Thread: A trend following system

Originally Posted by Gregory McLeod

Hey jbiggart! If you have a free moment, could you share your rules?

Sure, like me they are nice and simple.

1. Only trade if there is a trend and only in that direction
2. Enter on retrace at aprox 50% fib
3. Stop above/below previous high/low
4. Take the money at aprox 1.5 x risk
5. Move stop to just above/below retrace when i'm confident the turn has been made. 6. leave until stopped or in the money.
6. Don.t trade just before big news, too much panic & chaos.

Example:
AUd/USD had a couple of lower highs so i went short at 290 just below 50% fib initial stop at312 tp at 265. moved stop to 303 where i should have left it then moved to 295.

As the charts have stopped for the weekend thought I'd explain my thinking behind this strategy. As my crystal ball doesn't work very well I'm unable to predict the future so this strategy is about grabbing only the higher probability pips. I think it was one of the Dailyfx team who did some research that showed the most consistently successful forex traders trade in the quiet hours when the charts are meandering in boring but more predictable ranges and trends.

This is probably because the charts at this time are more boring and predictable. So I like to hunt out the cleanest trends that are also boring but hopefully more predictable. I'll leave the high octane, flying by the seat of your pants trading to the experts.Oh and the get rich quick heroes who ussually end up in the 'where's my money gone' club.

Trading the trend has been successfully traded for decades and I'm only trying to copy other traders success, why try and re-invent the wheel. This strategy is simply about grabbing the highest probability pips from the trend. If the market moves way past my 'take profit' point I don't care as I am only interested in the higher probability pips not the 'maybe or possibly' pips.

For the highest probability results find a trend in the 30 Min charts then wait for the 5 Min chart to trend in the direction of the 30 Min trend. Then for a falling trend:

1.short just below the 50% fib retrace line.

2.put stop just above 78% retrace (about 2/3 between 50% and previous high). I've moved the stop from above previous high for better risk/reward. If the trend is going to continue there's a good probability it will make its turn before the 78% retrace.

3.Put 'take profit' at a little bit less than 2 x risk

4.You can move stop to just above retrace high when price has dropped to near the previous low to protect against a double bottom bounce.

5.After moving stop once do not in anyway interfear with the trade until stopped or 'take profit' hit.

For a rising trend obviously do the opposite.

Keep your risk for each trade to aprox the same monetry value. The easiest way to do this is to keep the risk for each trade to a fixed percentage of your account, say 1%, upto you. Otherwise your trades could have a better than 50% win:lose ratio and yet you lose money.

Don't worry about the pips you may think you have missed beyond your 'take profit'. This strategy is only about grabbing some higher probability pips not the 'possibly/maybe' pips.

Be aware of major support and resistance, fib lines on higher time scales (big picture) and daily pivot,s1, r1 etc. No point having you 'take profit' the wrong side of one of these. You can keep an eye on divergence on RSI. But don't be too thorough or you'll never put a trade on.

Don't try and tamper, fiddle and alter the strategy in some clever attempt to reduce losing trades because you will end up doing less trades and therefore having less winning trades. This is not an exact science so don't try and make it one. The only people who are not losing trades are people who are not actually trading and time travellers.

Once you are consistently making more pips than you are losing over the previous 20 trade period you have now found the holy grail concept of trading. You can now gradually increase your profits by changing absolutely nothing in your successful trading strategy other than increasing the £'s/pip in your trades. But always use good money management or you'll end up back at the beginning scratching your head.

Don't try and trade a trend that is not there just because you've not been in a trade for a while. If you are not sure, don't trade but wait or look elsewhere for a better trend.

Remember, if you are losing money, don't blame the market, the broker, the system, the dog or anything else. The culprit will be staring back at you when you peer into a mirror. Quitting is usually the easiest decision to make what ever we do.

