Want to learn how to implement trend following strategies? Then take our free forex trading course! Bollinger bands were invented by John Bollinger. They are a highly useful indicator to have on your charts. Bollinger bands assume that prices will bounce back, like an elastic band. Essentially what they do is show the highest and lowest points the price of an instrument reaches. They can be used in uptrends , downtrends and even in ranging markets.

If the bands are very far away from the current price, it can indicate that the market is very volatile. If they are very close to the current price, it means the opposite. Many traders , particularly beginners, should be advised to keep away from either of those two. You can use Bollinger bands as part of your trend trading strategy by buying when the price reaches the lower band and selling when the price hits the upper band.

You can read more about Bollinger bands here. Moving averages are an excellent way to see the underlying trend behind an instrument and can be viewed on most charts. There are many different moving averages , though many trend traders choose to use a slow moving average. They are a great way to focus on the real price and direction of a trend and can help traders avoid mistaking temporary changes in price for trends.

You can use moving averages in your trend trading strategy by buying when the current price dips below the moving average and then selling when the current price meets the moving average or peaks above it. An important thing to remember about moving averages is that they cannot highlight if a trend will end or not. They can only show you past movements. So you cannot solely rely on them. They can be made when you apply a channel pattern over them more on channel patterns below.

The lower part of the movement represents the flag pole and the channel lines represent the flag itself. When they appear, they symbolise that a trend was momentarily interrupted. In a bull flag, the market is on the rise. In a bear flag, the market is on the decline.

You can incorporate bull and bear flags to your trend trading strategy by entering the market and getting and riding a trend.

Many different types of triangle patterns and some people refer to them as wedge patterns. Typically, what happens with a triangle pattern is the price gets narrower and narrower and then eventually breaks out into an uptrend or a downtrend. Here are a few common triangle patterns you can look into:. For example, if the length of the triangle is 50 pips, aim to buy or sell when the price reaches 50 pips after breaking.

Relative strength index or RSI, is an oscillator indicator and has been around since the s and is very popular. Typically, what will happen is when the price of an instrument reaches overbought levels, a trend will reverse and prices will start to decline. The opposite is true when the price reaches underbought levels; it will start to increase in price.

To use this indicator properly, it is best to stick to daily or larger charts otherwise you may receive too many signals to buy or sell. RSI can also show if a trend is about to end too. This can act as a signal to sell before the downtrend starts.

Like all indicators and patterns in trading , you cannot solely rely upon it. This is especially true if big news breaks out and the price of the instrument takes a dive down or soars up. The head and shoulders pattern is very common and symbolises that a trend has come to an end and a new one has emerged. They also work upside down as well. They are called head and shoulders because the shape they make looks like a persons head and shoulders as you could probably guess!

The shoulders represent either two high or two low points with the head being the highest or lowest price the instrument reached. In the upright position, when this pattern emerges, it means an uptrend has come to an end and a downtrend will now begin. If you have a position open, now is the time to close it. When upside down, a downtrend has finished and an uptrend has emerged. This is a perfect opportunity to buy. Channel patterns are highly useful and can be used in uptrends , downtrends and in ranging markets.

They are made with the channel pattern tool on your charting software and used to pinpoint highs and lows in market price. You can use them in your trend trading strategy by selling when they reach higher points and buying when they reach the lower points while a trend is in motion.

Much in the same way as Bollinger bands, mentioned above. Be warned though, it can be hard to spot when a trend ends. When this happens, you need to redraw your channel pattern. Make sure you look out for break out moments to avoid this happening. They can also be difficult to apply in highly volatile markets. The average true range, often abbreviated to ATR, is an indicator that measures volatility in market price. Keep in mind though that the ATR indicator does not tell you the direction of the trend.

If the price starts getting closer or even ranging, the ATR goes down. If a bear or bull market emerges, ATR rises. It does not distinguish between a bull or bear market. You can use ATR in your strategy by following this basic rule; high volatility usually follows low volatility and vice versa.

With that in mind, if a market instrument reaches historically low volatility, it could mean that if that trend breaks, a big break out may follow. If that happens and the price is going up, it can be a sign to buy as it means the price will likely increase.

