This strategy is very simple and can be traded by any level of trader, be it a new bee or Master or Professional. Most times its very difficult to know when a trend has just been established because the market ranges most of the time. With this strategy it would be very easy to determine if the market is in a trending mode and then we can trade the 2nd/3rd wave of the trend. This way we can limit ranging trades as this strategy is a typical trend trading strategy, as they say the “trend is your friend”.Most times a fundamental release can be the triggering factor of the established trend and some times it could be normal market sentiments.
LIST OF INDICATORS TO BE USED:
– 21 and 55 Exponential Moving Average
– SSRC Oscillator
– GG-Trend Bar customized indicator (a multiple time-frame indicator made with Parabolic S.A.R and ADX)
– Pivot Points(optional)
BASIC CONCEPT FOR TREND ESTABLISHMENT:
– Wait for 21 and 55 EMA to cross upward for buy trends and downward for sell trends.
– SSRC oscillator indicator must be in the direction of the buy or sell trend.
– Trends can be established by market sentiments or a fundamental release.
– GG-Trend bar multiple time-frame indicator must give same signal from minimum of 1 hour to 4hours to Daily or Weekly or Monthly.
– Never trade more than the 2nd or 3rd wave of the trend because this is when the momentum is still intact. By the 4th wave entry, the market might have lost momentum towards the direction.
ENTRY RULE FOR BUY TRADES:
– Buy when the SSRC oscillator goes into sell mode after a buy trend has been established and then gets out of the sell mode to give a fresh buy entry again.
– At this point, the 21 and 55 Exponential Moving Average must still be crossed upward towards the buy direction.
– When placing the trade the candle must be above the 21 Exponential Moving Average
– GG-Trend bar must support the signal for buy with 1 hour to 4hours or Daily time-frame synchronized towards buy same direction.
ENTRY RULES FOR SELL TRADES:
– Sell when SSRC oscillator goes into buy mode after a sell trend has been established and then gets out of the buy mode to give a fresh sell entry again.
– At this point, the 21 and 55 Exponential Moving Average must still be crossed downwards towards the sell direction.
– When placing the trade, the candle must be below the 21 Exponential Moving Average.
– GG-Trend bar must support the signal for sell with 1 hour to 4hours or Daily or Monthly time-frame all synchronized towards sell direction.
HOW TO APPLY TAKE PROFITS AND STOP LOSS:
– A 30 pips stop loss with an average of 30-60 pips take profit can be used as default.
– Pivot points like intra day resistance and support can be used as well.
Below is a diagram of a typical example of the 2nd/3rd wave trend trading strategy. The Blue zone represents the establishment of the bullish trend. While the yellow zone represents the pull backs of the market reflecting on the SSRC indicator and finally the red zone represents our entry signals.