Well that's all my thoughts, trading can be simple but is definitely definitely not easy. I may,of course, be completely wrong, you'll have to make your own mind up.

hi Curtis, sorry to hear that you didn't make at as trader but best of luck with your new career in sales.

thanks for reminding me about another rule;

8. DO NOT spend your hard earned money on 'amazing' and 'fantastic' new trading systems even if they are 'protected by law'.

there are NO easy short cuts in this game

edit: Curtis' post was removed as it was spam attempting to sell some worthless trading related sh*te

i've changed my mind about moving the stop.
there's too much 'noise' down here on the 5 min chart for stop trailing.
once my trade is triggered i am not going to alter my 'stop' or 'take profit' orders.
what will be will be.
i only need a 50:50 win:lose ratio to make plenty of honey in this game

i've never traded any GBP pairs but apparently they don't respect their own highs and lows when in a trent - Beware!

Originally Posted by biggari

As the charts have stopped for the weekend thought I'd explain my thinking behind this strategy. As my crystal ball doesn't work very well I'm unable to predict the future so this strategy is about grabbing only the higher probability pips. I think it was one of the Dailyfx team who did some research that showed the most consistently successful forex traders trade in the quiet hours when the charts are meandering in boring but more predictable ranges and trends.

This is probably because the charts at this time are more boring and predictable. So I like to hunt out the cleanest trends that are also boring but hopefully more predictable. I'll leave the high octane, flying by the seat of your pants trading to the experts.Oh and the get rich quick heroes who ussually end up in the 'where's my money gone' club.

Trading the trend has been successfully traded for decades and I'm only trying to copy other traders success, why try and re-invent the wheel. This strategy is simply about grabbing the highest probability pips from the trend. If the market moves way past my 'take profit' point I don't care as I am only interested in the higher probability pips not the 'maybe or possibly' pips.

For the highest probability results find a trend in the 30 Min charts then wait for the 5 Min chart to trend in the direction of the 30 Min trend. Then for a falling trend:

1.short just below the 50% fib retrace line.

2.put stop just above 78% retrace (about 2/3 between 50% and previous high). I've moved the stop from above previous high for better risk/reward. If the trend is going to continue there's a good probability it will make its turn before the 78% retrace.

3.Put 'take profit' at a little bit less than 2 x risk

4.You can move stop to just above retrace high when price has dropped to near the previous low to protect against a double bottom bounce.

5.After moving stop once do not in anyway interfear with the trade until stopped or 'take profit' hit.

For a rising trend obviously do the opposite.

Keep your risk for each trade to aprox the same monetry value. The easiest way to do this is to keep the risk for each trade to a fixed percentage of your account, say 1%, upto you. Otherwise your trades could have a better than 50% win:lose ratio and yet you lose money.

Don't worry about the pips you may think you have missed beyond your 'take profit'. This strategy is only about grabbing some higher probability pips not the 'possibly/maybe' pips.

Be aware of major support and resistance, fib lines on higher time scales (big picture) and daily pivot,s1, r1 etc. No point having you 'take profit' the wrong side of one of these. You can keep an eye on divergence on RSI. But don't be too thorough or you'll never put a trade on.

Don't try and tamper, fiddle and alter the strategy in some clever attempt to reduce losing trades because you will end up doing less trades and therefore having less winning trades. This is not an exact science so don't try and make it one. The only people who are not losing trades are people who are not actually trading and time travellers.

Once you are consistently making more pips than you are losing over the previous 20 trade period you have now found the holy grail concept of trading. You can now gradually increase your profits by changing absolutely nothing in your successful trading strategy other than increasing the £'s/pip in your trades. But always use good money management or you'll end up back at the beginning scratching your head.

Don't try and trade a trend that is not there just because you've not been in a trade for a while. If you are not sure, don't trade but wait or look elsewhere for a better trend.

Remember, if you are losing money, don't blame the market, the broker, the system, the dog or anything else. The culprit will be staring back at you when you peer into a mirror. Quitting is usually the easiest decision to make what ever we do.