Another example of a trend strategy that works both ways and symbolises a trend has ended and a new one has begun. If a double top appears, it means an uptrend has come to an end and downtrend has started.

It is characterised by two peaks in price. Typically, the second peak will be smaller. When a double top has taken place, it is a sign that you should sell as the price will only get lower. The reverse is true of double bottoms. They are characterised by two dips in price with the second one typically being a little higher than the first.

When double bottoms take place, you should see it as a sign to buy as the price will likely get higher. Another thing worth mentioning is that there is also a phenomenon called triple tops and triple bottoms too. The manager has to decide how much risk to accept, which markets to play, and how aggressively to increase and decrease the trading base as a function of equity change.

These decisions are quite important—often more important than trade timing. Discretionary trading has lesser defined rules that decide the entry, exit, risk management, and trade management. Although discretionary trading is more subjective, it is still guided by a trading plan. You must risk a fraction of your equity on each trade to survive the inherent drawdowns.

To be honest, the strategy is least of your concern. Instead, you should focus on your risk management, markets universe and trading consistency. There's no single best trend following strategy out there that's gonna make you a millionaire overnight. So please do your homework and verify everything. Past performance is not an indication of future performance. Please do your own due diligence before risking your hard-earned money. Click on the link below and enter your email to get access to The Ultimate Guide to Trend Following.

Thank for sharing this, you dont know how much it meant to someone like me…thank you very much. Very nice article. What timeframe is suitable to this Trend Following strategy? You suggested that you should be across the many different markets to capture trends everywhere. Just a small query , In the above example of Andreas Clenow system where will be the Stop Loss?

How can we get the 50 day High? Is these an indicator? Can you pls let me know the name of the particular indicator usually available in MT4? Thanks for the wonderful blog post. One question, how do you decide whether to keep 2 ATR as SL or 3 ATR? Is it based on the back test of that particular market to see what fits this type of market and so may be different for different markets , or are there any other trading rules applicable?

Hi Rayner Is averaging is really bad?. When you cant identify a single price point how about trading mini lots in many price points? Thank you very much for your articles and knowledge you provide, they have been very useful. g 20 ema as a minor pullback and continues with the trend? Hi rayner, great post, thanks for sharing! Anyway, would you please suggest the time horizon to analyze market on each time frame especially for 1H, 4H, and 1D?

I mean, if you -for example- trade in 1D, how many days in the chart would you use to analyze the pattern? please send me this pdf file at afeefdse gmail.

Iv Improved so much as a trader from last 5 years following ur tips excellent, I guess your always student for life always learning something new. Does these Trend Following Strategies work on smaller timeframes as well like 5min, 15min, 1hr or should I only trade the daily timeframe?

big fan! Already am with UST. For example, buying strength in the stock markets which could translate to something similar with options trading. Good day Rayner. thanks for this tutorial. Pls what are best parameterS for setting ma and 20ma. Thanks a lot…I have seen the ULTIMATE GUIDE TREND FOLLOWING. Thanks once more………you are my Facilitator…….. in my Trading journey. It must to become a psichological constitusion in trading. Hi Rayner…you are a great teacher.

You advise us to increase the markets that we trade. spread on Platinum and Palladium? Or you just regard it as cost of doing business? For CFDs, yes it can be high. Or you can trade the futures directly which is much cheaper but requires more capital.

how come you do not mention a video on trend trading. I do not see you mentioning the video that would be included in Trend Trading. Hey rayner…I love your youtube videos and your books. I really appreciate your willingness to share these ideas. just wanna ask you a question, why hold not more than 20stocks for trend following? is it because to track the performance or that holding of 20 stocks will offer and edge in the markets?

Infact Rayner you are just incredible, you are so receptive, willing to help and teach traders increase in thier profits, and trading system, which makes u phenomenon, and ever since I have been following you, oh my goodness, I have improved rapidly. Thanks for your good heart, more money,more knowledge for you. Thanks for the well organized series of videos and lectures. Very informative. You mentioned about 50 week high stocks but how do you find these as most stock screeners give only 52 week high stocks?

