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I’ve been testing a trend trading strategy for the past few days and the results from my forward tests have been very nice indeed.
And seeing these results, I’ve come to the realization that the trend is your best friend.
The strategy is actually simple, I analyse and identify the trend of the day and I just place a trade in the direction of the trend.
Here’s an example of a forward test of a perfect entry in the direction of the trend at the time…
When it comes to identifying and determining the trend, I visually look at the chart of the price movement of the day, for me smaller time frames such as the 30-minute time frame shows me plenty of indication of the current trend of the day.
In addition, as additional confluence, I also use the ema 200 to see if the price action is trending upwards or downwards, up if the price is above 200 ema, and down if the price is below 200 ema.
Next, you can refer to a shorter time frame, such as 1-15 minute time to get in after a pullback using any of the bullish or bearish candlestick patterns.
I personally look at market structures, such as change of characters, and break of structures and determine my entries.
As long as you can determine the trend in the overall right direction, even with the pullbacks, you can have more wins that losing days.
This is purely from my experience of the recent testing I’ve been doing. I don’t all the time, but the success rate is higher than the losing rate.
To sum it up, the trend is your best friend, simply because it’s going to give you the monies and profits. 🙂