Trend Following Forex Strategies
Trend following is an investment strategy that tries to take advantage of long-term moves that seem to play out in various markets. The strategy aims to work on the market trend mechanism and take benefit from both sides of the market, enjoying the profits from the ups and downs of the finacial markets. Traders who use this approach can use current market price calculation, moving averages and channel breakouts to determine the general direction of the market and to generate trade signals. Traders who employ a trend following strategy do not aim to forecast or predict specific price levels; they simply jump on the trend and ride it.
This trading method involves a risk management component that uses three elements: number of shares held, the current market price, and current market volatility. An initial risk rule determines position size at time of entry. Exactly how much to buy or sell is based on the size of the trading account and the volatility of the issue. Changes in price may lead to a gradual reduction or an increase of the initial trade. On the other hand, adverse price movements may lead to an exit for the entire trade.
Price: One of the first rules of trend following is that price is the main concern. Traders may use other indicators showing where price may go next or what it should be but as a general rule these should be disregarded. A trader need only be worried about what the market is doing, not what the market might do. The current price and only the price tells you what the market is doing.
Money management: Another decisive factor of trend following is not the timing of the trade or the indicator, but rather the decision of how much to trade over the course of the trend.
Risk control: Cut losses is the rule. This means that during periods of higher market volatility, the trading size is reduced. During losing periods, positions are reduced and trade size is cut back. The main objective is to preserve capital until more positive price trends reappear.
Rules: Trend following should be systematic. Price and time are pivotal at all times. This technique is not based on an analysis of fundamental supplly and demand factors.(Wikipedia)
Forexstrategiesresources offers an great collection di trading systems trend following.
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Forex Trend Following Strategies
8# Simple moving Averege and MACD
16# Moving Average Channel and Parabolic Sar
21# Fractal and Moxo (Momentum Crossover)
31# ADX and Moving -Average Channel
33# Commodity Channel Index Average System
43# Proative and Reactive Trading
47# Schaff Trend Cycle Strategy
61# The Retracement Market Method
64# Currency/Bonds/Dollar Index Strategy
65# 100EMA and MACD “4H Strategy”
66# ForexStrategiesResources, System VII: Envelope Reversal
69# ADX, Parabolic Sar and three EMA
81# RSI Trend Following Strategy
83# 3 EMA's Forex Trading System
84# 5 EMA and 13 EMA Fibonacci Numbers
88# Riding The Trend after Retracement
104# Tom De Mark Trend Line Strategy
116# Trendline Forex Entry Signal, Two High Probability Setups
119# Sperandeo Victor, Trendline Method
120# Trading System, EMA RSI Trend
121# Ichimoku Kinko Hyo Forex Strategy
125# THE GMMA – BUBBLE TRADING
127# Moving Averege with Fractal
134# Trading System, TeKinik CRS100
136# Four Exponential Moving Averages Strategy
137# Forex indicators Trading system
140# Three exponential moving averages trading system
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