Honestly! Best Trend Trading Strategy For Capturing An Insane Amount Of Pips

The title is a bit catchy and that’s why you’ve ended up here just starting to read this, have you? If you have, that’s awesome because what I am about to show you can change the way you trade forex and in fact the trend trading strategy and technique that I am going to show you here has the potential to increase your forex trading account fast when done properly(with risk management).

By the way, you may also be interested in reading these:

What you will be doing with this trend trading strategy is determining the trend and entering multiple trades in the direction of that prevailing trend.

The only thing if you can promise me is that…

  • you’ve got to hang on and don’t bail out too quickly and take your little profits and run when the trend has not ended yet!
  • At the end of this post, I will give you a very simple method that will allow you do do just that!

This is one of the best trend trading strategy that really simple and you can use it in all timeframes and even use it as a forex scalping system.

Here’s the secret to this trend trading strategy:

“Wait for Pullbacks And Then Enter A Trade On Each Pullback In The Direction Of The Trend”

In order to do that you need 3 steps…no…actually 4!

 

4 STEPS YOU NEED

  1. How To determine trend direction
  2. Know what a pullback is and how to spot one happening
  3. What sell(or buy) signal to look for to tell you that pullback is going to end to allow you to take a trade &
  4. How to Exit A Trade

Refer to this chart and examples of trades for the detailed explanations that will be given below. You need to read them.

Best Trend Trading Strategy

 

STEP 1: HOW TO DETERMINE TREND DIRECTION

This is fairly easy. You need two moving averages to crossover and that signals and determines the trend direction. The type of moving averages you use does not really matter.  It can be an SMA (simple moving average) or it can be and exponential moving average (EMA). You just need two of each to make this work.

Use the following moving averages combination can be used:

  • 9 ema & 18em (or they can be SMA’s)
  • 7ema & 14 ema
  • 25ema and 50ema

The smaller moving average is the faster one and the larger moving average is the slower one. So when (for example) the 9ema crosses the 18ema and goes down, you should know that its a downtrend signals. If 9ema crosses 18ema and goes above it, its an  uptrend signal.

 

STEP 2: WHAT IS A PULLBACK AND HOW TO SPOT ONE?

This is a simple definition of a price pullback : a pullback is when price after escaping away from the two moving averages for some time eventually comes back to it …

And when it comes back to it, it is anticipated that those two moving averages will act as resistance (if this was a downtrend) or support if this was an uptrend so when price hits them, it will bounce away from them in the direction of the trend.

Here’s another way to define pullback: a pullback is a minor/temporary trend in opposite to the main trend. This means if the main trend is downward, then even during this downward trend, price will make minor rallies upward only to get pushed back down to continue in the main (original) downward trend.

So how do you spot a pullback? Well, the answers have been given above:

  1. Two moving averages cross and price goes completely away from them for some time.
  2. You start to see a pullback happening when price starts coming back to the two moving average lines and eventually touches them.

So that’s what you look for!

 

STEP 3: WHAT IS THE SELL OR BUY SIGNAL TO LOOK FOR?

This is also so freakishly simple: you look for price action signals.

By that I mean:

  1. if the trend is down and price makes a pullback to to the moving averages and touches them then you look for bearish reversal candlestick patterns.
  2. if the trend is up and price makes a pullback then you look for bullish reversal candlestick patterns.

Click this link for 10 powerful reversal candlestick patterns.

 

STEP 4: HOW TO EXIT A TRADE

The most important part of this strategy is how to exit.

Remember…you are entering multiple trades in the prevailing trend direction.

So what that means is at the most you may have anything from 3-10 active trades running! Now, how are you going to manage the placement of stop loss for each of these trades?

Well, let me give an example of a short trade in a downtrend market:

  1. in your first trade will be on the first pullback after the moving average cross over. Your stop loss should be placed just above the recent lower swing high (peak) if its not more than 30 pips away. If no nearby lower swing high is there, then place stop loss at 30 pips from the high of the bearish reversal candlestick pattern.
  2. your second trade will be taken on the 2nd pullback and use the same strategy as above for your stop loss placement. Now here’s the critical thing: move the stop loss of the first trade down to where you placed the stop loss of the 2nd trade. This means that if your first trade is in profit, moving its stop loss down to the stop loss level of the 2nd trade either makes your first trade breakeven, or it would have some profits locked or its stop loss distance is reduced thus reducing the risk on that first trade. What this means is that you are not increasing your risk by taking the 2nd trade because you’ve already moved the stop loss of the first trade…Understand now? Good!
  3. your third trade will be taken on the 3rd pullback. Now use the same techniques as above for stop loss placement on this 3rd trade. Now you will have to move the stop losses for the first trade and the second trade down and place them in the level where the stop loss for trade 3 was placed. This means if trade 3 was taken way below trade 2 then that means trade 2 would be profitable  including trade 1. So moving trade 1 and 2 stop losses means that you you have locked in profits for trade 1 and 2  and if trade 3 goes profitable, you will continue to repeat the process for each subsequent pullbacks that happen.
  4. So eventually all your trades will get stopped out.

And guess what? Now would be the time to get your calculator and count your profitable pips you’ve made in that trendy downward move.

 

BUY SETUP RULES

What I’ve described above is for a short trade (downtrend) situation. You just do the opposite for an uptrend situation:

  • moving average crossover to the upside indicates uptrend.
  • price breaks away completely from the moving averages and shoots away-upwards.
  • eventually it comes back down to touch the moving average lines (it can only touch one or touch both…it does not really matter, as long as price touches at least one).
  • the first pullback is your first buy trade setup and you should watch for a bullish reversal candlestick to enter a long trade. Best option is to place a buy stop order 2-3 pips above the high of that bullish candlestick anticipating a breakout of the high.
  • place stop below the nearest higher swing low if its not more than 30 pips away from the low of the bullish candlestick. If its more, just use a 30 pips stop loss. This 30 pip stop loss is preferred for a 4hr chart.
  • at each pullback, you continue to place more trades, adding to your already existing open positions.

