High accuracy Trading Forex Trends With Moving Averages and Trigger Indicator – It can be extremely difficult for new traders to finalize a trend trading strategy for trading the Forex market. However, the good news is that most trend based strategies can be broken down into three different components. Today we are going to review the basics of a trending market strategy by identifying the trend, planning an entry, and identifying an exit.
The first step to trend trading is to find the trend! There are many ways to identify the EURUSD trend pictured below, but one of easiest is through 10 MA high and low. If price is stair stepping upwards that means price closed above 10 MA high, and the trend is up. Conversely if price is stepping down below 10MA low this mean price is potentially declining in a downtrend.
Given the information above, traders should look for opportunities to buy the EURUSD in its current uptrend. Pictured below we can see the chart graphically creating higher highs. If the trend continues, expectations are that price will remain support and new highs will continue to be created.
- Price closed above 10MA high
- Blue Trend Triggers Indicator upward above 10 MA high
- Triger Indicator green above 0 line
- TrendTriger Mod ( Power Trigger) above blue line
- Price closed below 10MA low
- Red Trend Triggers Indicator downward below 10 MA low
- Triger Indicator red below 0 line
- TrendTriger Mod ( Power Trigger) below red line
When trading markets, there is always the potential to lose money. That’s why when trading trends, it is important to know that they will eventually come to an end. In an uptrend like the EURUSD, traders may place stops under the previously identified swing low (higher low). In the event that price breaks under this value, it may symbolize that at least temporarily the EURUSD trend may be ending. Traders can exit any positions at this point through the use of a Stop Order.
Knowing where to take profit is also an important part of any trend trading plan. Traders should look to avoid the “Traders Number One Mistake” by looking to make more in profits than what they risk in the event the trade moves against them. Using BUY and SELL rules above, if a 150 pip stop loss has been set under the swing low, traders will expect more in return in the event that they are right. If a 300 pip limit has been set, this would create an expectation of a 1:2 Risk/Reward ratio.