Very simple trend-following set-up

This is a discussion on Very simple trend-following set-up within the Swing & Position Trading forums, part of the Methods category; Originally Posted by tomorton I like this simple trend-following systen too, FX-Ed, by Ed Ponsi ("Forex Patterns & Probabilities", 2007) ...

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Old Jul 6, 2015, 9:49am   #33
 
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Originally Posted by tomorton View Post
I like this simple trend-following systen too, FX-Ed, by Ed Ponsi ("Forex Patterns & Probabilities", 2007)

* Check 10, 20, 50, and 200EMAs in descending order (for uptrends)
* Check for at least the last 10 consecutive closes above 10EMA
* Buy when price dips intra-day below 10EMA
* Set a stop-loss equivalent to half the daily ATR (14 days) below the 10EMA: trail this higher as price rises, leave it alone if price falls.

(invert directions for short in a downtrend)

I've used systems like this very successfully for non-short-term trading. The important thing seems to be getting the MAs reasonably parallel and in the correct order. You can play about with different values/types/prices but it all comes out more or less the same in the end if you spot a good trend. Using PSAR makes for a good stop wide enough to keep you in the trade commensurate with enough risk to make it profitable while trailing and reducing as the trade becomes more profitable – again quite useful to play around with the PSAR settings to find what suits you best.

The best thing about this mode of trading for me is that it's basically "fire and forget" just do most your work at EOD and let the profits accrue. Scanner software will find your potential trades very easily, feed that data into a spreadsheet to work out the best trades, place your order the next day. Nice and simple.
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Old Sep 4, 2015, 6:27pm   #34
Joined Feb 2002
tomorton started this thread Not a bad day for trend followers, despite the NFPR and everything else.

Its a simplistic guide that its good to buy when price is above the 200EMA and short when its below.

Of the 35 pairs that I monitor, 31 followed that simple rule today (so far) - most of those that started the day above the 200EMA went up, most of those below the 200EMA went down. Looking at the weekly price changes, 24 of the 35 went the "right" way.

Quite pleasing really. Best of luck all.
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