The Trend is Your Friend

Okay so I always hear about people talking about the trend being your friend so I thought I’d come up with a system that does just that. (Disclaimer: This is coming from a total newbie.)

From everything that I have read, I thought I would combine a couple of trend-following indicators. I picked EMA (100) and RSI (9) and applied them to the 1-hour timeframe. I’ve read in some forums that a lot of traders pay attention to moving averages especially on the daily timeframe. But because making a system based on the daily timeframe generates only very few signals, I thought I’d put it on the 1 hour instead. I also saw that price reacted well to the MA, finding support/resistance from time to time. As for the RSI, I intend to use it as a “filter” to confirm if the trend is strong or not.

Here’s my idea for an entry:

Sell if price is below the 100 EMA, RSI is below 50. Buy if price is above 100 EMA, and RSI is above 50. ONE MORE THING! An entry is only valid if reversal CANDLESTICKS happen.

The stops for the trades should be below the EMA. The profit targets should be at support and resistance areas. However, if the RR ratio is less than 1:1, that’s a no trade.

Here are a few sample trade setups:

I haven’t tried this system before so please feel free to let me know what I can improve on it! Message me for questions. I’ll be updating it for this coming week. Thankls!

1 Like

Drop the indicators, that’ll make a substantial improvement, other than that it’s the type of strategy I swear by, trade with the trend off of support and resistance levels.

Donna, just curious. Why the 100 period EMA?? Thanks.

Hi! I too use this system the trend is your friend. By using EMA 8, 21, 55, 233. If EMA8 EMA21 crosses top down, this is a signal to buy. Thus I look at the RSI, should be <50. Timeframe H4, H1. If EMA8 EMA21 crosses bottom up, it’s a buy signal (RSI, must be> 50). Open buy (sell) with the trend. The same way look for the M15 is open buy (sell) when the price bounces off that line of support (resistance). TP 100 pips, SL 50 pips, 2:1.

Please just clarify your system. If I understand you correctly its a sell signal when ema8 and ema21 cross down across ema55? Will you give a little more explanation. Thanks

this seems a bit complicated for a beginner any out there geared towards a complete novice?