Today we will learn about the classic trend following forex trading strategy for novice traders and learn how to use the Trend Filter indicator. This trend following indicator shows the beginning of the trend and flats with efficiency of at least 80% and a target profit of at least 20 points. In this review you will find the indicator template and detailed instructions for how to use it. You will also learn how to start making money with this indicator.
The article covers the following subjects:
Trend following strategy using the Trend Filter Indicator
Simple trend following strategy with the unique Forex Trend Filter indicator
Would you like to learn about a simple and profitable strategy based on a single indicator, which will allow you to open at least 80% of profitable positions under strict conditions?
In this review you will:
- Learn what the Trend Filter indicator is and how to add it to MT4.
- Read about the Trend Filter trading strategy details: initial conditions, signals for entry, rules for exiting the market, risk management rules.
- Look at the analysis of individual situations and learn about the peculiarities of the trend following strategy.
You are always welcome to ask your questions in the comments!
What is trend following strategy?
The trend following strategy is a strategy of opening positions in the direction of the market price movement according to the trend indicator signal.
This means we enter the market with a buy position when the indicator gives a signal of a price increasing. We sell when we get a signal of the price falling. If the asset (the selected trading instrument, for example, a currency pair, stock, oil, etc.) grows, you assume that a growing trend has formed, and open a buy position expecting further growth. If the price of the trading instrument has begun to decline, you open a sell position, because you assume a downtrend has formed. Trend trader always acts in accordance with the trend movement.
Trend Filter Indicator
Trend Filter is a trend and flat indicator that gives fairly accurate and easily interpreted signals. You can use the MA as a confirmation tool.
Trend Filter is not one of the classic trend following indicator MT4, so it’s not used by everyone yet and its signals are quite effective. It is possible that in the future its formula will need to be corrected. The essence of the strategy is to follow the classic trading rule – follow the trend and squeeze what you can out of it. To do this, you need to find its beginning and have time to open a position before the trend reverses.
The Trend Filter is quite good at this and is the best trend following indicator. The indicator opens in a separate window below the chart. It shows the presence of a trend or flat on the market, and in the presence of a trending price movement, it shows its direction.
The main parameters of this trend following strategy:
- Time Frame – H4. I recommend learning to work with the indicator on this interval, and then experimenting with H1 or D1. The indicator will lag on time frames below H1.
- Currency pair – EURUSD.
- Additional indicator – MA (simple or exponential Moving Average). This indicator is auxiliary and is needed only for certain situations, which will be discussed below.
The target profit level is 20-30 points. This is the intraday trend following strategy, but there may be situations when trades are opened at the crossing of trading days, so do not forget about swaps.
Please note: the indicated figures of the target profit and stop orders are for 4-digit quotes!
1. Installing the Trend Filter Indicator and setting up the trend following strategy
The Trend Filter…