and implement the approach as directed, I am confident that you will be able to achieve consistent profits month after month.
This is a simple but highly profitable forex trading strategy. The focus of this strategy is to cut our losses and win as much as possible. The main driver of this strategy is higher returns and small losses.
Therefore, all trading signals are generated by the trading system and all you have to do is place your orders and manage them according to the rules of engagement.
In this trading strategy, we use 50 simple period moving averages to determine the market trend and use bullish and bearish engulfing candlestick patterns to enter trades.
Multiple Time Frames Can Multiply Returns
Basically, when we trade with this strategy, after determining the trend, we will ride this trend to gain as much as possible. Even if the trade does not go in our favour, we immediately cut the losses.
For example, take a look at the charts below. It represents what a profitable trade and a losing trade look like.
With this kind of return, it is easy to achieve consistent monthly profit. For additional clarification, see the excel screenshot of our trading journal. It represents how the profitable trades and losing trades are distributed.
Now according to the above trades, you can see that all losing trades are under 5 PIPs and we got two massive profitable trades (two +60PIPs gains) which skyrocketed our total profit.
Retrace Forex Trading Strategy
In the above chart we got a total of 15 trades. Among them we only had two massive 60 PIP winners with some small winners and everyone else losing trades.
Although the number of losing trades exceeded the number of profitable trades, we still ended up with +96.85 PIPs in our hands. That is the beauty of this trading strategy.
Now I hope you have a brief idea how this simple profitable forex trading strategy is going to work.
Personally, I’m a big fan of keeping things simple. That’s why I try to make my trading simple and rule-based. That way I will be able to concentrate and follow my trading process more effortlessly.
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So in this chapter we will discuss how to set up your trading environment in a simpler way so that you can avoid complications and focus on your trading process.
First, head over to tradingview.com and open a free account. Then follow the video below to set up your tradingview chart.
Ok, Tradingview is now ready. But from which platform will you place the trades? It’s up to you.
We also use a 15-minute time frame for this strategy. So make sure you are on the right time frame.
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Let’s talk about that before we go into the trading technique like entry, take profit and place stop loss.
Now, if you want to trade this strategy, here are the things you will have to deal with mentally.
If you want to make a consistent profit every single month, you need to take control of your emotions.
Since we have a huge return in this trading strategy, these small emotional issues will not be a big deal.
Best Trend Following Trading Strategies And Indicators To Learn
Consider this: even if you have a poor win rate, you can still be profitable because of the higher risk-to-reward ratio. So you can be a calm trader as the profit rate can no longer bother you.
When it comes to this trading strategy, the main goal is to decrease the size of losing trades while exponentially increasing the gains of winning trades.
Think for a moment, with a higher risk to reward ratio, to be profitable, all you need is a trading strategy with a 20% to 25% win rate. Therefore, a single losing trade or a series of losing trades does not worry you as you know that a good trade will cover all the losing trades.
When trading the forex market, losing trades is one of the most common market events that can hurt us, right?
Top 4 Indicators You Should Know About For Trend Trading
Because of the higher risk-to-reward ratio, losing trades can no longer hurt you because you are aware of your exponentially higher returns.
This means that you remove (or effectively manage) one of the market events that appears to cause emotional pain. This is an essential step towards becoming a successful trader.
As you can see, there are several reasons to be obsessed with a higher risk versus reward.
As you know, our trade entry is bullish and bearish engulfing candlestick patterns and the best part is that you have nothing to do. Each trade signal is generated by itself in the chart, so just relax and execute.
Trend Trading Strategies
Now let’s talk about the types of trade items. We have three types of trades in this simple profitable forex trading strategy.
This trade entry technique was developed to catch the trend early as possible or in another word I can say this is the first attempt to catch the trend.
Take a look at the highlighted area in the above diagram (yellow circle). There we can see that a strong bearish candle closed below the 50 Simple Moving Average.
In the next chapter we will talk about how to manage risk (Setting stop-loss and reducing losses). Therefore, do not worry about placing a stop-loss at the moment.
Trend Following Trading Strategies And Systems Explained (including Backtest And Statistics)
In the marked area
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