Well that's all my thoughts, trading can be simple but is definitely definitely not easy. I may,of course, be completely wrong, you'll have to make your own mind up.

Thanks for sharing this Biggari

always trade with a trend whether it is bullish and bearish,there are maxium chance to win

Nice share, biggari

always trade with a trend whether it is bullish and bearish,there are maxium chance to win

Hi there
I like to ask a question conserning 30 min trend. How much data is a good amount to use when determining the trend? As I see it if you use say 5 days of data the trend for that 5 days could be say down, but 20 days may show a uptrend. when trying to determine the trend on say the 30 min TF how many data do you think is enough when daytrading?

Originally Posted by boetiejon

Hi there
I like to ask a question conserning 30 min trend. How much data is a good amount to use when determining the trend? As I see it if you use say 5 days of data the trend for that 5 days could be say down, but 20 days may show a uptrend. when trying to determine the trend on say the 30 min TF how many data do you think is enough when daytrading?

i just look for lower highs or higher lows - it really is down to your own judgement - there is no precise answer - only trial and error and experience

some trends are steep and some are shallow - i alter my entries depending on this - channel trend lines can help

hope this helps - sorry if it doesnt

EDIT: i just see a trend as a sloping range

GL

a simple trading system.... (edit: i'v removed my simple trading system because there are an infinite yet underscovered ''trading edges'' and you probably couldnt make mine work anyway and blame me not yourself for this failing - so go find your own!)

Originally Posted by biggari

censored

a simple trading plan.....

Originally Posted by biggari

imho an excellent chart analyst can lose money with bad MM and RR but an average chart analysis can still profit with good MM and RR (luckily for me)

some simple maths;

with consistent R/R of 1:3 and always having the same monetary risk for every trade (what ever the pips) you can lose 70% of your trades and still be profitable (ofcourse the profits are immense if you can achieve 50% win/lose)

RR and MM are the key to success in this business, and not the success of any individual trade

edit: to get a better RR i split my trade into two positions - i add the second position only when price has moved my way and created another swing high/low and preferably moved through a support to resistance / resistance to support level - in this way the initial position is moved to approx BE and the risk used for the second position

once PA allows the stops can be moved to half way between the two entrys - if the price moves against me after this the trades will be stopped with no overall loss

a simple trading philosophy.....

Originally Posted by biggari

i pinched this from CodyB:

Probabilities are the name of the game and will require you to buy into the following

1: Anything can happen
2: You don't need to know what is going to happen next to make money
3: There is a random distribution between wins and losses for any set of variables that define your edge
4: An edge is nothing more than an indication of a higher probability of one thing happening over another
5: Every moment in the market is unique

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the ''guess which way the market is going to go'' game

lets say the world goes mad and your bookmaker offered you 2:1 odds on it not raining on each day for continuous daily bets. lets say you know from your research that over the last 5 years it has rained on aprox half the days.
you now have the circumstances/tools to spend the rest of your life a very wealthy person - well until your bookmaker goes bust

in effect your broker is offering you the same thing - you are given the freedom to create your own bet, with the odds of your own choosing, on the circumstances you choose - so you cant fail to make money right?

wrong!

because we are given so much freedom, instead of using it to our benefit, we use it to the benefit of our brokers, who are generally on the other end of out trades/bets

YES! we play the ''guess which way the market is going to go'' game

we spend all day playing this game, encouraged by our brokers forums and trading programs, and our money is slowly transferring from our accounts into our brokers accounts - they love this game - its their favourite game

wake up people - its your choice and your responsibility - STOP playing the ''guess which way the market is going to go'' game because you will lose

instead use the freedom your broker has given you for your benefit and start trading

good ''luck'' all - hope you get there

.

.

.

trend is Your friend ... until it END !!!
but when it will end ? no one can tell You

Originally Posted by goldfingerchf

trend is Your friend ... until it END !!!
but when it will end ? no one can tell You

i can tell when a trend is probably at an end - i get stopped out

simple really