Forex Trend Follower System
I wait for a new trend to emerge & then take a position. I trade on the daily charts and sometimes stay in for 2-3 weeks depending how long the trend runs.
I identify a new trend using a combination of Bollinger Bands & Starc Bands (Stoller True Average). Allowances for retracements are required to stay in the trade. I have definite entry & exit strategies. I have been trading on this system for the last 3 years.
Firstly I am always in with at least 3 currency pairs at any one time. As I close positions, I may be opening new ones. Because of the long term nature of my trades pip spreads are not important to me so I look for new trend breaks amongst 17 odd currency pairs. I trade mini lots,so it is nothing to be in with multiple currency pairs. Also good for risk management as you dont have all your eggs in one basket.
False signals about 30 -40%. Because I look at so many currency pairs I can afford to be fussy so my hit rate is fairly high. I will only enter with the trend when all criteria is in place.
The RSI & STOCHASTICS are just nice to haves. Normally my stop loss is around 150 pips but tighten it to take me out when ready to exit. I use smaller time frames (30 mins) with the trend to find the entry to the market. The SMA & WMA I only use AS ONE OF THE INDICATORS when I want to exit. I use the Bollinger/Starc breakaway to enter a trade.
My exits are a little more complicated. I have about 3 different methods for exit. I normally take the first to appear or pull my stop up tight and let it run further if it wants to. The nice thing about trend trading, is that you don’t need to be at the computer all day long. 3 looks a day is enough.
Here is one of my exit strategies. When you enter a trade draw a yellow vertical & horizontal line as per attachment. When the Bollinger line comes round and intersects the horizontal line, exit and take profit or wait until the SMA & WMA cross at the bottom. There is another scenario I will explain after this.
Both my Bollinger intersect with the horizontal yellow line or the SMA/WMA cross will give you approx the same pip profit in this instance 700 odd pips.
However this is not a hard & fast rule. Here is my other exit strategy which might occur 1st. When the top Bollinger starts curving downwards the run is probably starting to slow down, but not always. Less profit available but profit is profit if you dont feel comfortable trading longer.