Trendline trading strategies
August 23, by wpengine 8 Comments. The Trend Breaker Strategy. I have developed a new Trend Breaker Strategy that simple and yet easy to understand. Trendline Trend Breaker strategy also uses three different time frames. They are the 4 hourthe 1 hourand 15 minute time frames. This top-down approach uses these time frames to identify a trend, find a breakout point, determine an entry point, and execute the trade. The first thing you need to do is identify an upward, downward, or sideways trend by switching to a 4-hour and 1 hour time frames. The reason both are used is trendline it will give you the best perspective in determining a trend according to this strategy. Draw a trend-line so that 3 points of resistance or support was touched. Since this strategy focuses on trends, a trend line will be drawn on the support or resistance lines of the trend. The criteria for a trend is that there need to be at least three points of resistance or support. Below is the same chart only this is a 1-hour time frame. This is just to get another perspective strategies this down trend. It is good to do this to completely confirm this trend by identifying strategies levels of resistance. In order to find a breakout point of the trend that was identified in step one, the strategy will use a combination of the three indicators MACD, 15 minute SMA, EMA to identify a break out on the minute time frame. This time frame is used because a trend was already identified in step one on the 4 hours and 1 hour time frames. As you can see in the chart above on the minute time frame, the MACD lines were crossed. When the crossover of the fast length and slow length occurs, this will signal a new trend. This gave an indication that a trend was breaking. The moving average and exponential moving average lines also crossed. So looking at our example above the trading was met to go to step three because the SMA and EMA crossed and the MACD lines crossed. Also, the trend went upwards and hit our trend line. This is a signal to go to step three. If neither of the indicators crosses before the candlesticks close and hit the trend line strategies do not go any further because the trade does not meet the criteria of the rules. The indicators need to show that the trend broke before it touched the trend line. This is because the trend is breaking and a breakout is about to occur. When the breakout happens we will discuss when to make an entry. Now we need to identify a point of entry. To identify a point of entry always use the 15 minute time frame in this strategy. So in our example below, we see that there is an obvious stand-off between buyers and sellers on the trend line. Once there are at least three candle sticks above or below the trend line, you execute the trade. In this example, there are three candlesticks that fell above the trend line after our indicators signaled that the trend was broken. At this point, you want to make an entry. Place a stop loss past the last support and resistance levels in the trend itself. In the example shown below, place the stop loss below the last support level. This will ensure that if there was a bearish move, it will hit the last point of support and make a trading move upwards. You can clearly see that there are two levels of support in the above example. Use the support levels to determine the stop loss. The rules were to place the stop loss below the last support level which is why you see the stop loss below trading levels. The plan clearly identified a trend, a breakout point, point of entry, and determined a stop loss. The final step is to determine the exit point. This Trend Breaker strategy uses 1 risk to 3 reward ratio. To do this you, the first thing that needs to be done is identifying how many pips there are from your entry point to your stop loss. Since we are using a 1 risk to 3 reward ratio, we would simply multiple the number of pips in between the stop and entry by 3. This would give us The rules were followed, the ratio of a risk of 1 to 3 reward was put in place, and the trading strategy worked to perfection! This Trend Breaker Strategy is simple and yet effective. There is no need to stress and worry that you made the wrong trade. You follow the rules and do not let anything else make you back out of a trade. If it follows the rules, execute the trade with confidence. This will help you identify daily trends and points where they break. There is no need to force yourself into a trade. If it does not follow your rules and guidelines then search for another pair to trade. Feel free to check out one of our other trading strategies. If you thought this strategy will work great then go ahead and check out trendline Free Reporrt To this Strategy! This full report will show you detailed information about this strategy and why it works so well. It will trading show you more examples of this strategy. Check it out now while it is completely FREE. Please let us know if you have any questions at all. You can contact us at info tradingstrategyguides. Ramesh Gandhi Mumbai India. We appreciate your comment, Kevin. If you have any questions that you would like us answer, please let us know. I fill, this is a stratergy that will be worth implementing soon. Knowing where the profit margine is, is a clear advantaged. Trading Strategy Guides The Best Place to Get Trading Strategies. Home Blog About Pricing Contact Us Economic Calendar Members. Trading with trend lines: The Trend Breaker Strategy August 23, by wpengine 8 Comments Trend Line Trading: The Trend Breaker Strategy I have developed a new Trend Breaker Strategy that simple and yet easy to understand. This trendline breakout trading strategy uses three indicators which are the following: MACD The inputs for this indicator are: This is plotted by vertical lines called a histogram. Simple Moving Averag e The inputs for this indicator are: Length 8, Offset 0. Red line Exponential Moving Average -The inputs for trendline indicator are: Length 20, Offset 0. Blue line This Trend Breaker strategy also uses three different time frames. Step One to trend line trading: Identify a trend The first thing you need to do is identify an upward, downward, or sideways trend by switching to a 4-hour and 1 hour time frames. As you can see on the 4- hour time frame below this clearly is a downtrend. Identify a Breakout point In order to find a breakout point of the trend that was identified in step one, the strategy will use a combination of the three indicators MACD, 15 minute SMA, EMA to identify a break out on the minute time frame. Identify a point of entry Here is a list of the entry criteria: These 4 things must happen to enter a trade with this Trend Breaker Strategy. Simple Moving Average Must Cross below the Exponential moving average. Macd Must Cross The price must break below or above the trend line. After the break of the trendline, you must wait for 3 candles to close on the minute chart before taking your entry. Once your entry point has been determined then you can place a stop loss. Determine where to place a stop loss Place a stop loss past the last support and resistance levels in the trend itself. Exit Strategy The plan clearly identified a trend, a breakout point, point of entry, and determined a stop loss. Strategies that mean is you have the potential to make 3 times more than you are risking. So 72 pips would be the target number for that trade. Conclusion This Trend Breaker Strategy is simple and yet effective. Thanks Ramesh, I appreciate the feedback should you have anymore questions please let me know. Great teaching here
I use this often if not all the time. Appears to be good strategy. Exact feed back after trial. It a great one to learn and implement! One of our favorites for sure! Download Our Free Big Three Trading Strategy. Recent Posts Bill Williams Awesome Oscillator Strategy Big Profits, Small Losses Cypher Patterns Trading Strategy How to Correctly Draw Cypher Pattern Parabolic SAR Moving Average Trading Strategy Rabbit Trail Channel Trading Strategy How to Trade Stock Options for Beginners Best Options Trading Strategy. Follow Us On Social Media.
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