Trend power trading method

Trend is your friend, you probably heard that before and it’s true! Trend simply means price direction. And it’s not only safe and profitable to trade with the trend, but it’s also very logical.

Trading with the trend, means to buy when prices are going higher, and sell when price are falling. Sounds great, but it’s easier said than done. There are many reasons for that, here are few to keep in mind:

1 – Price moves in bullish-bearish waves, and sometimes it’s hard to tell if the current movement is only temporary impulse/correction move or it’s an actual trend.

2 – With all pairs available, and the global economical connection, sometimes the move for specific pair is just a reaction to a strong movement that happened in a different market or currency pair. This correlation between pairs could create sudden movements that doesn’t reflect the actual trend of the pair, and even go against it.

3 – Using poorly developed strategies could cause a lot of damage, not only to your money, but also to how you understand or translate price movement. And later on, when you start trading by yourself, you could still use wrong/false concepts.

4 – Relying 100% on indicators ( most of them are lagging indicators ) would train your mind not to accept the obvious and wait until you get a signal from indicators, even it’s totally wrong or false signal.

5 – Negative emotions could force you to believe what you want to believe and ignore what’s actually happening in the market. For example, trading to get-back the money you just lost in a bad trade, could cause force you to follow weak signs of trending movement, instead of waiting for further confirmations.

6 – It’s also very common with trend following, to enter the market exactly at the worst possible time, usually when price is high, to find out that right after this price started to reverse and once you see this reversal you would close the trade or your stop loss would close it for you. Unfortunately, while the trade is already closed, price will soon reverse back and move on like nothing happened. Entry point is the most important thing if you wish to follow the trend. you must completely understand when to start following that trend and when to wait.

Trend power strategy, is designed for trend following. And it’s developed in a special way that will keep you out of unnecessary risk and enjoy emotion-free trading, as possible.

Here are the tools/indicators that you’ll need:
1 – A.O indicator
2 – A.C indicator
3 – Alligator indicator ( settings : Jaw period = 200, shift = 8 Teeth period = 100, shift = 5 Lips period = 50 , shift = 3 ) apply to : Median Price HL/2. Here is how your chart should look like with all indicators attached on Metatrader 4 platform:

Trend power trading strategy

You don’t have to use Metatrader platform if it’s not supported by your broker. It can be used with any time frame and any currency pair. I personally suggest and recommend that you use it with 1 hour chart and higher time frames, and with major pairs only. And additionally, you can also use this strategy with any market. It’s specially designed for Forex trading, but it will work very successfully with any other market. Like stocks for example.

How it works?

The alligator indicator is there to visually show you the direction of major trend. It’s only valid when all lines are displayed correctly not mixed. Up Trend = 200 > 100 > 50 lines, Down trend = 50 > 100 > 200 lines. If the lines are mixed that means trend is weak and you shouldn’t trade this pair at this time.

A.O and A.C indicators are used to catch the right time for entry and exists. When both indicators show the same bar color ( above or below 0 line ) that means we have a valid entry signal. Please keep in mind that we’re following the trend. That means we only look for entry signals that goes with current trend’s direction as suggested by alligator indicator.

And we close the trend when we get any sign of reversal from A.O or A.C indicators or both at the same time. Example...

Trend power trading strategy

Strategy confirmations

The strategy as explained above, is complete and works perfectly. But it’s always a good idea to add any additional confirmation signals/tools/rules that you prefer. Here I will suggest some of the most powerful confirmation rules that you can easily copy.

1 – For Entry signals, you can use pin bars and inside bars. This will allow you to add price action analysis to the strategy and only open trades when the market reflects what the indicators are recommending. Pin bars and inside bars are what I suggest and personally use. But please free to add any other candlesticks formations/patterns that you prefer.

2 – Check multiple time frames. Trading multiple time frames is a very effective technique when it comes to trading any market, especially Forex market. And it doesn’t have to be as difficult as many would believe. Simply use the same strategy and check the signals provided by those different time frames. Trade only when you get the same signal – buy/sell – from all used time frames. Personally I trade with 2 time frames only. My main time frame is 4 hours and I use daily chart for confirmation.

3 – Check correlated pairs. For example, EUR/USD and USD/CHF usually move in opposite directions. If you’re trading EUR/USD, you can only open a trade when your strategy – used with USD/CHF, same time frame – is suggesting an opposite signal.

4 – Use major support and resistance levels as best entry and exist points and wait for confirmation from A.O and A.C indicators. Please note that this strategy is designed based on pure technical analysis methods. I don’t recommend that you use it for trading news. In fact, I recommend that you check your economical news calendar before you start trading to avoid any unnecessary risks.

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