Trend trading increases your win rate, improves your risk to reward, and can be applied across all markets. You can define the long-term trend using the period moving average. In a strong trend, it's ideal to enter your trades on a breakout (or on a lower timeframe).
Table of contents
- Intro: The different market phases
- Trend Trading
- Daily Time Frame Forex Trading Strategy (3 Ways to Trade Daily Chart)
- Capturing Trend Days - Traders Log
As long as that keeps occurring, if the price moves below the trendline it doesn't necessarily mean the trend has ended, the line may just need to be adjusted.
Intro: The different market phases
During a downtrend, the price makes lower lows and lower highs. As long as that happens, if the price moves above the descending trendline it doesn't necessarily mean the trend has ended, the trendline might simply need to be adjusted. The need for constant adjusting makes a trendline imprecise for use as a trade signal. Also, consider that a trendline drawn at a slightly different angle can make a big difference in what price that trendline intersects with.
Therefore, while you can use trendlines as a guide, use more precise criteria for entering a trade, such as a move back in the trending direction, an engulfing pattern where the next bar is larger than the previous one, engulfing it , or an indicator that adjusts more precisely and quickly to changes in volatility. If you use trendlines as just a guide, then you don't need to worry about drawing trendlines along the exact highs or lows.
Draw "trendlines of best fit. In some cases drawing trendlines along extreme highs and lows works, but when it doesn't, draw trendlines of best fit. Since the trendline isn't being used as a trade signal, it still provides you with relevant information about the trend, without the need to constantly readjust it. Trendlines are a great tool, showcasing short-term trends within the overall trend. Pay attention to price action and always consider it when using trendlines. If the price makes lower lows and lower highs, it's still a downtrend even if the price moves above a descending trendline.
If the price makes higher highs and higher lows, the price still has an uptrend even if it moves below the trendline.
A trendline needs to be adjusted often, especially when day trading. Use "trendlines of best fit" to avoid constantly adjusting. The trendline of best fit still shows the trend and when the trend may be reversing. Use trendlines to alert you of potential trade opportunities, and use price action signals taking action on trades simply by the price to get in. Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content. Create a personalised content profile.
Measure ad performance. Select basic ads. Create a personalised ads profile. This is our entry trigger. Now all confluences are aligned nicely, Now it is a matter of placing the trade. We can place a sell order here.
Daily Time Frame Forex Trading Strategy (3 Ways to Trade Daily Chart)
But where we place stops and targets. According to the above chart, we placed stop-loss a few pips above the lower high, And we used 2R for the target which means our take-profit is twice as the stop-loss. Beside the stop-loss and take profit, we have to manage the trade, right? This is simple. Learn more on How to Cut Losses in Forex. Have a look at the two examples that we executed in the last month before move into the next trading strategy. Support and resistance are one of the highly rated and most profitable trading tools when it comes to anticipating market movements.
Almost every trading strategies out there use some sort of support and resistance. Another fact about support and resistance is that they tend to works better on higher time frames especially in the daily chart. Which mean price has to be test support or resistance in the near past.
Have look at the 4-Hour gold chart below. According to the above chart, you can see that there is a level comes from the daily chart which acts as a resistance in past. But on the 4-hour we can see that price again bounce from that daily resistance level and this confirms this resistance is valid and can look for trades in future. Just like that before looking for any trades we have to confirm the validity of the support and resistance. So what are the confirmations that we can use to find the price movement around support or resistance?
Have a look at the marked bullish engulfing candlestick pattern in the above chart. Why this candle is important for us? There are two reasons, one is Bullish engulfing pattern indicate buying pressure and the second one is it occurred at daily support level which is a higher probability area to look for trade opportunities. With all these confluences in mind, we place stop-loss few pips below the bullish engulfing pattern and we use 2R for the take profit.
Just like that, you can also use the pin bar as your entry technique. Have a look at the chart below,. Before that keep in mind RSI over-bought and over-sold is not trading signals, But if you can combining RSI over-bought and over-sold with price actions, then you can have a small edge over the market. Have a look at the chart below, first, you can see that price fell after the RSI overbought signal and the same thing happened again after the RSI over-sold signal — price move higher.
I am the follower of your you tube channel and now reading the articles in your website to improve my Forex trading knowledge. So If I want to open and close the position in a day, what is the time frame is best suited for me. Which Time frame I need to use for analysis and trade.
Because I try to use the MA as you suggested, but when the Time frame is changed the results are confusing. So please need your advice.
Actually I was doing trading in my live account and lost the money, so now spending my time to understand my mistakes. Till that time I am planning to invest the money for Copy trading so that I can earn decent margins, Is there any possibility please advice. Hi Raynor- Great stuff like usual! I watch all of your youtube videos… so I feel like you are one of my best friends. I use a hybrid strategy- trend follower leaning a little toward swing trading. Two words… Heiken Ashi!!! If your readers are having trouble finding or exiting trends tell them to try looking at the charts with some Heiken Ashi glasses on.
It has helped me to find a really strong trend easier and stay in the trade a little longer.
Capturing Trend Days - Traders Log
My win rate since switching to Heiken Ashi has had a dramatic improvement. First I look at a chart using Heiken Ashi candles, then if it meets my visual scan, I will switch to regular candles for a secondary confirmation. Again- Thanks for all the great info. Hi Rayner- Sorry for the typo in spelling your name in my post above. I know its Rayner… I should have proofread before hitting submit. On which timeframe do you use the Heikin Ashi? Can you give a little more information? Many thanks!!! I would suggest trading in positive swap directions or at least pairs with fairly low negative direction.
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