126# 5min Trend Follower

Submit by Janus Trader

Time frame: 5 minutes
Trading time: From EU open until US close
Recommended Forex Pairs: USD/JPY, USD/CHF, GBP/USD, EUR/USD, USD/CAD, AUD/USD, EUR/JPY and Gold

Trend Follower is a trend following system. If you ever heard the saying Trend is your friend, this system will show you the mechanics behind these words. Its unique approach to the market will give you a great understanding of market movements and allow you to see that what happens is not random but an underlying order behind price movement. Through practicing these exact rules with which the system was designed, you will get a more clear picture of the market and begin to reap the financial rewards.

The system was created from a need not only to trade profitably but also to give the traders a more clear picture of what they are doing and why they are doing it. Many commercial or public system just consist out of indicators without giving a clear understanding of price movement and inform the trader with signals without him knowing why he got the signal and why he should enter the trade. This way a trader will not thrust the method and as a result he will have a hard time being consistent.

If you don’t know exactly what you are doing, you can not thrust the system and if you can’t thrust the system to follow the exact rules, you will not be profitable. Trend Follower ensures that the entries and exits are clearly defined and at the same time allow the trader to be able to explain why he took the trade!

Traders are no longer subjects of spikes, volatile markets or rallies that mess up many good systems. Money management is also a very important aspect of the system and you should take a good look at some articles on the Internet or in a book about it, although we have covered exits and entries in the rules section. Without proper money management one is bound to fail in the long term! MONEY MANAGEMENT! Burn these words into your head.

Trend Follower is unique in that it doesn’t attempt to predict the future but rather a tool that helps you to recognize the current trend and lets you go with the current flow. Mastering the system will give you greater peace of mind because you won’t need to keep up with the economical events, trying to figure out the meaning of numbers, or opinions of experts. Unlike most other trading systems Trend Follower does not depend on past performance and should work on every market. Its formulas are not based on pattern recognition and random selection of indicators, but rather a clean understanding and timing of the market. 

In the picture 5 min trenf follower forex system in action.

The indicators are:

a) Signal Arrows
b) MACD
c) Volatility Channel
d) Laguerre
e) Slope Direction line
f) Pivot Points
g) Guppy Multiple Moving Averages (GMMA)

The Rules

Trend Follower – The Rules

All the criteria must be met at the bar with signal or one after! If everything is not met at the signal bar or one after, leave it alone! It might eventually go the right way, but in the long term it will give more false trades. Only take trades where at the signal bar or one after all these rules apply! We enter the next bar after the signal.

Long\Buy

ENTRY: First We wait for a long signal alert
GUPPY MMA: The green lines must be above the red lines! Green, Red and Yellow lines must agree and head north. All the lines must be going in the same direction!
LAGUERRE: Laguerre line must cross the 0.15 from below and head up
MACD: This is important! When you get the signal MACD must be above 0

STOP LOSS: 5 points (+spread!) below recent LOW
ALTERNATE STOP LOSS: 20 points on default pairs and 25 point on more volatile pairs such as the GBP pairs and crosses. Choose whatever SL method fits you best
EXIT (combined): When you open a position you can then choose to close half of the position on the first pivot point and let the other half run till the slope direction line goes red
ALTERNATE EXIT: You can choose your own method and close positions at pivot points or when slope direction line goes red after a move, or when price (a new candle) opens on the other side of the volatility channel

Short\Sell

ENTRY: First We wait for a short signal alert
GUPPY MMA: The green lines must be below the red lines! Green, Red and Yellow lines must agree and head south.All the lines must be going in the same direction!
LAGUERRE: Laguerre line must cross the 0.75 from above and head down
MACD: This is important! When you get the signal MACD must be below 0

STOP LOSS: 5 points (+spread!) above recent HIGH
ALTERNATE STOP LOSS: 20 points on default pairs and 25 point on more volatile pairs such as the GBP pairs and crosses. Choose whatever SL method fits you best
EXIT (combined): When you open a position you can then choose to close half of the position on the first pivot point and let the other half run till the slope direction line goes blue.
ALTERNATE EXIT: You can choose your own method and close positions at pivot points or when slope direction line goes red after a move, or when price opens on the other side of the volatility channel.

Breakouts

Though we avoid trading breakouts, the guppy MMA shows us exactly when this is happening. Once a breakout has occurred whereby the yellow lines cross the red lines but the green lines are still below the red, we would expect the yellow lines to retrace back. This is the point where we would be waiting to place our new positions in the direction of the new trend. Please note that you DO NOT place trades during a breakout but after the prices have retraced which is denoted by the green and red lines changing positions.

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