Big Trend Bar Trend Forex Trading Strategy

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Big Trend Bar Trend Forex Trading Strategy

High probability trading is all about increasing the probability of getting a winning trade. It does not mean you will win all the time, but it should mean that you are winning more often than losing. This is called a positive expectancy. In the long run, if you could accumulate many trades using the same setup, the strategy should allow you to have more wins than losses.

One of the best ways to increase the probability of a trade is by looking for confluences. This means finding trades wherein several factors point to the same direction. Some traders look for confluences based on price action and patterns. Others look for confluences based on indicators. Others look for confluences of market bias.

One of my favorite trades are setups wherein there is a confluence between a bigger picture trend and a short-term momentum. In these types of setups, the market flow is moving in the direction of your trade because of the trend. The only case wherein you will be trading against the flow of the market will be if you are catching the tail end of the trend and the trend is already reversing. However, in a trending market condition, there will be several price expansions in the direction of the trend and just one reversal move.

Big Trend Bar Trend Forex Trading Strategy is a strategy that systematically provides confluences of a trending market and a short-term momentum. This allows traders to enter the market in the direction of the trend as it is expanding in the same direction.

TSR Big Trend

TSR Big Trend is a trend following custom technical indicator. It is based on a modified moving average which is smoothened out to provide a more reliable trend indication.

The TSR Big Trend indicator plots a moving average line which follows the direction of price action. It would slope up if the trend is bullish and slope down if the trend is bearish. The line also changes color to indicate the changing of the trend direction based on its slope. A light blue line indicates a bullish trend, while a tomato line indicates a bearish trend.

The moving average line of the TSR Big Trend indicator has a smoothened-out characteristic. This allows the indicator to maintain its trend bias even if the market starts to become choppy as it enters a market contraction phase during retracements. However, despite its smoothened characteristics, it still manages to be very responsive, making it useful as a trend direction filter and a trend reversal signal.

TSR Bar Trend

TSR Bar Trend is another custom technical indicator which is developed to indicate short-term momentum.

This indicator overlays bars over a price candle to help traders identify the direction of the short-term momentum or trend. The bars change color depending on the direction of the trend, based on the average price movements of historical prices.

The indicator plots dark green bars to indicate a bullish short-term momentum and purple bars to indicate a bearish short-term momentum.

TSR Bar Trend is mainly used as an entry signal. This is because of the precise reversal signals that it could produce. Traders could simply take trades based on the changing of the color of the bars. However, it should also be aligned with other indications in order to have a higher probability trade.

Trading Strategy

This strategy trades on confluences of trend direction and short-term momentum using the TSR Big Trend and TSR Bar Trend indicator.

The TSR Big Trend indicator is used as the trend direction filter. Trend direction will be based on the slope of the TSR Big Trend line, the color of the line, and the location of price in relation to the line.

Aside from being a trend filter, the TSR Big Trend line will also be used as a dynamic area of support or resistance. As soon as we identify a trend, we wait for price to retrace and bounce off the TSR Big Trend line.

To confirm the bounce off the TSR Big Trend line, we will be using the TSR Bar Trend indicator. Trades are taken as soon as the TSR Bar Trend indicator shows a reversal based on the changing of the color after price bounces off the TSR Big Trend line.

Indicators:

  • (T_S_R)-BAR Trend
  • (T_S_R)-Big Trend
    • Period: 200

Preferred Time Frames: 30-minute, 1-hour, 4-hour and daily charts

Currency Pairs: FX majors, minors and crosses

Trading Sessions: Tokyo, London and New York sessions

Buy Trade Setup

Entry

  • The TSR Big Trend line should be light blue and should be sloping up.
  • Price should be above the TSR Big Trend line.
  • Price should retrace towards the TSR Big Trend line and bounce off it.
  • Enter a buy order as soon as the TSR Bar Trend indicator plots a dark green bar.

Stop Loss

  • Set the stop loss on the fractal below the entry candle.

Exit

  • Close the trade as soon as the TSR Bar Trend indicator plots a purple bar.

Big Trend Bar Trend Forex Trading Strategy

Big Trend Bar Trend Forex Trading Strategy 2

Sell Trade Setup

Entry

  • The TSR Big Trend line should be tomato and should be sloping down.
  • Price should be below the TSR Big Trend line.
  • Price should retrace towards the TSR Big Trend line and bounce off it.
  • Enter a sell order as soon as the TSR Bar Trend indicator plots a purple bar.

Stop Loss

  • Set the stop loss on the fractal above the entry candle.

Exit

  • Close the trade as soon as the TSR Bar Trend indicator plots a dark green bar.

Big Trend Bar Trend Forex Trading Strategy 3

Big Trend Bar Trend Forex Trading Strategy 4

Conclusion

This trading strategy works well in markets which have a clear trend with deep retracements that rejects the TSR Big Trend line. Trades that are taken in this type of market condition using this strategy should produce high probability trades with positive reward-risk ratios.

There will be times wherein the market is trending, but the retracements do not touch the TSR Big Trend line. These are cases wherein the market trend has a strong momentum. If the market retraces toward the line, often it would go straight through it because price is reversing from an overextended condition. In these cases, it is best to move to a lower time frame because it might be in the lower timeframes where price is rejecting the TSR Big Trend line. However, do not use this strategy in very low timeframes because it tends to be less reliable as the timeframe gets lower.

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