Hi everyone. I’m Anthony and I’m looking to make a trend following system. I’m practice using a simple system but I’m making a trend following system, what indicators would you recommend me to start with, being a new trader in the game?
Just an EMA. Actually, you could get useful help from two, one being about 2 to 5 times the duration of the other. Don’t enter / exit on cross-overs, but pay attention to the sequence of the EMA’s and whether they both slope up or down. After that what you do depends on how quickly you want to enter trends after they have started but I can’t see any additional indicators adding a lot of value and clarity.
Thanks for the help!! I highly appreciate it
For trend a simple 200 moving ave and rsi is all you need,
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Try the following: Put 2 WMAs (Weighted Moving Average), both at 8 periods. For one use the close price as input. For the other use the open price as input.
Sell when the wmaClose crosses under the wmaOpen. Buy when wmaClose crosses above wmaOpen. Use them only after you determine that the market is trending and go long or short in the direction of the trend.
Increase or decrease the period to suit your needs. You can combine this with other indicators for additional confluence.
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I like it, I’ll give it a try. what are the exits rules? unless I can just use the risk management plan I have already.
I’ll let you know how I do with it. I’ll be trading USD/JPY, GBP/USD, and GBP/JPY. That’s it. I’ll give you weekly reports lol.
Whom are you asking?
You sorry. Forgot to tag you.
If you’re trading the daily TF, plan your entries on a 4H. Drop in an RSI of 7 or 8 period with oversold at 25 and overbought at 75. Enter only at the RSI extremes using the wma crosses and only in the direction of the trend.
Your entries and exits will be somewhere at the tops or bottoms of the next major swing high or low. Your stop will be at the previous swing high/low from the entry swing high/low.
Hope you got that. 
Yup I got it. I’m on it. Writing down the reports. I actually might just make an article so the community can follow too if ever they were looking for a new trending system to use.
Did you ever get round to making an article as I am trading in a similar way with similar pairs just working on trying to catch the trend earlier and tighten up stop losses.
Keen to see how you go.
@QuadPip hi regarding entries at h4 do we switch on the h4 tf whe the wma crosses on the daily tf? And do we exit position on h4 aswell?
The Daily is your analysis chart so you are trading the daily. H4 is merely your execution time frame. When the daily wma crosses over it gives you direction. You use this direction to execute your trades on the H4. But the key is to look for highs and lows and enter or exit at these highs and lows. Otherwise you will get whiplashed. It will also help if you consult the weekly for direction and to look for support and resistance zones and/or, what some people call, supply and demand zones.
Note that this a training wheel approach. Eventually you want to get to a point where you rely on market structure alone to trade. You will get vastly better entries and exits using market structure and price action principles than you will ever get using indicators.
If I have some time this weekend I will post some charts as examples.
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I would recommend to start from moving averages. The purpose of their use is to smooth price and remove noise from it which in theory should help to see short-term, medium-term and long-term trends. I have one technical system with Hotforex which is based on divergence of 1H and Daily moving averages which helps to identify trend reversal and trade pullbacks.
I picked USD/CAD and I chose a section that would allow me to demonstrate a few different concepts. I suggest that you open up your charts to the same location so that you can follow along. I’m going to be brief and write points rather than lengthy explanations.
Price moves in a fractal pattern. It moves from one high/low to the next high/low. When price turns you should make a guess as to where it is likely going to end up before turning again.
First consult the weekly to get a sense of whether price is about to turn and for the direction. On the daily chart mark out a section (yellow rectangle) when the daily wma crosses and extend the section to the right and bottom. The bars following the wma cross will not be there when you mark out the region.
The bottom of the region you’re going to markup is obtained by looking at the next available support region. When you switch to the H4 chart, this colored rectangle will remind you of the boundaries that you are working within. Mark out the support region or demand zone as some call it in a different color so it is clearly delineated from the tradable region. I’ve marked it in lavender. (See the video below to see how to mark up supply/demand regions.)
I’ve put notes on the chart as to why I picked that support region. The green wma is a close of 7 periods. The blue wma is an open of 7 periods. The RSI is a 5 period with OB at 75 and OS at 25. Red dashed vertical lines were drawn on the H4 and are all opportunities to go short after the first short taken on the daily when the wma crossed and the daily bar closed.
I’ve attached images of the weekly, daily and H4 annotated charts of the marked out section. If you have questions please ask.
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I’m confused with the RSI part, As i noticed that the attached chart example is not even in the OB and OS zone in the daily and H4 when you tag the entries.
The entry signals are based on the wma crossings. When you’re selling, you want to wait until the retracement has reached its maximum point before taking the trade so as to keep your drawdown and risk to a minimum.
The RSI in OB gives you that clue. That is why we wait to see that the RSI is in OB zone before considering entering the trade or adding to our position. That’s the only function that the RSI performs in this strategy. The RSI does not signal an entry. When the signal occurs with the wma close crossing below the wma open, price is already moving down and at the wma crossing the RSI will have retraced from OB zone.
Does that clarify things for you?
now its clear to me . Thank you sir!