Do you remember the first time you saw a forex chart? Or any other trading chart for that matter? When we start trading for the first time, we only see meaningless bars that move up and down on a chart without any direction. Then we wonder how traders make money with a senseless price movement. Then when we start looking and learning about trade and technical analysis, we start to see things. As we progress, we learn to identify what type of market we are in, depending on how the price moves. It could either be a sectoral market, a trend market, a reversal or just a troubled market.
Of all of the above market conditions, many traders might agree that a trend market appears to be the most directional type of market condition. We see a trend market and drool in the hope that we entered the market right at the beginning of the trend. If we only acted at the right moment and held onto the position, we could have made a huge profit. If only we had the opportunity to predict the start of a trend.
Moving Average Behavior in Trend Markets
The moving average is one of the simplest and most basic indicators, but also one of the most overlooked. Probably because of its simplicity, many traders either tamper with it or completely ignore its use and look for something more complex.
One of the best uses for moving averages is to develop a market trend. The moving average has characteristics that are peculiar to it and are very useful in a trend during a market situation.
Individually, a moving average could determine the trend bias of the market based on its slope. This is due to the fact that the moving average falls in a single direction with increasing price development, also in the direction of the trend. When the market is bullish, the moving average tends to fall higher. Conversely, when the market is bearish, the moving averages tend to fall.
Below is an example of a bullish and bearish market situation that led to a decline in the moving average.
There are many more ways to determine the directional dependency of the market or to determine whether the market is trending based on moving averages. Other uses could include moving average crossovers, fanning multiple moving averages, or even just the location of the price with respect to a moving average filter. With this strategy, however, we mainly focus on using the slope of a moving average.
Trading strategy concept
As mentioned earlier, moving averages tend to tilt during a trend market condition. For this reason, we will use this knowledge to our advantage.
We'll use the custom slope direction line indicator as the main indicator. This indicator is based on a moving average, the color of which changes based on the slope of the indicator. If the market shows a bullish trend, the indicator turns light blue, while if the market shows a bearish trend, the indicator takes on the tomato color. We will use this color change both as an input trigger and as a filter.
In addition to the custom indicator above, we also use the custom TrendLineReg indicator. This indicator records a histogram in a separate window based on its evaluation of the trend. Positive histogram bars are considered bullish, while negative histogram bars are considered bearish. This also serves as an input trigger and filter in conjunction with the Slope Direction Line display. Purchase transactions are carried out at the cross of the histogram bars above zero, while sales transactions are carried out when the histogram bars are below zero.
- Slope direction line
Time frame: preferably 5-minute, 15-minute, 30-minute and 1-hour charts
Currency pairs: any
Trading session: any
Buy (Long) Trade Setup
- The slope direction line should be light blue, indicating that the market is bullish
- The TrendLineReg should be above zero, indicating that the market may be starting an upward trend
- Enter a buy market order when the above conditions merge
- Set the stop loss on the swing deep below the entry candle
- Close the deal if the slope direction line changes to tomato color
- Close the trade if the TrendLineReg histogram bar is below zero
Sell (Short) Trade Setup
- The slope direction line should be a color tomato, indicating that the market is in a downward trend
- The TrendLineReg should be below zero, indicating that the market may start to decline
- Enter a sell market order when the above conditions merge
- Set the stop loss on the swing high above the entry candle
- Close the deal when the slope direction line turns light blue
- Close the trade if the TrendLineReg histogram bar is above zero
This strategy enables traders to capture large trend movements when the market reverses and tends in the opposite direction. This is done using the two custom indicators based on trends.
It is also based on the medium and long-term trend, which uses 100 periods as the basis for the indicator for the slope direction line. This enables traders to capture longer-lasting trends and avoid premature exits that are common for moving averages for shorter periods. The disadvantage, however, is that the entries can be somewhat late for shorter periods compared to moving averages.
This strategy could allow for a higher reward-risk ratio, as traders can enter and exit trading near the beginning of the trend when it is confirmed that the trend has ended. However, there will be trades that may just break even or cause a loss. This is due to the fact that wrong signals can be generated during troubled markets. Use this strategy only in conditions where the market tends to trend and avoid it in troubled markets.
Installation guide for Forex Trading Systems
The Trend Slope Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator (s) and template.
The essence of this forex system is to transform the accumulated historical data and trading signals.
The Trend Slope Forex Trading Strategy offers the possibility to recognize various peculiarities and patterns in price dynamics that are invisible to the naked eye.
Based on this information, traders can accept further price movements and adapt this system accordingly.
Forex Metatrader 4 trading platform
- Free $ 30 to start trading immediately
- No deposit required
- Your account will be automatically credited
- No hidden terms
How do I install the Trend Slope Forex trading strategy?
- Download Trend Slope Forex Trading Strategy.zip
- Copy mq4 and ex4 files to your Metatrader directory / Experts / indicators /
- Copy the tpl file (template) into your Metatrader directory / templates /
- Start or restart your Metatrader client
- Choose the chart and time frame in which you want to test your forex system
- Right-click on your trading chart and move the mouse pointer over "Template".
- Move right to select the Trend Slope Forex trading strategy
- You will see that the Trend Slope Forex trading strategy is available on your chart
* Note: Not all forex strategies come with mq4 / ex4 files. Some templates are already integrated in the MT4 indicators of the MetaTrader platform.
Click here to download:
Trend Slope Forex Trading Strategy