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A Basic Trend Following Strategy

 
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mmidave55

A Basic Trend Following Strategy

This is my very basic FX trend following strategy. This has worked for me, and I believe the simplist strategies are the best.

1.) Identify a market that is trending on a Daily, Weekly, or longer timeframe. The stronger the trend the better.

2) Enter the market with a very generous stop in the direction of the trend. I look to enter as many strong trends at once as possible to diversify the portfolio. If you have access to commercial trader reports such as "commitments of traders" (cotbase.com) this can help show the difference between commercial and retail traders in these trends.

3) Exit the position when a complete reversal is identified on the same long term charts (Daily, Weekly, etc). The stop needs to be far enough from being stopped out by daily or weekly level chop so only a decisive reversal causes the stop out. I would consider stopping out if I am negative 150 pips or more if the chart appears that the trend has ended.

4) The key is to ride the trend and let the chop keep you in the position until reversal. You might consider taking profits when you get to 300 pips or more, but the ultimate goal is to ride that trend for as long as it will go.

Fri, 06/22/2018 - 2:26am