Forex Trend Trading Strategy Explained With Examples

0
5300

Forex Trend Trading Strategy Introduction:

What is so special about Trend?

The trend is the major direction of price. Riding the trend is like guarantee profits but the problem is sometimes we ride on exhaust trend that is about to reverse.

The smart way to take advantage of trending is to use a leading indicator. In this blog post, I’m going to introduce you the leading indicator which is the price action. The price action can be classified into many.

However, the method I’m going to teach involves with candlestick pattern (part of price action). The candlestick pattern works very efficiently in terms of getting a signal.

We ride the trend. We use candlestick to get early entry. Do sounds like a good idea? I bet it is.

There are 2 powerful patterns that I want to introduce you:

1 – Pin Bar Pattern

  • How to identify Pin Bar Pattern? Easy, the name says it all. Take a look on this screenshot.

  • The long wick of the pin bar shows a strong rejection of the price. The rejection causes reversal of the price.

forex-trend-trading-strategy-12 – Engulfing Pattern

  • The big second candle engulfs the first candle. This shows a massive selling/buying market.

forex-trend-trading-strategy-2

The Forex Trend Trading Strategy Method:

Follow these steps:

Step 1: Identify the market trend

Open your chart and set an indicator called exponential Moving Average(EMA) and change the setting into 21.

The rules are simple:

forex-trend-trading-strategy-3

  • When the EMA move below the price, then the market is trending up.

  • However, when the EMA move above the price, then the market is trending down.

Trending up example:

Example 1:

forex-trend-trading-strategy-4

Example 2:

forex-trend-trading-strategy-5

Trending down example:

Example 1

forex-trend-trading-strategy-6

Example 2

forex-trend-trading-strategy-7

Step 2: Formation of candlestick pattern

Trade only if we see a candlestick pattern formed with the direction of trend.

For example, if bullish pin bar pattern formed whilst the market is trending down, then ignore the signal and move on the next currency or wait for other signal.

However, if the bullish pin bar pattern formed when the market is trending up, then the signal is align with the trend. Prepare for the buy setup.

Buy setup:

Example 1:

forex-trend-trading-strategy-8Bullish Engulfing Pattern. The trend is up

Example 2:

forex-trend-trading-strategy-9

Bullish Pin Bar Pattern.

Sell Setup:

Example 1:

forex-trend-trading-strategy-10

Example 2:

forex-trend-trading-strategy-11

Formation of Bearish Pin Bar Pattern

The Forex Trend Trading Strategy Method In A Nutshell:

The method is simple and straightforward while keeping it as a good strategy for anyone who wanted to implement it to their trading plan.

Here is the method outline:

  1. Identify the trend

  1. Look for candlestick pattern formation

  1. If the candlestick pattern formation align or follow to the trend direction then consider to make an entry. If not, then ignore it.

***Extra Tip: Knowing more about the candlestick pattern help you to take advantage to know what happens during the trading time. Hence, more trading entry signals.

I hope you enjoyed reading this short, simple post on an easy way dominate forex trend trading. Do comment and share if you like this! 🙂

For Automated Trading Trend Identifier – Click here

Best,
Tim Morris

admin @ ForexMT4Indicators.com

 

LEAVE A REPLY

Please enter your comment!
Please enter your name here