Trend Continuation Strategies are some of the most reliable trading strategies. This is because trend continuation strategies do not go against the trend, but instead trade on the pullbacks which develop as the trend progresses.
This strategy is a simple trend continuation strategy which uses two reliable trend following indicators.
Non Lag Dot Indicator
Table of Contents
The Non Lag Dot Indicator was developed as a supply and demand indicator that indicates possible trend reversal and trend direction based on the dominant market forces. If you would at the Non Lag Dot Indicator closely, you would observe that it is a trend following technical indicator which identifies and indicates the short-term trend direction.
The Non Lag Dot Indicator indicates trend direction by plotting dots on the price chart. These dots tend to trail behind price action quite closely. The color of the dots also indicates the direction of the momentum. It plots green dots to indicate a bullish trend direction, and magenta dots to indicate a bearish trend direction.
The Non Lag Dot Indicator is based on an underlying moving average line which the dots follow. It then compares the value of the current dot to the prior dot. It plots a green dot whenever the current dot has a higher value than the preceding dot, and a magenta dot whenever the current dot has a lower value compared to the preceding dot. It is also supposed to plot gray dots whenever the dots have the same value as its preceding dot. However, this scenario does not occur often.
If you would consider the concept behind this indicator closely, you would realize that it is based on the concept of using the slope of moving average lines as a basis for identifying trend direction, wherein the trend is bullish whenever the moving average line is sloping up, and bearish whenever the moving average line is sloping down.
Traders can use the color of the dot as a basis for identifying trend direction and use the indicator as a trend direction filter. In such case, traders can avoid trading against the direction of the trend by avoiding trades that go against the trend indicated by the Non Lag Dot Indicator.
When using the preset of this indicator, this indicator can serve well as a trend reversal signal indicator based on the short-term trend. Traders can use the changing of the color of the dots as a trend reversal signal and open trades based on it. However, this is best applied in confluence with a longer-term trend or other technical analysis indication.
50 Simple Moving Average
The 50 Simple Moving Average (SMA) line is one of the most widely used moving average lines. It is in fact widely accepted as a major indication of the mid-term trend.
There are many seasoned traders who use the 50 SMA line as a basis for identifying the main trend direction. In fact, there are also many seasoned traders who would never trade against the 50 SMA line as part of their trading rules.
There are a couple of ways traders identify trend direction based on the 50 SMA line. One would be based on where price action generally is in relation to the 50 SMA line. The trend is considered bullish whenever price action is generally above the 50 SMA line, and bearish whenever price action is generally below the 50 SMA line.
Another option would be to identify trend direction based on the slope of the 50 SMA line. The 50 SMA line follows where price action generally is. As such, it also tends to curl and slope in the direction of where price action is. So, traders can also identify trend direction based on the slope of the 50 SMA line. The trend is bullish whenever it slopes up, and bearish whenever it slopes down.
Aside from this, the 50 SMA line can also be useful as a dynamic support or resistance line. Price tends to bounce off it or the area around it after a retracement whenever the market is trending in one direction.
The 50 SMA line is a built-in indicator on the MT5 platform which can be accessed as the Moving Average Indicator. Users simply have to modify the preset inputs wherein the Period is set at 50 bars and the Method is set at Simple.
Trading Strategy Concept
This trading strategy is a trend continuation strategy which is based on the alignment of the mid term and short term trends.
The mid term trend direction is based on the 50 SMA line. This will be based on where price action generally is in relation to the 50 SMA line, as well as the direction of its slope.
Users should then wait for price action to pullback which would cause the Non Lag Dots to temporarily change color going against the trend direction of the 50 SMA line.
The Non Lag Dots should then revert back to the color which correlates with the trend direction of the 50 SMA line as the pullback ends and the trend continues. This would then be our signal that the trend is continuing and would be our entry signal.
Buy Trade Setup
- Price action should generally be above the 50 SMA line.
- The 50 SMA line should slope up.
- Price action should pullback near the 50 SMA line causing the Non Lag Dots to temporarily change to magenta.
- Open a buy order as soon as the Non Lag Dots change back to green.
- Set the stop loss on the support below the entry candle.
- Close the trade as soon as the Non Lag Dots change back to magenta.
Sell Trade Setup
- Price action should generally be below the 50 SMA line.
- The 50 SMA line should slope down.
- Price action should pullback near the 50 SMA line causing the Non Lag Dots to temporarily change to green.
- Open a sell order as soon as the Non Lag Dots change back to magenta.
- Set the stop loss on the resistance above the entry candle.
- Close the trade as soon as the Non Lag Dots change back to green.
This trading strategy can be an effective trend continuation strategy. It works best at the start of a new trend which could be the first or second pullback on the trend. The longer the trend is, the higher the probability that it would end. It is best to trade these signals on the first two pullbacks.
Forex Trading Strategies Installation Instructions
Non Lag Dot Trend Continuation Strategy for MT5 is a combination of Metatrader 5 (MT5) indicator(s) and template.
The essence of this forex strategy is to transform the accumulated history data and trading signals.
Non Lag Dot Trend Continuation Strategy for MT5 provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.
Based on this information, traders can assume further price movement and adjust this strategy accordingly.
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How to install Non Lag Dot Trend Continuation Strategy for MT5?
- Download Non Lag Dot Trend Continuation Strategy for MT5.zip
- *Copy mq5 and ex5 files to your Metatrader Directory / experts / indicators /
- Copy tpl file (Template) to your Metatrader Directory / templates /
- Start or restart your Metatrader Client
- Select Chart and Timeframe where you want to test your forex strategy
- Right click on your trading chart and hover on “Template”
- Move right to select Non Lag Dot Trend Continuation Strategy for MT5
- You will see Non Lag Dot Trend Continuation Strategy for MT5 is available on your Chart
*Note: Not all forex strategies come with mq5/ex5 files. Some templates are already integrated with the MT5 Indicators from the MetaTrader Platform.
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