Cornflower Forex Trend Following Strategy

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Cornflower Trading System

Cornflower is based on the principle that trades should be taken when the same trend presents itself on multiple timeframes. This is another trend following strategy that will aid you in trading. Use this system in a 1 hour timeframe if you are conservative and 30 minute chart if you are aggressive. Do not use lower timeframe lower than 1 hour to avoid whipsaw. You can use this system in all session but Asian market is recommended.

Indicators needed are as follows:

  • 8 EMA
  • 12 EMA
  • 24 EMA
  • 72 EMA

The Principle of this System

Base on an hourly chart:

  • The EMA represents the daily trend.
  • The 8 EMA represent the intraday velocity of fast money. Usually 1/3 of the length.
  • The 12 EMA represent the trend of the last half-day. The value of this moving average represents the value where the price will find its support when there is a dominant trend.
  • The 24 EMA, a long-term trend will sometimes catch a breather around this area, with big money accumulating on the opportunity to buy or sell at a
    substantial discount.
  • The 72 EMA represent the dominant trend. The trend will reassert itself as cumulative memory tells traders to resume trading in its direction.

If the 3 short term moving averages are above 72 EMA, then there is an uptrend.
The opportunity for a short to medium term will bounce when the price pulls back to the area between the 1 and 24 EMAs.

The point of entry and profit target area is based on a number of criteria. It may be support or resistance, pivots or set pip amount.

We can also enter a long term trade and exit when the 12 EMA cross down below the 24 EMA. This system can catch major move in the market and provides multiple opportunities to take advantage of a big trend.

Basic System Rules

Two kind of entries:

  • Pullback (aggressive)
  • Price settles in the area between the 8 and 24 EMAs.
  • Price aims to capitalize on the first movement of a new trend.
  • It is defined by a thrust beyond 72 EMA confirmed by a turn around in the shorter EMA.
  • Initial (conservative)

Pullback (conservative) entry – use hourly chart

  • 8, 12, and 24 EMAs are all above (long) or below (short) the 72 EMA
  • Price has pulled back to the 12 or 24 EMA (the more aggressive the trend, the
    more shallow the pullback.
  • Enter for 20 pips, or hold depending on trader’s judgment of the strength of the trend.

Initial (aggressive) entry – use M30 chart with identical indicators

  • Price has moved with authority above or below the 72 EMA or closed near the top of the range.
  • 8, 12, 24 EMAs are all pointed in the direction of price, and preferably already
    stacked in a perfect order (8 over 12 over 24 for long, 24 over 12 over 8 for
    short).
  • Enter for 20 pips and hold if the thrust develops into a real trend.
  • Take profit about 20 pips, it is ideal for hourly and half hourly charts.

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