Super Trend Bounce Forex Trading Strategy

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Super Trend Bounce Forex Trading Strategy

Trends are one of the easiest types of market conditions to trade in. As one stock trader who traded during the “.com” boom said, they could just buy any stock that has a “.com” on it in the morning, go out, get back to trading in the afternoon and see its price go up. That is exactly what happens when there is a trending market condition. Momentum and sentiment are on the side of the trend and these things push price further into the direction of the trend.

However, it is not as simple as it sounds. Many trend following and momentum traders are guilty of chasing price. This habit causes them to either buy high and sell low or in the case of a downtrend, sell low and buy high.

So, how do we trade with the trend while not falling victim to chasing prices? One of the best practices that many traders do is trading during retracements. This allows them to trade with the prevailing trend while at the same time avoid taking a buy trade at its peak or a sell trade at the bottom.

Super Trend Bounce Forex Trading Strategy is a simple trend following strategy which trades with the trend while at the same time waiting for prices to retrace at a favorable price.

Super Trend

The Super Trend indicator is a trend following indicator which is based on the Average True Range (ATR).

One of the ways many traders identify trends and trend reversals is using ATRs. The assumption is that a trend is reversing if price goes against the direction of the current trend by more the thrice the ATR. Some consider the trend to have reversed if price moves against the current trend by more than twice the current ATR.

Super Trend indicator is also based on this concept. The indicator plots a line behind price action by a certain distance based on the ATR. If price breaches and closes beyond the Super Trend line, then the indicator would detect a trend reversal and shift the line on the opposite side of the Super Trend line.

The Super Trend line can be used as a trend reversal entry signal. Traders can take trades whenever the line shifts towards the opposite side of price action.

It can also be used as a trend direction filter. Traders can simply avoid trade setups that go against the direction indicated by the Super Trend indicator.

Lastly, it can also be used as a stop loss placement basis. Traders can simply put their stop losses behind the Super Trend line or trail it as the line moves.

Forex Major Trend

The Forex Major Trend indicator is a trend following indicator which indicates trend direction using bars.

It plots bars on a separate window. These bars change color whenever the indicator detects that the trend has reversed. Blue bars indicate a bullish trend bias, while red bars indicate a bearish trend bias.

Traders can use the changing of the color of the bars as a trend reversal signal. They could then take buy or sell trades based on these signals provided that it is in confluence with other trend indications.

Traders can also use this indicator as a trend or momentum direction filter. Using a shorter momentum indicator, traders can take trades based on another indicator as long as the signals produced are aligned with the trend as indicated by the Forex Major Trend indicator.

Trading Strategy

This trend following strategy trades based on the direction of the trend as indicated by the Super Trend indicator, the Forex Major Trend indicator and the 200-period Exponential Moving Average (EMA).

The main trend direction is based on the 200 EMA line. This is based on the direction of the slope of the 200 EMA line and the general location of price action in relation to the 200 EMA line.

The Super Trend line should then confirm the trend based on the location of price action in relation to the Super Trend line as well as the color of the Super Trend line.

Price should then retrace towards the Super Trend line. This should cause the Forex Major Trend indicator to temporarily reverse.

Trades are taken as soon as price action shows indication of rejecting the Super Trend line and the Forex Major Trend indicating the resumption of the direction of the trend.

Indicators:

  • 200 EMA
  • SuperTrend
  • ForexMajorTrend

Preferred Time Frames: 30-minute, 1-hour, 4-hour and daily charts

Currency Pairs: FX majors, minors and crosses

Trading Sessions: Tokyo, London and New York sessions

Buy Trade Setup

Entry

  • Price action and the Super Trend line should be above the 200 EMA line.
  • The 200 EMA line should slope up.
  • The Super Trend line should be below price action and should be color lime.
  • Price should retrace towards the Super Trend line.
  • Enter a buy order as soon as the Forex Major Trend bars change to blue.

Stop Loss

  • Set the stop loss on the support below the entry candle.

Exit

  • Close the trade as soon as the Forex Major Trend bars change to red.

Super Trend Bounce Forex Trading Strategy

Super Trend Bounce Forex Trading Strategy 2

Sell Trade Setup

Entry

  • Price action and the Super Trend line should be below the 200 EMA line.
  • The 200 EMA line should slope down.
  • The Super Trend line should be above price action and should be color red.
  • Price should retrace towards the Super Trend line.
  • Enter a sell order as soon as the Forex Major Trend bars change to red.

Stop Loss

  • Set the stop loss on the resistance above the entry candle.

Exit

  • Close the trade as soon as the Forex Major Trend bars change to blue.

Super Trend Bounce Forex Trading Strategy 3

Super Trend Bounce Forex Trading Strategy 4

Conclusion

Trading retracements on a trending market is a good trading strategy. It allows for traders to trade with the trend while at the same time taking advantage of better prices during retracements.

The question is where we should expect a retracement. Some traders expect retracements on moving averages. While this could work, it would depend on which timeframe the market is trending on. If trade on the wrong time frame, retracements could be either too deep or too shallow.

Super Trend on the other hand could easily indicate if the market is trending on the timeframe which a trader is looking at. This allows traders to easily decide whether to take trades based on retracements on that timeframe.


Forex Trading Strategies Installation Instructions

Super Trend Bounce Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.

The essence of this forex strategy is to transform the accumulated history data and trading signals.

Super Trend Bounce Forex Trading Strategy 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 Super Trend Bounce Forex Trading Strategy?

  • Download Super Trend Bounce Forex Trading Strategy.zip
  • *Copy mq4 and ex4 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 Super Trend Bounce Forex Trading Strategy
  • You will see Super Trend Bounce Forex Trading Strategy is available on your Chart

*Note: Not all forex strategies come with mq4/ex4 files. Some templates are already integrated with the MT4 Indicators from the MetaTrader Platform.

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