Friday, November 24, 2017

My Forex Trend Trading System

August 8, 2011 by  
Filed under Fx Tutorial

If you have been reading up forex books or courses, you will have heard of the phrase “The Trend Is Your Friend”. Indeed I will strong recommend new traders to trade with the trend instead of against it.

Trading against the trend is only advisable for those experienced traders who have a feel of the market. Therefore in this post, I will be sharing with you my forex trend trading system so that you can try it on your demo to see if it works for you.

What You Need To Trade The Forex Trend Trading System:

How To Trade The Forex Trend Trading System:

First of all, you need to plot the 200 EMA as this is an indicator that you can use to tell the current trend and strength of the market. If the 200 EMA is sloping upward with steep angle, you are seeing a strong up trend. If it is sloping downward with steep angle, you are seeing a strong down trend.

I will strongly advice against you trading when the 200 EMA are pretty flat as there is no trend in action.

Next you should setup the forex stochastic indicator with the setting of 5,3,3. What you do with this forex indicator is to wait for it to get overbought or oversold.

What we are actually doing when performing this forex trend trading system is to BUY THE DIPS and SELL THE RALLY. When you are in a strong uptrend, you will wait for the price to retrace (DIPS) and then BUY in. When you are in a strong downtrend, you will wait for the price to retrace (RALLY) and then SELL.

In order to do this perfectly, we need the help of the forex stochastic indicator. When you are in an uptrend, you will wait for the price to retrace until the stochastic show sign of oversold. At this time, you will make use of the forex Fibonacci indicator to check if there is a strong level of support or resistance like the 0.382, 0.500 or 0.618 levels.

If the price hits a major Fibonacci level and the stochastic is showing sign of overbought or oversold. It is a good trading opportunity.

Forex Trend Trading System

I will suggest you to try this strategy out on your demo account and see how well it works. Practice it until you are able to execute it with ease and I believe you will start to see profit.

Note to Readers

Do note that the above strategy is a general forex trading strategy that has not been fine tuned. In order for you to trade with it, please fine it tune on a demo account. If you do not know how to fine tune a strategy, please read the below

For those of you who are totally new to forex trading, I will suggest that you read through this blog post that I have written for beginners

Click Here For The Post

If you are interested to learn how I do my forex technical analysis, you can take a look at the post below

Click Here For The Post



14 Responses to “My Forex Trend Trading System”
  1. Nick says:

    Does both of the Stochastic(%D %K )lines have to hit the 80% to sell or 20% to buy or do you get in when they cross in the 80,20 ?

    • Kelvin says:

      Hi Nick

      It will be best if there are both in and then started to cross out of the overbought or oversold zone to enter.

  2. Nick says:

    Why are your Fibonacci levels backwards. I thought in an uptrend the first retracement was .382 then .5 then.618 going down.

    • Kelvin says:

      Hi Nick

      That is because the FXCM trade station that I am using plotted it this way.

      However you just treat swop the number as per your own platform and you will have no problem understanding my system.

  3. Monirul says:

    Hi Kelvin,
    Many thanks for your effective initiative.
    Can you tell me something about stop loss and take profit for this trend trading method?

    • Kelvin says:

      Hi Monirul

      It really depends on your own style. For me, I will set it to be around 30 pips stop loss and 60 pips target profits.

  4. Jonathan says:

    Hi Kelvin,

    How many trades does this strategy gives you a month on average?


  5. Afolabi says:

    Hi kelvin, i really appreciate your efforts, may God continue to bless you immeasurably.
    I’ve got few questions bothering me and i hope you’ll be of help. Firstly, fom the chat above why did u construct your Fibo downward? since 200ema says it’s an uptrend i construct upward.
    Secondly, from your experience, if i’m to exit my trade using Fibo, what Fibo expansion shld i use for 38.2 and 50.0? (because i just use 127.2 for them
    Thirdly, i actually trade mainly on D1 time frame so i dont use Stoch cause i get so much false signal using (533) what parameter would u suggest?

  6. SAL says:

    Hi Lee , where to find the LMT system ?

  7. alex says:

    where did you learn or how did you came up with this strategy? i’m interested in the process of developping trading systems. would be also usefull to know how much time did it take you … thanks.

  8. Redgy says:

    Hi Kelvin

    Can use on every timeframe, or which is the best?

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