Trending markets are the type of markets that many traders want to trade. This is because trending markets allow traders to identify the direction of the trade that they should take without much thought. If they see that the market is in a downtrend, then they can opt to trade only short trades. If they see that the market is trending up, then they would just take buy trades. This quickly eliminates one decision making process for the trader. Now, they do not need to guess where the market is going. They already have an idea which direction the market is most likely going to take. This significantly increases their chances of winning because often, the market will move with the trend. The only question left to answer is when to take the trade.
Trending markets present many opportunities. Although the market is generally moving in one direction, price would still oscillate up and down due to market contraction and expansion phases. These retracements allow traders to enter the market at a discount and exit as the short burst of volume ends. Then, they can wait for another round of contraction and expansion and repeat the same process until the trend ends. In short, traders can grind multiple trades through a trending market condition. This allows them to maximize their profits within a single trend.
FX Trend Grind Forex Trading Strategy is a systematic trend following strategy which allows traders to identify trend direction based on price action and long-term momentum, while at the same time allowing them to enter trades every time the market presents opportunities through retracements.
RSI Filter is a momentum technical indicator which is based on the Relative Strength Index (RSI) indicator.
The classic RSI is an indicator which provides indications regarding trend, momentum and overbought or oversold markets. It is an oscillator which plots a line that could oscillate from 0 to 100.
As a trend indicator, traders identify the direction of the trend based on the location of the RSI line in relation to its midline, which is 50. Some traders also add levels 45 and 55. Level 45 acts as a support during an uptrend, while 55 acts as a resistance during a downtrend.
It also typically has markers at 30 and 70. Traders can identify an oversold market based on the RSI line dropping below 30 and reversing. Traders can also identify overbought markets based on the RSI line breaching above 70 and reversing.
On the other hand, momentum traders interpret drops below 30 and breaches above 70 as bearish and bullish momentum spikes.
RSI Filter is based on the momentum and trend concept from the classic RSI indicator. It plots positive bars whenever the RSI line breaches above 70 and continues printing such bars until the RSI line drops below 45. It also plots negative bars whenever the RSI line drops below 30 and continues printing negative bars until the RSI line breaches above 55. This simply means that momentum has picked and has started a new trend.
Buy Sell Arrow Scalper
Although the name specifically indicates “scalper”, the Buy Sell Arrow Scalper is not just a scalping indicator. It is a trend following indicator which can be used on different timeframes quite effectively.
Buy Sell Arrow Scalper is a trend following indicator which identifies short-term trend reversals based on recent historical price movements.
It then plots arrows indicating the direction of the trend whenever it detects a trend reversal.
It also plots a line that changes color depending on the direction of the trend. A dodger blue line indicates a bullish short-term trend direction, while a red line indicates a bearish short-term trend direction. The same line also has bars attached to it which shifts depending on the direction of the trend. The bars are attached below the line during an uptrend, and above the line during a downtrend.
The Buy Sell Arrow Scalper indicator is mainly used as a trend reversal signal indicator. Traders can take trades in the direction of the trend whenever the indicator plots a new arrow. However, traders should also align these signals with a longer-term trend or momentum indication.
This trading strategy is a simple trend following strategy which identifies long-term trends based on momentum and price action.
To identify the main trend direction, we will be using the RSI Filter indicator. This is simply based on whether the RSI Filter indicator is plotting positive or negative bars. The indicator should be plotting the same bars for quite some time indicating that price has gained momentum in a certain direction and has found support since the RSI Filter bars is not reversing. This should also coincide with price action being in a trend based on the swing high and swing lows either being constantly higher or lower.
As soon as we identify the main trend, we then wait for opportunities based on the short-term trend. This is simply based on the changing of the color of the Buy Sell Arrow Scalper and the plotting of an arrow indicating a trend reversal signal.
Preferred Time Frames: 15-minute, 30-minute, 1-hour and 4-hour charts
Currency Pairs: FX majors, minors and crosses
Trading Sessions: Tokyo, London and New York sessions
Buy Trade Setup
- The RSI Filter indicator should be plotting positive bars.
- Price action should be trending up based on higher swing highs and swing lows.
- The Buy Sell Arrows Scalper indicator should temporarily reverse indicated by a red line.
- The short-term trend should resume causing the Buy Sell Arrow Scalper indicator to plot an arrow pointing up and the line to change to dodger blue.
- Enter a buy order upon the confirmation of these conditions.
- Set the stop loss below the Buy Sell Arrow Scalper bars.
- Close the trade as soon as the Buy Sell Arrow Scalper indicator plots an arrow pointing down.
Sell Trade Setup
- The RSI Filter indicator should be plotting negative bars.
- Price action should be trending down based on lower swing highs and swing lows.
- The Buy Sell Arrows Scalper indicator should temporarily reverse indicated by a dodger blue line.
- The short-term trend should resume causing the Buy Sell Arrow Scalper indicator to plot an arrow pointing down and the line to change to red.
- Enter a sell order upon the confirmation of these conditions.
- Set the stop loss above the Buy Sell Arrow Scalper bars.
- Close the trade as soon as the Buy Sell Arrow Scalper indicator plots an arrow pointing up.
This trading strategy works very well when used in the right market condition. That is a trending market with clear price action swings.
The RSI Filter just serves to confirm the trend and the Buy Sell Arrow Scalper just serves to enter the trend during retracements.
Traders who can identify a good trending market can exploit such trends using this strategy.
Traders can also maximize profits by placing fixed take profit targets which are a multiple of the risk placed on a stop loss. However, there are also instances when the market could produce even more yields if the trade is not capped with a fixed exit. It is up to the trader what method he prefers. Shoot for the stars with an open ended exit or play it safe with a fixed take profit target.
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