Please log in again. The login page will open in a new tab. After logging in you can close it and return to this page. Trend Following Trading Strategy Guide. And do you know what is their trading approach? Trend Following. What is Trend Following? The reason is simple. Markets are driven by emotions, greed, and fear. Kaminski validates that Trend Following thrives during crisis periods Following the trend by Andreas Clenow explains how hedge funds and professional traders have been consistently outperforming traditional investment strategies Now, forget about finding the "holy grail" or the ultimate best trend following strategy, instead pick up the principles and concepts to make your own strategy.

Would you buy it? A lot. Because your attitude towards buying apples is brought over to your trading endeavor. Secret 2: Just follow price You want to be right. It feels good to know you called the tops and bottoms in the market. The best thing you can do as a trader is, just follow price. It depends. You need a winning system with proper risk management.

And not forgetting… The recovery from the risk of ruin is not linear, it could be impossible to recover if it goes too deep. So, how much should you risk exactly? This results in a low winning rate but, high reward to risk. Secret 5: Trade all markets to increase your odds of capturing trends Markets spend more time ranging than trending.

Imagine this: A company called Orange has been trading higher over the last 6 months. What do you think will happen? I would lose often but, all I need is one trade to make it all back, and more. And this is the same trade that caused you to blow up your account. A few examples in real life: Fall of Long Term Capital Management Destruction of Bear Stearns The financial crisis These events caused investors and traders to lose tons of money.

And the winner happens to be Trend Followers. This is our edge. Different approaches to Trend Following Trend Following can be further divided into 2 different approaches.

Systematic trading Discretionary trading Systematic trading Systematic trading has defined rules that decide the entry, exit, risk management, and trade management. This approach is widely adopted by big hedge funds like Dunn, Winton, and MAN AHL. Decisions like… How much to risk What markets to trade The manager has to decide how much risk to accept, which markets to play, and how aggressively to increase and decrease the trading base as a function of equity change.

This approach is widely adopted by smaller individual traders.

Forex trend trading strategies are when a forex trader will look to buy or sell currency pairs when price is clearly moving in a particular direction. The forex market can be analyzed for up trends and down trends by using technical indicators such as the moving average and Parabolic SAR. Other indicators such as the ADX and MACD can be used to gauge the strength of a trend.

Oscillators such as the CCI and Stochastics can be used to identify pullbacks into the trend for possible entry positions. Forex currency pairs can develop trends on multiple chart time frames. There can be trends on the 1-minute chart all the way through to the 1-day and yearly charts.

The higher the time frame, the more likely the trend is being watched by more traders, including some of the big players such as banks and funds. I tend to find that the lower chart time frames can contain too much noise and therefore presents too many false trend trading signals. Forex trend traders will often lock in trades at break even once it has moved in their favor and utilize a trailing stop to try and maximize the possibilities.

Some will even close part of their position to bag some pips whereas others may scale up on trades once in an established trend. This makes forex trend trading a flexible strategy which can be adapted to individual trader needs. With so many currency pairs to choose from and multiple chart time frames, there is always the possibility to look for trend trading opportunities.

This is great for those who do not have much time to dedicate to trading. Not only do trends frequently appear on currency pairs, but they can be found on any other trading instrument including stocks, commodities and cryptocurrencies. You can even set alerts via email or SMS to send you notifications when a trend trading signal has appeared according to your trend trading strategy. Alerts will save you from having to constantly stare at the charts all day waiting for trends to form.

This could for example be when two moving averages cross. When a day moving average cross above or below a day moving average, this is known as a golden cross. It can identify the start of a long-term trend. Trend trading strategies can be very easy to implement once you know how to spot trends. There are plenty of technical indicators built into online trading platforms that can help you to easily identify market trends.

The important part will be timing your trade entry into the trend and using sensible money management. Trend trading strategies can be used for short and long-term trading. They can often lead to trade setups that catch big moves with favorable risk to reward ratios due to the momentum market trends can gather.

Fundamental factors can work in favor of trend trading strategies. If there is a major news release that occurs during a trend, this can increase the momentum and give traders the opportunity to catch some big moves.

Also, if a currency pair is trending, it can show the strength or weakness of the underlying currencies which can be confirmed by checking other charts with the same currencies.

