Big Trend Swing Forex Trading Strategy

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Big Trend Swing Forex Trading Strategy

Many traders would love to take trades right at the start of a fresh trend and exit right at the end of that trend. It gives traders the most bang for their buck. Traders who were able to trade right at the beginning of the trend and exit at the end are the ones who would have gained the most profit out of a given trend.

However, this is easier said than done. This is because it is very difficult to predict tops and bottoms. Traders can only dream of being good at picking tops and bottoms. Sure, we could guess the right figure sometimes, but we could never be as accurate as we would want.

Instead of aiming for the tops and bottoms, what traders can do instead is ride the trend right near the beginning of the trend. This is after the top or the bottom, after the trend is confirmed to have reversed. This allows traders to be more accurate with their trend reversal setups.

Now, how do we confirm if a trend has reversed? There are many ways to confirm a trend reversal. Some trade based on breakouts of an opposing support or resistance. Others trade on retests after the breakout.

Price action traders define a trend based on the pattern of the swing highs and swing lows. If the swing points are rising, then the market is bullish. If the swing points are dropping, then the market is bearish. Reversals are characterized by a shift in the pattern, from a rising pattern to a falling pattern, or vice versa.

Big Trend Swing Forex Trading Strategy trades on trend reversals that are confirmed by price action patterns. It uses a couple of indicators to help traders easily identify trends and potential trend reversals, as well as the short-term momentum of the market.

TSR Big Trend

TSR Big Trend, also known as the Slope Direction Line, is a custom trend following indicator based on a modified moving average.

Moving averages are widely used to identify trend direction and trend reversals. Many identify trend based on the general location of price action in relation to a moving average line. Others base it on the slope of the line. Trend reversals are often identified based on the crossover of price action and a moving average line or the crossover of two moving average lines.

Although moving averages are excellent trend following tools, most are either too lagging or too susceptible to choppy market conditions.

The TSR Big Trend indicator is a smoothened-out version of a moving average line, which makes it less susceptible to choppy market conditions. It is also developed to reduce lag significantly making it respond to price action changes much faster.

The TSR Big Trend indicator can be used to identify trends and trend reversals based on the slope of the line, as well as the location of price action in relation to the line. The indicator also changes color depending on the direction of the trend. A light blue TSR Big Trend line indicates a bullish trend, while a tomato TSR Big Trend line indicates a bearish trend.

Stochastic Oscillator

The Stochastic Oscillator is a momentum indicator developed to help traders identify the direction of the short-term trend or momentum.

It plots two oscillator lines based on the historical average price movements. One line is faster than the other. Trend or momentum direction is based on how the lines intersect. If the faster line is above the slower line, then the trend is bullish. If the faster line is below the slower line, then the trend is bearish.

The Stochastic Oscillator also has markers on level 20 and 80. These markers indicate where the market will be considered oversold or overbought. Lines below 20 indicate an oversold market, while lines above 80 indicate an overbought market. Crossovers occurring on these levels tend to have a higher probability of actually reversing.

Trading Strategy

This trading strategy is a trend reversal strategy based on the crossover of the TSR Big Trend line and price action. However, instead of taking trades as soon as price crosses over the line, we will be waiting for price action to confirm the trend reversal.

After price crosses over the TSR Big Trend line, we will wait for price action to either create a higher low in a bullish trend reversal or a lower high in a bearish trend reversal. This would confirm the trend reversal based on price action.

The Stochastic Oscillator lines would be used to confirm the direction of the short-term trend or momentum. This is simply based on how the two lines overlap.

Indicators:

  • (T_S_R)-Big Trend
    • Period: 60
  • Stochastic Oscillator
    • %K Period: 15
    • %D Period: 6
    • Slowing: 6

Preferred Time Frames: 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 should cross above the TSR Big Trend line.
  • The TSR Big Trend line should change to light blue.
  • Price action should create a higher swing low.
  • The faster Stochastic Oscillator line should be above the slower line.
  • Enter a buy order upon the confirmation of the conditions above.

Stop Loss

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

Exit

  • Close the trade as soon as the TSR Big Trend line changes to tomato.

Big Trend Swing Forex Trading Strategy

Big Trend Swing Forex Trading Strategy 2

Sell Trade Setup

Entry

  • Price action should cross below the TSR Big Trend line.
  • The TSR Big Trend line should change to tomato.
  • Price action should create a lower swing high.
  • The faster Stochastic Oscillator line should be below the slower line.
  • Enter a sell order upon the confirmation of the conditions above.

Stop Loss

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

Exit

  • Close the trade as soon as the TSR Big Trend line changes to light blue.

Big Trend Swing Forex Trading Strategy 3

Big Trend Swing Forex Trading Strategy 4

Conclusion

Big Trend Swing Forex Trading Strategy works well because of the fact that it incorporates the confirmation of price action with the usual moving average and price action crossover.

The crossover of moving averages or moving average and price action is called the Death Cross for a reason. It is a point of indecision. Price can reverse but it can also bounce off the moving average lines and continue the trend. Waiting for price action itself to confirm the trend reversal significantly increases the likelihood of the trend reversal continuing.

Traders who can accurately identify the swing points can use this strategy to consistently profit from the forex market.

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