Most of the time, markets don't show any visible clear trend - they bounce back and forth between support and resistance levels. This sideways movement is called a trading range.
Below is a strategy that may help you in identifying entry points on short-term trends, whilst protecting your profits with trailing stops.
Trade Set-up
The strategy uses two charts with different time periods (10-minute and hourly), along with two technical indicators: a 200-bar moving average and a 14-bar slow stochastic study.
1st Step : Identify a Trend
Compare the moving averages on both charts. A trend may be developing when price is consistently above or below the moving averages on both charts.
2nd Step : Pinpoint entry
Once you've identified a trend, look for the following two conditions at the same time on the 10-minute chart:
1. Price is no more than 20 pips above (to buy) or 20 pips below (to sell) the MA.
2. The "fast" stochastic (%K) crosses above the "slow" stochastic (%D) below 20 (to buy), or crosses below the "slow" stochastic above 80 (to sell).
3rd Step : Ride the trend
Set a trailing stop after the trade entry.
On a LONG position, the stop order should be 10 pips BELOW the 200-period MA on the 10-minute chart. You'll RAISE the stop as the trade goes in your favor.
On a SHORT position, place the stop 10 pips ABOVE the MA. You'll LOWER the stop as the trade goes in your favor.
I hope this helps ! Test this out on a demo platform like eToro or ibfx practice accounts before you go live !
Below is a strategy that may help you in identifying entry points on short-term trends, whilst protecting your profits with trailing stops.
Trade Set-up
The strategy uses two charts with different time periods (10-minute and hourly), along with two technical indicators: a 200-bar moving average and a 14-bar slow stochastic study.
1st Step : Identify a Trend
Compare the moving averages on both charts. A trend may be developing when price is consistently above or below the moving averages on both charts.
2nd Step : Pinpoint entry
Once you've identified a trend, look for the following two conditions at the same time on the 10-minute chart:
1. Price is no more than 20 pips above (to buy) or 20 pips below (to sell) the MA.
2. The "fast" stochastic (%K) crosses above the "slow" stochastic (%D) below 20 (to buy), or crosses below the "slow" stochastic above 80 (to sell).
3rd Step : Ride the trend
Set a trailing stop after the trade entry.
On a LONG position, the stop order should be 10 pips BELOW the 200-period MA on the 10-minute chart. You'll RAISE the stop as the trade goes in your favor.
On a SHORT position, place the stop 10 pips ABOVE the MA. You'll LOWER the stop as the trade goes in your favor.
I hope this helps ! Test this out on a demo platform like eToro or ibfx practice accounts before you go live !
