Profitable Forex Trend Following Strategy
This system works on higher timeframe such as 1 hour, 4 hours and daily timeframes. This is applicable to all currency pairs but it is suited or best works in GU, UCHF, EJ and GJ. Use shorter timeframe such as 5M and 15M if you want to use this on indices.
When you have identify the trend, look for the first small retracement (L1 signal) and the first larger retracement (L2 signal). Take the first L1 and first L2 signal. When price retraces, be careful to re-enter. Know first if the trend still has the strength. Use MACD to identify momentum.
You will know if the momentum is still going up because the uptrend makes another new highs in price and momentum indicators, and downtrend makes new lows in price and in the momentum.
Therefore, the second L1 signal is valid as long as the previous L1
signal was successful and resulted in the trend making new high/low in
both price and momentum. Likewise, the second L2 signal is valid as
long as the previous L2 signal was successful and resulted in the trend
making new high/low in both price and momentum.
This method of momentum determination is important. It helps us
filter a lot of false signal.
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