As they are usually targeting more than just a few pips, trend trading strategies can be less susceptible to forex broker spreads and slippage. Forex trend trading strategies can perform poorly if traders are not identifying significant enough market trends. I have often seen beginner traders using lower chart time frames and trying to spot trends that do not have enough importance in the overall bigger picture. You will often find that a trend on one-time frame can be contradictory to a trend on another time frame.

Therefore, I would always verify a trend is relevant across as many time frames as possible, especially the higher chart time frames which I find can have more importance over the mid-long term. These trends can be watched by more market participants which gives them a greater emphasis. A forex trend trading strategy is unlikely to perform well without additional analysis on other factors such as support and resistance , fundamentals and price action. For that reason, the success rate can depend on much more than simply spotting a market trend.

I would combine all types of market analysis with a forex trend trading strategy to filter signals. If the trend trader is not using sensible money management and does not plan stop losses effectively, a trend trading strategy can cause them to be whipsawed in and out of the market. It is important to realize that not every single trend trade will come to fruition and there will be losses which is a completely normal part of trading any forex strategy.

If for instance, the stop loss is placed just below the moving average for a buy trade or just above the moving average on a sell trade, there is a chance that the trade is taken out prematurely multiple times if the market goes through a consolidation period. I would look to place my stops on a previous high or low and give the trend a chance to prove itself. Furthermore, I would only take trend trades that give a favorable risk to reward ratio of at least so that one losing trade does not wipe out multiple winners.

There are thousands of forex trend trading strategies that you can find online. You can also use the technical indicators built into trading platforms to create your own trend trading strategy template that suits your individual trading style. The primary concept of breakout trading is to spot if there is a market trend and the trend direction. You will then look to enter the market in the direction of the trend by timing your entry.

This forex trend trading strategy looks to enter a trend when price makes a pull back against the trend direction before continuing in the original direction. An oversold market during a pullback in an uptrend could suggest soon price will soon continue to increase. Another popular way to trend trade is to use a breakout trading strategy to enter in the direction of the trend when there is a breakout of important price levels.

You can mark important prices for possible breakouts using support and resistance lines, pivot points and Fibonacci levels. One key thing about breakout price levels is that many big players use them so the levels can have added impetus. This is one of the toughest trend trading strategies in my opinion but it can also be the most lucrative when successful. The primary idea behind a new trend trading strategy is to enter just as a trend starts forming.

Whilst this can mean that you by low and sell high, it can also mean that there are multiple losses incurred whilst trying to find the start of a trend. I would personally wait at least for one trend correction before considering a trend trading position.

Forex trend trading strategies are very popular and flexible to suit all different trading styles. Finding trends on charts is the easiest part. The key to success with a trend trading strategy will most likely be timing your entry into the trend and your money management. Of course as with any trading strategy, it will be important to have a good trading plan and trading discipline with your emotions under control. If you are looking to trade forex online, you will need an account with a forex broker.

If you are looking for some inspiration, please feel free to browse my best forex brokers. I have spent many years testing and reviewing forex brokers. IC Markets are my top choice as I find they have tight spreads, low commission fees, quick execution speeds and excellent customer support. Self-confessed Forex Geek spending my days researching and testing everything forex related. I have many years of experience in the forex industry having reviewed thousands of forex robots, brokers, strategies, courses and more.

I share my knowledge with you for free to help you learn more about the crazy world of forex trading! Read more about me. Skip to content Forex Brokers Forex Courses Forex Robots Forex Signals Forex Systems Forex Tools Forex Trading. Forex Brokers Forex Courses Forex Robots Forex Signals Forex Systems Forex Tools Forex Trading.

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Help center Contact us. This article will provide traders with a detailed explanation of what Harmonic Trading Patterns are, how harmonic trading patterns are used in currency markets, as well as, exploring market harmonics, harmonic ratios, and much more! Some even say that you can make a living off just one pattern, that is if you know how to use it. The indicator period is 16, the offset is 2. I really appreciate your willingness to share these ideas. If you do not use a trailing stop and monitor each candle, you could make a profit of at least points from all three trades.

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