hello traders welcome to my new trading blog where we will discus one of the greatest trading strategy
and one of the simple strategies in the world of trading.
let's start with brief explanation of the strategy
the strategy is based on broken trend and we will explain it and make it simpler as possible
first of all we have to understand what trend mean
trend is the direction established by the market in certain period of time
so how we going to determine the direction in the chart
how to draw trends
Drawing an Uptrend
In an uptrend, the trend line is drawn below the chart. Draw the trend line that connects the lows of the wicks. The trend line becomes a support line
Drawing A Downtrend
In a downtrend, the trend line is drawn above the chart. Draw the trend line that connects the highs of the wicks. The trend line becomes a resistance line.
Couple of key points to note here:
• A trend line is always straight.
• The price should touch the trend line at least 3 times to confirm that the trend line is valid. If it only touches twice, it is only a tentative trend line and you can not be sure that a trend actually exists.
• A trend line should not cross any of the wicks. If a trend line is broken, you will have to redraw the trend line.
• A trend line should be approximately 45 degrees. If a trend line is too steep, then it is usually not sustainable. If a trend line is too flat, then it may be a weak trend and can be broken easily.
now after we understand how to draw trends
now we will go throw the rule of the strategy
the principle : is to enter when the trend is broken
we will use some indicator to help us filtering and pick the good entry
we will use
-momentum indicator: we want the momentum to be in our side when enter >100 for long and <100 for short
-macd: to look for divergence
the rules of entry
short entry
we look for un up trend and we draw it
we wait for the break of the trend then we check the momentum indicator if it is below the zero line
when all the condition are met we enter short on the next candel open at market or we can wait for a retest of the broken trend
the stop lose is depend on the time frame and the structurs of price
for long entry we look for the same thing but in down trend
it's easy let's jump to the chart and see some real example
and one of the simple strategies in the world of trading.
let's start with brief explanation of the strategy
the strategy is based on broken trend and we will explain it and make it simpler as possible
first of all we have to understand what trend mean
trend is the direction established by the market in certain period of time
so how we going to determine the direction in the chart
how to draw trends
Drawing an Uptrend
In an uptrend, the trend line is drawn below the chart. Draw the trend line that connects the lows of the wicks. The trend line becomes a support line
Drawing A Downtrend
In a downtrend, the trend line is drawn above the chart. Draw the trend line that connects the highs of the wicks. The trend line becomes a resistance line.
Couple of key points to note here:
• A trend line is always straight.
• The price should touch the trend line at least 3 times to confirm that the trend line is valid. If it only touches twice, it is only a tentative trend line and you can not be sure that a trend actually exists.
• A trend line should not cross any of the wicks. If a trend line is broken, you will have to redraw the trend line.
• A trend line should be approximately 45 degrees. If a trend line is too steep, then it is usually not sustainable. If a trend line is too flat, then it may be a weak trend and can be broken easily.
now after we understand how to draw trends
now we will go throw the rule of the strategy
the principle : is to enter when the trend is broken
we will use some indicator to help us filtering and pick the good entry
we will use
-momentum indicator: we want the momentum to be in our side when enter >100 for long and <100 for short
-macd: to look for divergence
the rules of entry
short entry
we look for un up trend and we draw it
we wait for the break of the trend then we check the momentum indicator if it is below the zero line
when all the condition are met we enter short on the next candel open at market or we can wait for a retest of the broken trend
the stop lose is depend on the time frame and the structurs of price
for long entry we look for the same thing but in down trend
it's easy let's jump to the chart and see some real example
