Trend Trading Strategy

[pipster]

To trade the trend, we want a good entry point rather than just jumping in, risking a pullback. Here's a very basic strategy that gets you in a trend on pullbacks. It can be used on any timeframe but in my opinion it is best used on 4 hour or daily or even 1 hour.

Indicators: 50 EMA and Stochastics (14,3,3)

So here it is:

Look at the chart, and check the slope of the moving average. If it is a down, sell when stochastics becomes overbought and crosses down. For longs, do the opposite. This strategy should work in any market including the stock market since it is simply following the trend and buying/selling on pullbacks.

Now, as an example, I picked the pound vs dollar with both, longs and shorts using a 4 hour chart. On the last long trade, I just noticed the moving average was not really sloping up. But it doesn't matter, you get the idea.

PS: I learned this strategy from FXStreet.

[huttre]

Thanks for sharing pipster. will look more into this.

have you tried this on the 5 min chart?

[pipster]

Originally Posted by huttre

Thanks for sharing pipster. will look more into this.

have you tried this on the 5 min chart?

Yes, it can be used on any time frame especially when theres a nice trend (nice slope of the MA). I just prefer longer time frames since I like trading where you dont have to watch the charts a lot.



Here is a current chart of EURUSD on 5 minute, with its mini-uptrend (daily trend is down)

[pipster]

Here are my 2 current trades, both from 4hr. stops are at BE or almost at BE

[Jcm]

Originally Posted by pipster

Here are my 2 current trades, both from 4hr. stops are at BE or almost at BE

I saw these 2 exact set ups after reading your strategy yesterday. What are you using for stops, and what parameters cause you to move stops to b/e? Does it depend on time frames, pairs, or S/R levels?

**guess I should ask, what determines take profits, or if you doing any scaling out, as well?

Thanks for your time.

[pipster]

Originally Posted by Jcm

I saw these 2 exact set ups after reading your strategy yesterday. What are you using for stops, and what parameters cause you to move stops to b/e? Does it depend on time frames, pairs, or S/R levels?

**guess I should ask, what determines take profits, or if you doing any scaling out, as well?

Thanks for your time.

For stops, I like to use the swing high/low. In yesterday's trades, I closed half and moved stop to breakeven after about 40-50 pip profit (if i remember correctly). And let the rest go for the same amount of pips as the stop loss.

I trade support/resistance too (from 1hr and 4hr) so its a good idea to have S/R lines on your charts for potential turning points. On the EU trade, 1.2560 was my TP because of support. Look at the hourly chart, and you can see clearly some support at 1.2560. I'll post a chart...

[yosih36]

Thank you for Sharing

[gazul]

Thank you for Sharing.

[pipster]

Im currently in GU.

Got in a bit late though. Stop loss: 100 pips, TP is at previous resistance around 1.4450 (80 pips TP). RR is not 1:1 since I got in late, so good idea to go for a lower position...Let's see how it goes :)

[pipster]

I have hit my TP on the GU trade. Still holding onto some of it though.

In my last post I forgot to mention the EJ trade with the same setup that I took:D, now I have closed 2/3 on it and letting the rest run.

[Verto]

Looks like a pretty good system Pipster. I will take a look and start doing some more testing.

[charlesb]

Nice one pipster.
Attached is daily fibs from spud.
Invaluable for short term trading.

[chamane]

Originally Posted by pipster

To trade the trend, we want a good entry point rather than just jumping in, risking a pullback. Here's a very basic strategy that gets you in a trend on pullbacks. It can be used on any timeframe but in my opinion it is best used on 4 hour or daily or even 1 hour.

Indicators: 50 EMA and Stochastics (14,3,3)

So here it is:

Look at the chart, and check the slope of the moving average. If it is a down, sell when stochastics becomes overbought and crosses down. For longs, do the opposite. This strategy should work in any market including the stock market since it is simply following the trend and buying/selling on pullbacks.

Now, as an example, I picked the pound vs dollar with both, longs and shorts using a 4 hour chart. On the last long trade, I just noticed the moving average was not really sloping up. But it doesn't matter, you get the idea.

PS: I learned this strategy from FXStreet.

Hi,

Thanks for sharing. My experience in forex is limited, but I keep reading on all strategies I can find. Yours is simple and seems profitable.

It reminds me of one I saw on another forum evoking the concept of elastivity. It is trading when Sto (14,3,3) of a higher timeframe (e.g. 4 HR) reaches overbought/oversold area and Sto (14,3,3) of trading timeframe (e.g. 15 min) reaches opposite overbought/oversold area. I am pretty sure that combining that strategy with yours (if either one of the criteria occurs) could generate quite a number of good signals.

Also, I get the feeling that the Stochastic levels for overbought/oversold could be lowered to get a valid signal. For instance, instead of the standard 30,70 we could use any number between 50 and 70 for sell and between 50 and 30 for buy. As long as a proper money management is used. Of course this is only suggestion and it has to be demoed.

Chamane:)

[charleyhankins]

Looks promising. I'm going to test it out on H4, Daily, and scalping to see how we do. Thanks!

[warhead]

Better to play in longer TF such as 4H .. pips maker !

[lefteye]

Hi Pipster, its a KISS strategy, I will try on a lower TF and see how it goes, thank you very much.

[chamane]

I don't know if this is off topic, but I just wanted to leave an observation. I marked the change of slope of the 50 EMA by black vertical lines. I realized that it fits quite well the change of trend of the CCI55. I am using the DoubleWoody(5514) indicator. The fast CCI(14) can help to weed out false signals (see black break lines). Long stochastic signal under 50 level and short signal over 50 seems to be enough for me (instead of overbought/oversold levels). I would use faster Stochastic (8,3,3 or 5,3,3) for shorter timeframes. SL would be last swing high/low and profit same as risk with bringing stop to breakeven +5 pips as soon as possible. Just food for thoughts.

Chamane

[cx57]

very good trading

[snowhyte]

I backtested this system and found that it is more reliable at H4 i.e. longer TFs.

Thanks for sharing. Moving average has always been my favourite but trading correctly and effectively using MA is difficult. Your system helps.

[larry]

Thank you for sharing

[simpleguy]

Love trading the trend. I bounced around looking at several systems and this is the only thing that has made sense. I took a class in psychology that said I can't change anything about a person, I can only change what I do. Made me think of the markets, I can't change it, Guess it would be easiest to just go with the flow. :cool: