Trendline trading system

Trendline Trading Strategy-Sell At Top Buy At Market Bottom. The Trendline Trading Strategy is a forex price action trading system that is designed to trade the.
Table of contents

• Trendline Trading Strategies – Breakouts and Reversals
• The Simple Trend Line Trading Strategy
• Trendline Trading: What to Do (And Not to Do)
• Trendlines: Uptrends and Downtrends in Trading | CMC Markets

With this in mind it is always useful to be able to see what the market is doing before you deploy an automated trendline trading strategy. Picking the optimum pair for a trend based automated trading strategy would be greatly assisted by index analysis in the case of forex and range analysis data. The Forex Currency Strength Meter is a complimentary tools when used in conjunction with Trendline Trader Pro and allows traders to very quickly identify the optimum pair selection..

The products on this site are trading tools and are not intended to replace individual research or licensed investment advice. Past performance does not guarantee future results.

Trading currencies, indices or commodities involves substantial risk, and there is always the potential for loss. No representation is being made that these products will guarantee profits or not result in losses from trading. Any explanation or demonstration of the product's operation should not be construed as a trade recommendation or the provision of investment advice. Fully automated Trading Once configured. Trading Behaviour.

Where price action momentarily breaks above or below a trendline and is within a designated range controlled by a pre-defined trigger channel. Where price action hits a defined trigger zone - gets rejected and then subsequently retests the same trigger zone. Unique Java FX graphical user interface for unrivalled rapid configuration and deployment.

Trade independent strategies from unlimited numbers of trendlines per chart. Up to 50 trader defined profiles for 2 click strategy deployment. This is also known as the reversion to the mean in trading terms as explained above.

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As long as momentum is building up, price tends to move in the same direction as it previously was. As momentum wanes, it is more difficult for the price to continue rising or falling. In trading terminology, this can be seen as buyers or sellers who dominated the trend start to ease. This leads to fading momentum. Eventually, price capitulates and reverses direction. When this happens, you can expect the reversal to be sudden and sharp. It should be noted that at this point, there is momentum, but just price reverting to its mean or the main trend line which depicts the average price.

As the direction changes, the price will not attract new buyers or sellers.

This, in turn, builds up momentum and pushes price in the opposite direction. One noticeable thing about this trading strategy is that when our setups occur, you can expect the target to be reached rather quickly. This gives you the advantage of not having to hold on to your positions for long periods of time. The first step is of course to identify the chart. You can use this trading method on any instrument of your choice.

However, it is ideal that you apply this trading strategy to only the most liquid of currency pairs or other markets such as futures or stocks.

The Simple Trend Line Trading Strategy

The time frame of the chart is not relevant. Price needs to be moving in a strong and steady trend for this setup to work. Once you identify a trending chart, you will then draw the rising or the falling trend line by connecting the consecutive highs or the lows respectively. This first trend line should slope with an approximate degree angle. Once this main trend line is constructed, the next step is to wait for price action to evolve. Evidently, at some point, you should start to see price gaining more momentum. This should result in another trend line that is steeper than the first and obviously shorter in duration.

After setting up your chart, the next step is to qualify the trade and to ascertain if the trade setup is worth trading or not. You will determine this by checking the distance between the two trend lines. The more space there is between the two trend lines, the greater the reward for the trade. When you find such a setup, you need to be patient and wait for price action to give you further clues. Usually, near the shorter trend line, prices can either turn flat, trading in a range or they can post a fake-out before changing direction.

To determine this, you can use the rectangle tool and draw the range that is established. When the range is broken in the opposite direction to the trend that was established, you can then enter the trade. Once you are ready to enter the trade, your trade management is simple. Your stops come in at the recent fake-out high or the low prior to the change in direction of the trend. In Figure 3, we see an example of a long trade setup.

Here, the red trend line is the main falling trend line. This main trend line has a normal slope. Later in the trend, you can see that as the price comes near the bottom, we plot another trend line which is shorter in duration and is steeper than normal. Near the end of this smaller trend line, you can see that price turns flat. This is identified by the rectangle that is plotted on the chart.

It depicts the side-way range of price. When this range is breached, we take a long position with stops at the lower end of the rectangle. The profit level is set to the main trend line. In figure 4, we have an example of this trading system with a short setup. The green rising trend line is the main trend line, which as you can see spans across a longer time span.

As price makes the second contact with the main trend line, the momentum increases and price rallies higher. Near the top end of this sharp rally, price action briefly turns flat. There is a small spike to the upside, known as the fake-out and following this, price breaks past the steep trend line. A short position is taken at the break of this trend line with the profit target set to the main trend line.

To make this trading system easier to trade and less time consuming, you can make use of the Trendline Trader EA for the MT4 trading platform. This EA will enter and exit positions according to the trend lines that you draw. With this EA even short-term trading will be possible besides a normal day job. All you need to do is to spot a steeper trend line setup and draw a trend line accordingly. The trend line labeled with the red arrow in the following screenshot shows such a steeper trend line.

Figure 6: Configure the name of the trendline.

Once you configured the trend line properly, the Trendline Trader EA knows what to do. It patiently waits for the price to drop below the trendline. After the price dropped below the trendline, the EA will enter with a sell order and places the stop and target according to the trade handling settings that you configured in the parameters of the EA:. You can use the trend line trading system with different entry signals. You can apply this trend line trading strategy to any time frame of your interest. The only difference is that you need to pay attention to your positions. This is because the risk you take on a one-hour chart time frame is different when you use a four-hour chart time frame.

Besides tweaking your positions, a bit, this trend line-based trading system with the double top or double bottom pattern can enable you to enter the trade with a great level of confidence. There will be some losing trades no doubt. Consistency is one of the main aspects of trading that will determine your success. This trend line-based trading system does exactly that.

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