Trend Continuation Strategy
Trend Continuation Strategy. Any time frame. Any symbol.
My personal experience with this strategy is an approximate 60% win rate and 2.45 profit factor. The profit factor is the key, not the win rate. Tight stops keep losses to an absolute minimum, while a take profit equal to at least 3 times the stop maximizes profit. I add a trailing stop equal in value to the entry stop and just let my trades run. In a typical trend I will win 3 to 4 trades and lose 1 to 2 trades. Do the math and you will see why this strategy is so profitable and reliable. Simple rules eliminate emotion, which is a giant step forward for newbies and experienced traders alike.
About the strategy
Trade alerts are triggered by Stochastic (5,3,3, Close/Close) crossovers that occur at or below the 20 level (buy) and at or above the 80 level (sell), which are confirmed by the slope of the EMA50 (Close). A Stochastic cross-up is confirmed if the EMA50 is sloping up, and a Stochastic cross-down is confirmed if the EMA50 is sloping down. Trade alerts are ignored if the EMA50 is flat and trending sideways. Entry stop loss is set just below the previous low for a buy, and just above the previous high for a sell. I trade the H4 time frame so I use a 10 pip buffer. Take profit is set at 3 times the stop loss value, i.e. 30 pip stop equals a 90 pip take profit. Very simple rules.
I learned about this strategy from Sam Seiden, a veteran floor trader with 15 years experience on the Chicago Mercantile Exchange. I put it into practice straight away, and the results were immediate. That gets me excited so I want to share this strategy with you and others. The strategy is free for anyone willing to watch Sam Seiden's 44 minute video below. If you like it, have tested it, and want to automate trade alerts, my Market Scanner indicator is the solution. First, here's the video:
I don't like to spend too much time at the computer scanning for trade alerts, so I have put together the Market Scanner indicator to automate this task. Market Scanner applies the strategy rules to 28 currency pairs plus Gold and Silver, and generates trade alerts when the rules are met. Trade alerts are highlighted in gold in the symbol list displayed on the chart screen. Click the symbol button to open the relevant price chart for visual confirmation according to the strategy rules. Tip: Create a chart template with EMA50 and Stochastic, and Market Scanner attached, and save it as the "default" template. This template will automatically open whenever you click a symbol button on Market Scanner.
When an order is opened, Market Scanner will display (B) for a buy and (S) for a sell, and tag the current order profit/loss next to this. The button will change color to red for a losing position and green for winning position. This makes it easy to view the status of all open positions at a glance. Just a simple piece of software that you can use to save a lot of time and improve trading efficiency!