 

Best Trading Strategy

WHY THIS FOREX TRADING STRATEGY MAY NOT BE THE HOLY GRAIL BUT CAN INCREASE YOUR TRADING ACCOUNT FAST

  • every time you enter a new trade, your risk is on that one single trade is the average the risk of only one trade…even though you may have 10 open trades. For example, you have opened a 10th trade on the 10th pullback, and you have moved all your stop losses for the previous 9 open trades down to the stop loss level of the 10th trade you just place. This means that there’s absolutely no risk at all on previous 9 trades except the 10 trade you just place. So your trading risk is just for one trade. All the 9 trades you have are all in profit! How good is that?
  • in a solid trending market, this trend trading strategy will honestly bag you hundreds to thousands of pips very easily with only one trendy move!
  • Best Time frames to use are the 1hr and the 4hr chart. This is where the most money is made. There is so much “noise” in the smaller timeframe charts.
  • The risk to reward of this trend trading strategy is really good. Every trade you enter has the potential to earn your more than 3 times what you risked initially.
  • you do not restrict your profits by using a “take profit” target level in your trade…what you are doing is riding the trend most of the way up or down and allowing the market to take you out. This is a faster way to increase profits and therefore increase your trading account fast because you are not limiting your profits but allowing them to run and adding more positions along the way with very little risk to each new trade that you place.

 

REMEMBER WHAT I SAID IN THE BEGINNING OF THIS POST?

I said in order for you to be successful with this amazing strategy is not to bail out to soon and take your small profits and run. I promised you that I would give you simple effective technique to help you avoid doing that and here it is:

  • when you see a trade, place it and let the market do its job and get away from your computer.

If you are have taken a trade based on a 4hr chart and you are sitting down there in front of your computer, what are you going to achieve?

Nothing!

If you sit there, you start to see those little price fluctuations and start to see your floating losses and you may exit too early only to realize that as soon as you exit with a loss, price moves in the direction of your trade or you see a nice floating profit and then you see that price is heading in the oposite direction and starts to eat the profits and you can’t stand it anymore so you close out your trade with a little profit…thinking you’ve made the right choice only to realize an hour later that the market has moved massively on the original direction of the trade.

So best option? You know the risk that you will take on a trade, place that trade and walk away! If the stop loss gets hit so what?  That’s was what the risk you were willing to take so what? Or if the floating profits start to get smaller so what? You stop loss is not yet hit…the market can turn and go in the direction of your trade…

 

CONCLUSION

I’m must admit, I’m not a real fan of trading with moving averages and don’t use moving averages as part of my trading strategy because I trade 100% price action.

But if you are one of those forex traders that like trading moving averages, then let me tell you that this trading strategy has great potential. In my opinion, the real secret to taking high probability trades with such a trend trading system is by using reversal candlestick patterns. This will allow you to get into a trade at just about the right time before the market moves the other way.

Can I ask you for just 10 seconds of your time? I would appreciate you can click any one of the buttons below to tweet, share, G+ facebook like/share etc?  Advance Thanks for doing that. I hoped you’ve enjoyed reading about this forex trading technique that can increase your trading account fast 🙂

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6 Responses to “Honestly! Best Trend Trading Strategy For Capturing An Insane Amount Of Pips”

  1. Carlos says:

    Hello i absolutely love your website. I have used one of your basic Forex strategies the 200 EMA one which has been very profitable.I would like to start using this one because it looks like it could give me better returns on my risk but after reading this and going over the charts im still not a hundred percent sure how to fully get the best out of this strategy.

    I would extremely thankful if you could redo this article or just tell me how i can get better entries using this and etc..

  2. kevin says:

    Have you ever personally used this system and would you recommend it

  3. Mangi Madang says:

    Hi Kevin,

    I’ve used this system in the past with good results, so in terms of recommending it, yes, I’d say go for it.
    I am no longer using it anymore as I am now using only price action trading. The reason why I left it? My trading personality is not suited to this method.

    Cheers

    Mangi Madang

  4. kevin says:

    Thanks for the response,i must agree that price action methods are the best from what i have seen and experienced. One last question , don’t mean to bother you , is there anything that you would recommend to improve this system and what markets does it performs best in e.g equity index’s commodities or currency pairs.

    Thank you

    Kevin Sanger

  5. Mangi Madang says:

    Hi Kevin,

    there are couple of ideas I have in my mind that I think could make this a better system. These are ideas only that need to be tested and should not be taken as recommendations. (If I knew how to code trading systems, that would be so awesome to verify if my ideas are good or bad…anyway,this is not about that).

    (1) Personally, I’d stick with forex market due to the huge liquidity of the fx market as well that fact that it opens for 24hrs a day. I never have traded commodities and have very little trading exposure to the equities market so I cant say anything on that.
    (2) ideas to improve the system? These are the few I have in mind:
    -use price action for entry confirmation
    -work this system in conjunction with support and resistance levels/fib levels.
    -you should also know the structure of how trends form/trends end and use that knowledge in conjunction with this trading system.
    -chose only a few currency pairs that have good trending characteristics and use this system on them.
    -try trading only certain trading sessions (maybe London & US trading session only) and avoid trading on the Asian trading session
    -timeframes? What timeframes are the best to trade? 1hr, 4hr or daily? I’d say go with the 1hr & 4hr but its really up the you what timeframe you want to use.

    Regards

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