Turtle High Low Trend Forex Trading Strategy

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Turtle High Low Trend Forex Trading Strategy

Most traders make money trading trend reversals. Traders would often look for charts that show signs that the market is reversing, either through moving average crossovers, price action patterns or various indications of a possible trend reversal coming from technical indicators. This is a very logical way to make money out of forex trading. Trading trend reversals allow traders to squeeze the most profit out of a single trend by entering the market at the start of the trend and holding on to the trade until the end of the trend.

However, catching trend reversals as it starts is very difficult. At times, traders often identify trend reversals when it is already too late.

For those times when we miss the start of the trend, we could make use of a trend re-entry type of setup. Although it is not an actual type of trading strategy, it could be considered as a type of trend following strategy. Trend re-entry assumes that a trending market is already established and is clearly observable on the price chart. There are a couple of options traders could do in this kind of market scenario. First, they could wait for the next trend reversal. However, there would be an opportunity lost as price could still move in the direction of the trend. The second option is to enter the market in the direction of the trend in the middle of the trending move. The risk is that price may actually reverse or that we might be chasing the market and could be trading at the peak of the trend. Re-entering the market requires good timing as we would want to aim for the retracements as price contracts prior to the next momentum thrust in the direction of the trend.

The Turtle Trading Channel

The Turtle Trading Channel is a custom trend following technical indicator which is based on the highs and lows of price action. It attempts to anticipate trend direction based on how price responds to extreme price levels within its preset period.

This indicator plots a solid line which indicates the trend direction, called the Trade Period. The Trade Period line indicates trend direction based on its color and its location in relation to price action. A blue line below price action indicates a bullish trend bias. A red line above price action indicates a bearish trend bias.

It also plots another line which is a dotted line, called the Stop Period. This line is based on a shorter period and is mainly used as a stop loss placement tool for trades taken in the direction indicated by the Trade Period line.

Gann High Low Activator Bars

The Gann High Low Activator Bars is a momentum indicator which is focused on short-term momentum reversals.

It indicates momentum direction by overlaying bars on the price candle. These bars change color depending on the direction of the momentum. Blue bars indicate a bullish momentum, while red bars indicate a bearish momentum.

Traders can use this indicator as an entry signal based on momentum shifts. It is a powerful entry signal when taken in the direction of a larger trend.

Trading Strategy

Turtle High Low Trend Forex Trading Strategy is a simple trend following or trend re-entry strategy which aligns a shorter momentum reversal with a longer trend.

The main trend direction is based on The Turtle Trading Channel indicator. Trades should be taken in the direction of the trend as indicated by the color of the Trade Period line.

The Gann High Low Activator Bars is used as the entry signal based on the short-term momentum shifts.

We should first identify a trending market based on the Turtle Trading Channel indicator as well as the characteristics of price action.

After identifying a trending forex pair, we then wait for price to temporarily retrace or contract. This would cause the color of the Gann High Low Activator Bars to temporarily reverse. Trades are taken as soon as the Gann High Low Activator Bars revert back to the color which agrees with the direction of the main trend.

Indicators:

  • TheTurtleTradingChannel
  • Gann HiLo activator bars

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

Currency Pairs: FX majors, minors and crosses

Trading Sessions: Tokyo, London and New York sessions

Buy Trade Setup

Entry

  • The Turtle Trading Channel trade period line should be below price action and should be color blue.
  • Price action swing points should be plotting higher swing highs and swing lows.
  • The Gann High Low Activator Bars should temporarily change to red.
  • Enter a buy order as soon as the Gann High Low Activator Bars revert to blue.

Stop Loss

  • Place the stop loss below the stop period line.

Exit

  • Close the trade as soon as the Gann High Low Activator Bars change to red.

Turtle High Low Trend Forex Trading Strategy

Turtle High Low Trend Forex Trading Strategy 2

Sell Trade Setup

Entry

  • The Turtle Trading Channel trade period line should be above price action and should be color red.
  • Price action swing points should be plotting lower swing highs and swing lows.
  • The Gann High Low Activator Bars should temporarily change to blue.
  • Enter a sell order as soon as the Gann High Low Activator Bars revert to red.

Stop Loss

  • Place the stop loss above the stop period line.

Exit

  • Close the trade as soon as the Gann High Low Activator Bars change to blue.

Turtle High Low Trend Forex Trading Strategy 3

Turtle High Low Trend Forex Trading Strategy 4

Conclusion

This trading strategy is an excellent trend following or trend re-entry strategy. Trading in the direction of the trend based on the Turtle Trading Channel indicator tends to be a high probability trading strategy. The question is where we enter the market.

The Gann High Low Activator Bars could provide a solution for the trade entry, as it could it identify shorter reversals based on momentum.

If used in the right market condition, this strategy could produce high quality trade setups. However, the signals could also produce premature reversals if the market is too choppy. Traders should first identify clear market trends in order to avoid such choppy market conditions.

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