My Simple Strategy

  • H4 Time Frame
  • 50 Period Exponential Moving Average
  • 7 Period Commodity Channel Index
  • Stop Loss 14 Period Average True Range on Previous High/Low
  • 28 Currency Pairs (Majors and their Crosses)

This strategy concept was originally developed by Sam Seiden , a veteran floor trader with 15 years experience on the Chicago Mercantile Exchange. It is a very effective trading method that is easy to interpret and simple to apply.

As the name suggests, the Trend Continuation Strategy is focused on trading continuation signals. The basic premise is that trend continuations are far easier to identify and take advantage of, than trend reversals, and as a result, profits are much more consistent. Having used this strategy since October 2018, I can vouch for this. It works.

I will not attempt to re-write Sam Seiden’s strategy here. Instead, I encourage you to watch his video: Using CCI and Stochastics For Long and Short Term Forex Trading (13 January 2016, FX Street).

Picking the exact point at which a trend reversal occurs can be incredibly profitable, but incredibly difficult to achieve on a consistent basis. Continuation trades, although offering smaller profits than trend reversals, occur often within a given price trend and offer many opportunities with good profit potential.

Signal interpretation is a simple 5-step process that is performed in no particular sequence or order, and considers the following factors:

  • Price action in relation to the Exponential Moving Average (EMA);
  • The EMA slope;
  • Price retrace to EMA;
  • Price break above/below the previous high/low; and
  • Confirmation given by the Commodity Channel Index.

The two price charts that follow demonstrate how this works.

Here’s the only catch. The need to monitor 28 currency pairs on the H4 time-frame does make this strategy a bit time intensive. This is a negative, but it is well worth it if you are able to dedicate the time needed.

Alternatively, if you are not able dedicate the time, or just prefer not to, you could do as many other advocates of this strategy are doing, and subscribe to my You Tube channel for live notifications whenever a trade set-up is triggered. It’s completely free. No hidden agenda.

Here’s an example (AI voice-over is used for speed):

We are all trading the exact same strategy, interpreting the exact same trade set-up signals, and you will continue to apply your knowledge of the strategy to confirm a trade set-up and decide if you want to trade it. The only difference is that you only need to dedicate your time when it’s worth the effort. Something to consider!

I hope you find this strategy as useful and fruitful as it has proven to be for me!

2 Likes

If this is so cumbersome to do in H4 chart, why can’t one do this in D1 chart?

Pick any time frame you want.

Hello, do you have any verified track record that shows that the strategy actuslly works?

2 Likes

In my opinion, this is a good solid strategy with sensible reasoning and minimal requirements. I think the 4H TF is a good one for getting into trend continuations without the false breaks of lower TFs.

I doubt whether the checking of 28 currency pairs is quite so consuming in practice as it sounds. When one gets into the rhythm of the pairs it is possible to spot those which are potentially approaching the 50 EMA and are worth concentrating on as well as those which are not doing anything at all at the moment or are already in a strong move.

The basic overall idea of identifying a trend, waiting for a pullback, and entering on a bounce is logical. I have never used the CCI so can’t comment on that.

Nice work! :slight_smile:

4 Likes

Thanks for the feedback, Sovos.

I would prefer that you verify the strategy. Why don’t you demo it for a few weeks, and make your own decision?

strategy is important but the main thing is, there is no trading strategy which not works for all time.

1 Like

So true. Expecting 100% accuracy from a strategy is not realistic. Provided winning trades are able to absorb losing trades, and the win/lose ratio is reasonable, then a strategy can be consistently successful.

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Been looking for a good swing strategy and this looks like a great fit.

Two quick questions, well one in two parts. Stop Loss above/below the EMA generally (Based on sell/buy respectively)? Take profit based on personal risk management strategies/comfort level/time frame to hold trade?

Thanks for the detailed explanation and nice strategy.

Thanks for the feedback. I set my stop-loss at previous high/low, as the case may be, plus/minus a 14 period ATR. I don’t use the EMA for stop-loss, but it’s an option you might prefer. The main thing is capital protection. I generally don’t set a take-profit, as I prefer to trail my stop-loss until triggered. This can often maximise trade potential…but sometimes it cuts it short!!!

Thanks again!

Hi - I love this strategy & will be demoing it over the weekend.

Can you explain a little bit more around using the ATR to set a Stop/Loss please? I don’t see it on the charts in your examples and I am struggling to see the correlation between the ATR and a price to set the Stop/Loss

Thanks in advance!! :slight_smile:

Hi, thanks for the feedback and question. The following shots should clarify:

Got it - thanks for taking time to show some examples :slight_smile:

No problem at all.

NZDJPY looking good for a buy:

IMPORTANT UPDATE: Commodity Channel Index

The strategy period setting for the Commodity Channel Index has changed from 7-periods to 14-periods. You may continue to apply the 7-period if preferred, however, the switch to a 14-period setting aims to slightly delay trade entry and improve signal quality.

This could be a quick profit:

This is a sensible variation on a profitable strategy. I use a similar approach off the daily charts except I never ruse any off-chart indicators, so CCI is not in my toolbox.

But I’m open to being convinced - is CCI absolutely necessary? I assume its in the strategy because its possible to see the other criteria all lined up but CCI says stay out and this avoids a low probability trade that would more likely be a loss?

In practice do you see CCI adds benefit?

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I have been wondering the same. As I mentioned in an earlier post, I have never used the CCI so I don’t know either. But I have been looking at it the last few days but it hasn’t set me on fire yet.

I was interested in the comment that it’s value has now been moved from 7 to 14. I had already done that from just my initial studies! :smiley:

But, like you, I don’t usually use any indicator that is off the price chart a) because they are often superfluous and b) I forget to look at them! :laughing:

1 Like