Forex Trend Following Strategies: Riding Profitable Trends In Singapore

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Forex Trend Following Strategies: Riding Profitable Trends In Singapore – Often, traders write off indicators as lagging and often declare that price action is king. While this carries a certain degree of truth, we also cannot discount the fact that some indicators allow traders to better understand the markets instead of just judging things by their eye

This article is not intended to discuss or debate the superiority of any of the indicators or price action, but rather to show how some indicators support price action in a visual way.

Forex Trend Following Strategies: Riding Profitable Trends In Singapore

Forex Trend Following Strategies: Riding Profitable Trends In Singapore

In my mind, one indicator stands out in this regard – the Donchian Channel. This indicator that comes with the standard MT4 application is a hidden gem that many traders overlook. However, if carefully studied and observed, this indicator may just help some traders find their advantage.

Trend Trading Strategy Review

Richard Donchian, known as the father of trend following, was a prominent figure in the trading world in the mid-1900’s. In those days, currency markets still did not exist, the technology was not yet available to allow fast and powerful computing, and trading with computers was still an unthinkable distant future. Because of this situation, Richard Donchian, who wanted to create something to make his trading easier, had to settle for something very simple. This simplicity is what I believe is the power behind the Donchian Channel.

So, what is the Donchian Channel? It is simply an indicator made of 3 bands that indicate the high, low, and its average for the past 20 periods. Below is a picture of what it looks like.

With just these 3 simple lines, one that could be calculated in a time before computers, a lot can be gleaned from this simple indicator.

This indicator, by plotting the highest and lowest lows allows traders to see how far the price can travel, which is usually volatility. Many professional traders know very well that without volatility they cannot make money. The Donchian Channel provides this information by showing whether a market has the capacity to be volatile.

Trend Following Shooting Star Forex Strategy

The Donchian Channel, also by plotting the highest highs and lowest lows in effect places the range over the past 20 periods. This may not be very useful for long-term traders, but it may be of value to short-term traders. However, MT4 also allows tweaking of this indicator, allowing traders to change the number of periods on which it should be based on highs and lows.

The Donchian Channel also shows how the market contracts and expands. Periods in which the Donchian Channel narrows will be considered contraction periods, while periods in which the Donchian Channel widens significantly will be considered expansion periods. This is a very important piece of information because rapid price movements often occur after periods of contraction.

Perhaps the most important information one can get from this indicator is the direction of the trend, and not only does it indicate the trend, but it is based on price action. Some price action traders may argue that this is not how price action is read. However, let me first explain why I see this as coming from price action. One of the ways to identify a trend using price action is to use higher-highs and lower-lows or vice versa. Charts that show higher highs and higher lows are considered bullish trending charts while charts that show lower-highs and lower-lows are considered bearish trending charts. Since the Donchian Channel is based on the highest highs and lowest lows for the past 20-period, it actually shows whether a chart is trending or not. In the example above, you can see how the price creates lines that go up on the chart indicating that this is a bullish trending chart.

Forex Trend Following Strategies: Riding Profitable Trends In Singapore

There are many ways to trade with the Donchian Channel, however I will discuss one of the most basic ways to trade it.

What’s The Best Time To Trade Forex?

First, we must visually determine the trend whether it is a bullish or bearish trending chart or clearly a ranging chart with no trend. For seasoned traders this is easy to determine, but for some beginning traders, it can be difficult. To give us a clue, we can look to see if the long horizontal lines below continue to rise, or at least the latest horizontal green line is still above the main horizontal green line. This will be a bullish trending chart. On the other hand, if the chart has highs, represented by horizontal red lines, that are falling and falling, it is considered a bearish trending chart.

What if the chart shows a horizontal green line higher than the recent horizontal green line, but also has a horizontal red line lower than the recent horizontal red line? This is not so much a concern as it presents an opportunity. This area is considered a market contraction. We can expect the next stage in an expansion, which could be a continuation of the trend.

Of course, we don’t enter the market mindlessly after identifying the trend. In theory we could, but that wouldn’t be the most profitable route. So how can we identify signs of trend continuation?

After the price dives back below the middle blue line during the contraction phase, we need to wait for a candle to close back above it. It should not be any candle, but it should be a large long candle indicating that there is a force behind the move in direction.

Trend Trading System

Zoomed in, this candle right here with the arrow below is an example of a good entry candle. It broke and closed above the blue line and a long large candle.

This strategy can be a very profitable strategy if done properly. The sample trade above would have gained 90 pips on the 1-hour chart. This shows the potential of the Donchian Channel as an indicator that can be seen to help traders create trend riding strategies.

However, this strategy is not the answer to every trade we make. As stated earlier, this is a strategy of riding the trend. This certainly won’t work in a volatile market or a market reversal. Also, there can be some false signals if we are not careful in assessing the breakout candles. This is why it is important to determine whether the candle has a force behind it or not. One tool that can be useful is volume. Candles with high volume usually have a force behind them.

Forex Trend Following Strategies: Riding Profitable Trends In Singapore

This strategy serves as a framework upon which you can build more with other strategies and filters, as well as stop loss and trade management strategies.

Trend Trading: Strategies, Indicators And Examples

Basic Donchian Channel Trend Riding Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.

The Basic Donchian Channel Trend Riding Forex Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics that are invisible to the eye.

*Note: Not all forex strategies come with mq4/ex4 files. Some templates are already integrated with MT4 Indicators from the MetaTrader Platform.

Is a compilation of forex strategies, systems, mt4 indicators, mt5 indicators, technical analysis and fundamental analysis in forex trading. You can also find systems for scalping such as trends, reversals, price actions. Trading in lower timeframe like 1 minute to long term trading is also provided here. We aim to be a place where every forex trader can get resources about trading. Trend-following trading is probably the most popular way for traders to generate trading signals. Traders expect that by using a trend-following trading approach they will be able to realize larger winning trades by capturing long-term trending movements. In this article, I introduce five common and powerful ways to find trend-following trading opportunities and teach you various chart studies to enhance your understanding of trend-following trading all in all. What is Trend Follow As the name suggests, using the trend-following trading approach, traders must first identify an existing trending market and then look for profitable trading opportunities when the trend continues. The first challenge, therefore, is to identify a trending market, and here traders can use different trading tools and concepts that we have explored in another article: identify the direction of the trend The benefit of trend-following trading is when a trader catches a long-term trending move, the potential profit can be enormous. Another important aspect of trend-following trading is that traders must realize that as a trend-following trader, you will not be able to capture the entire trending move. Because trend following traders must wait for a trend to establish first, by definition, they cannot capture the early part of a trend. Especially new and inexperienced traders make the mistake of trying to predict when a new trend will appear before there are actual signs that a trend is present. This predictive mindset can be dangerous because the trader is tempted to take trades too early and then realize unnecessary losses. Waiting for a trend to emerge and being patient are important skills that trend following traders must develop. But now we get into the practical part of this article and

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