Klanny Slope Trend Forex Trading Strategy

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Klanny Slope Trend Forex Trading Strategy 1

Trading the forex markets is a very demanding job. It requires traders to develop skills that are not inherent in most people. This includes the ability to understand price charts, price action and technical analysis. On top of that, traders must be emotionally tough in order to withstand the emotional swings that the market would be bringing them. Traders have to be resilient both mentally and emotionally. Most people are not cut for this type of job. It takes so much to be a trader. However, there are ways in order to simplify trading. It allows traders to understand market movements quite easily and anticipate what the market might do next. In fact, this is what most profitable traders do. Simplify the process by making use of tools that give traders an edge. This is by making use of technical indicators. Technical indicators help traders understand market sentiment, momentum, trend and even pinpoint exact entry points to trade. This makes it a lot easier, right? It does not mean traders could forgo analyzing the market and being emotionally resilient. All it does is help traders simplify the process to make things a lot easier.

The Klanny Trend Forex Trading Strategy makes use of such technical indicators. The indicators used in this strategy help traders identify trend direction with great accuracy, and pinpoint probable entry points that have a high probability of resulting into profitable trades. It also makes use of a positive reward-risk ratio, which allows traders to have positive expectancy while using this strategy.

Linear Regression Slope

The Linear Regression Slope is one of the tools used in trading in order to determine momentum and trend direction. This is a common statistical method which is also used in trading in order to identify the direction of the dominant market trend. This indicator is an oscillating indicator similar to most momentum indicators such as the Moving Average Convergence and Divergence and the likes.

It measures the trend based on the movement of historical prices. This is done by measuring the slope of the bars brought about by price changes. The Raw Slope Value is multiplied by 100, then divided by the current price. This method normalizes the slope. The result of this indicates the rate of increase or decrease of the current price. A normalized slope of 0.33 for example means that price is increasing at a rate of 0.33%. Negative normalized slopes on the other hand simply means that price is decreasing at a certain rate.

The Linear Regression Slope is an oscillating momentum indicator. As such, it also has a midline which helps determine trend direction, which is at zero. Whenever the Linear Regression Slope crosses above zero, then the market is said to be having a bullish trend reversal. On the other hand, crossovers below the midline means that the market is having a bearish trend reversal. This is quite understandable given that positive Linear Regression Slope means an increasing price, while negative Linear Regression Slope means a decreasing price.

Klanny Trend Indicator

The Klanny Trend indicator is a custom indicator used to identify possible entry points in a market. These entry points are based on momentum. This makes the indicator quite useful as an entry trigger, since many momentum price moves result in a trend.

This indicator is best used when paired with an indicator that helps determine the mid- to long-term trends. By doing so, traders could align the short-term momentum shift with the longer-term trend reversal.

Trading Strategy

The Klanny Slope Trend Forex Trading Strategy is a momentum-based strategy which makes use of the trend shifts based on the Linear Regression Slope. The trend reversals indicated by the Linear Regression Slope have a high probability of pinpointing the direction of price movements. This is because the Linear Regression Slope is in fact a probability-based indicator.

Paired with the Klanny Slope indicator, the Linear Regression Slope becomes even more powerful. Trend reversals indicated by the Linear Regressions Slope indicator usually have a good chance of resulting in a profitable trade when confirmed by the Klanny Slope. This is because the entry signals provided by the Klanny Slope indicator are momentum-based.

Indicators:

  • LinearRegSlope_v1
    • Length: 36
  • KlannyTrend

Timeframe: preferably 4-hour and daily charts

Currency Pairs: preferably major and minor pairs

Trading Session: Tokyo, London and New York

Buy Trade Setup

Entry

  • The Linear Regressions Slope line should cross above the midline indicating that price is increasing by a certain degree
  • The Klanny Trend indicator should produce an arrow pointing up indicating a bullish momentum price movement
  • These bullish signals should be somewhat aligned
  • Enter a buy order on the confluence of the above conditions

Stop Loss

  • Set the stop loss at the support level below the entry candle

Take Profit

  • Set the take profit target at 1.5x the risk on the stop loss

Klanny Slope Trend Forex Trading Strategy 1

Klanny Slope Trend Forex Trading Strategy 2

Sell Trade Setup

Entry

  • The Linear Regressions Slope line should cross below the midline indicating that price is decreasing by a certain degree
  • The Klanny Trend indicator should produce an arrow pointing down indicating a bearish momentum price movement
  • These bearish signals should be somewhat aligned
  • Enter a sell order on the confluence of the above conditions

Stop Loss

  • Set the stop loss at the resistance level above the entry candle

Take Profit

  • Set the take profit target at 1.5x the risk on the stop loss

Klanny Slope Trend Forex Trading Strategy 3

Klanny Slope Trend Forex Trading Strategy 4

Conclusion

This trading strategy is a momentum-based strategy that provides good quality trade signals. Most of the entry signals provided by this strategy would result in a profit. On top of it, the strategy itself makes use of a fixed take profit target. This gives the strategy a positive expectancy.

It is best to pair this strategy with some price action technical analysis focused on identifying momentum price movements. This would give the strategy an even better expectancy as most signals that are in confluence with a momentum price movement would result in a profitable trade.

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