With the help of the Auto Trendline indicator for MT4you can implement whichever trendline trading strategy fits your style. A trendline trading strategy is one of the most popular choices amongst Forex traders.
When it comes to developing a Forex trading strategy, just remember that trendlines are not the holy grail. Then we'll apply the indicator to some trendline trading strategies for breakouts and reversals. No longer do you have to manually draw and update trendlines on your chart.
Trendline Trading: What to Do (And Not to Do)
Just let the indicator do the work for you. As you can see, there are only ever a maximum of 2 trendlines on your chart at any time.
A bullish trendline in blue. A bearish trendline in red.
Trendline Trading Strategy
It determines whether price has invalidated a particular line and automatically removes it from your chart. Each type of trendline trading strategy is outlined and analysed below.
Trendline Breakout Strategy The first trendline trading strategy that you can implement is the breakout strategy. Breakouts can provide some of the most explosive moves in Forex. For best results, only look to buy while the market is in a higher time frame, bullish trend. Or only looking to sell, while the market is in a lower time frame bearish trend. How to trade when taking a long position: Identify a bearish trendline on your chart in red.
Now before I dive into specific Trend Line strategies and techniques, you must first learn how to draw a Trend Line correctly. And which to ignore? An example: Because a Trend Line can also alert you when market conditions are changing.
When a trendline breakout occurs, take a long position. For a conservative entry, wait for a retest binary options trading platform from 3 the broken trendline resistance as support.
Place your stop loss below the previous swing low and target a risk:reward ratio that works for you.
3 Trendline Strategies
Remember, you can follow the steps in the opposite direction when taking a short position. We identified a bearish trendline, took a long position when the trendline was broken and rode the momentum in the move higher.
You can also see that the Trend lines trading strategy Auto TrendLine indicator printed a bullish trendline in blue, supporting the idea that the trend was changing and a breakout was imminent. All these little things help.
Trendline Reversal Strategy The second trendline trading strategy that you can implement is the reversal strategy. Reversal trading is a safe trading strategy.
The Utility Of Trendlines
Support and resistance levels are in play, until they are broken. For this reason, many traders like to trust them by trading reversals rather than breakouts.
Once again, the trend is your friend. Only look to buy while the market is in a bullish trend and look to sell while in a bearish trend. Steps to follow when taking a short position: Identify a bearish trendline on your chart in red.
When a trendline bounce occurs, take a short position.
The Utility Of Trendlines
Place your stop loss above the previous swing high and once again target a risk: reward ratio that works for you. Remember, you can follow the steps in the opposite direction when taking a long position. A bearish trendline was printed, we took a short position when price looked to hold the level and we allowed the trend to continue to trend lines trading strategy price lower.
You can see that on the last touch that the trendline indicator used to draw the line, price printed an inverted hammer. Just another supporting price action indicator that points out that a reversal at resistance is imminent. Use whatever works for you as additional confirmation.
Final Thoughts on Choosing a Trendline Strategy When choosing a trendline trading strategy, success will depend on your personality as a Forex trader.