One thing about the market that many traders don't get straight away is that it is dynamic. There are no rules. It is always changing. It never stops developing. Because of these characteristics, no trader can force his will on the market except for the probably largest institutional traders of the big banks. We can set up any rules and parameters we want, but it wouldn't always work. It can work 50%, 60%, 70% or even 80% of the time, but it would never be absolutely perfect. This is how the market works.
With this in mind, it is also advisable to consider dynamic indicators. There are indicators with fixed numbers or lines in which most rules would require trading if the indicator exceeds this fixed number. This is especially true for oscillators. Take the trade when the price reaches 80, 20, 100, zero, etc. Although these numbers somehow work and also order a trading strategy, the price would often do exactly the opposite of what we expect whenever the price reaches these levels or sometimes takes a very profitable step before the indicators reach these levels.
The Detrended Synthetic Price Oscillator
The Detrended Synthetic Price Oscillator (DSP) is an oscillating indicator that is very dynamic by nature. It is unlimited, which means that the resulting number can be drawn anywhere based on price movements, rather than being held in a fixed range. Although there are many indicators that have these properties, the DSP appears to have dynamic signal lines. Most oscillating indicators generate signals when the price exceeds a certain fixed level. However, the DSP allows the trigger line to move around the middle level along with the signal line. If these two lines cross in a certain direction, a signal is generated regardless of the level.
The DynamicRS_C indicator is a custom indicator based on a median of the price. Although the mathematical basis for drawing its lines is not clearly discussed, it is one of these indicators that seems to work just fine. While it's not perfect, it works well as additional confirmation for determining short-term trends.
Trading strategy concept
The two custom indicators above complement each other. These indicators seem to match at some level, resulting in a high probability of trading that could also bring high reward gains.
Before we get to the actual entry signals based on the indicators above, we'll filter out trades that don't match the medium-term trend. For this purpose, we use the Exponential Moving Average (EMA) with 50 periods as the basis for the intermediate trend. We will examine the location of the price in relation to the 50 EMA and the slope of the 50 EMA.
For the entries we will look for a confluence of the Detrended Synthetic Price Oscillator and the DynamicRS_C. The signals of the DSP are based on whether the signal line (solid line) goes beyond the trigger line (dashed line), which indicates that the market could trend in a certain direction. This particular indicator also changes color when the two indicators intersect, which conveniently indicates the actual input signal.
The DynamicRS_C indicator also determines the short-term trend. This is done by changing the color when the direction is changed. It paints an aqua line when the market becomes bullish and a red line when the market becomes bearish.
- 50 EMA (green)
Time window: 15-minute, 30-minute, 1-hour, 4-hour and daily charts
Currency pair: any
Trading session: any
Buy (Long) Trade Setup
- The price should be over 50 EMA
- The 50 EMA should rise
- The DynamicRS_C indicator should change to the color aqua
- The solid line of the Detrended_Synthetic_Price_goscillators indicator should break above the dashed line above and change to the color lime green
- Open a purchase order at the confluence of the above rules
- Set the stop loss on the fractal below the entry candle
- Close the trade when the DynamicRS_C indicator turns red
- Close the deal when the solid line of Detrended_Synthetic_Price_goscillators breaks below the top dashed line and changes to gray
Sell (Short) Trade Setup
- The price should be below 50 EMA
- The 50 EMA should drop
- The DynamicRS_C display should turn red
- The solid line of the indicator Detrended_Synthetic_Price_goscillators should be interrupted below the lower dashed line and assume the color orange red
- Open a sales order at the confluence of the above rules
- Set the stop loss on the fractal above the entry candle
- Close the deal when the DynamicRS_C indicator changes to Aqua
- Close the deal when the solid line of Detrended_Synthetic_Price_goscillators breaks above the bottom dashed line and changes to gray
This strategy enables a trend-following strategy that matches the medium-term trend of the 50 EMA.
The confluence of DynamicRS_C and Detrended_Synthetic_Price_goscillators enables a trade configuration with high probability and high reward. Not all trade configurations would be profitable, but many of the stores opened on this strategy could work. In addition, there is a high probability that the price could run for some time, which allows a reward / risk ratio of more than 2: 1.
The key to this strategy is to use it under the current market conditions. This would not work well in a large market. To see if the market is really trending, look at how inclined the 50 EMA is. The steeper the slope, the stronger the trend. The stronger the trend, the higher the likelihood of trading.
Installation instructions for forex trading strategies
The Dynamic Trend Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator (s) and template.
The essence of this forex strategy is to transform the accumulated historical data and trading signals.
The dynamic trend forex trading strategy offers the opportunity to recognize various peculiarities and patterns in price dynamics that are not visible to the naked eye.
Based on this information, traders can accept further price movements and adjust this strategy accordingly.
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How do I install the Dynamic Trend Forex Trading Strategy?
- Download Dynamic Trend Forex Trading Strategy.zip
- * Copy mq4 and ex4 files into 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 strategy
- Right-click on your trading chart and move the mouse pointer over "Template".
- Move right to select Dynamic Trend Forex Trading Strategy
- You will see that the dynamic trend 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.
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