(+) Swing Trade Strategies

RIDING THE TREND TRADING STRATEGY

Following the master trend is the wisest strategy, whether you are a day-trader or a swing-trader.

 TRADING STRATEGY

■ Style: Swing Trade Strategy

■ Name: Riding the Trend Trading Strategy

FINANCIAL ASSETS

■ Forex Majors | ■ Metals and Energy | ■ Stocks | ■ Indices

 TIMEFRAME

■ H1 timeframe (1-Hour)

 INDICATORS & SETUP

This strategy uses a simple model for trend determination combined with the Stochastic indicator.

■ Determining the Trend

To identify the trend, we use the simplest definition of trend formation.

⬆️ Rising Trend:

A trend is rising when a local high is higher than the previous high, and at the same time, the recent low is higher than the previous low.

⬇️ Falling Trend:

A trend is falling when a local low is lower than the previous low, and at the same time, the recent high is lower than the previous high.

■ Stochastic

At a Glance: The Stochastic Oscillator

The Stochastic Oscillator measures a currency pair's closing price relative to its price range over a specified period—typically 14 days. It generates two lines, %K and %D, which oscillate between 0 and 100. This indicator helps identify overbought conditions (above 80) and oversold conditions (below 20), signals momentum shifts through line crossovers, and highlights potential reversals by spotting divergences between price action and the oscillator.

Settings:

• %K period = 12, %D period = 3, Slowing = 3
• Note that the standard settings are (14,3,3)

 TRADING SIGNALS

This is how you can implement the Riding-the-Trend Strategy:

■ (↑) Long Trades

1. Identify a new uptrend using the simple definition:
   “The new high is higher than the previous high, and the recent low is higher than the previous low.”

2. Confirm that the Stochastic is recovering from oversold levels around 20, then enter a long trade.

■ (↓) Short Trades

1. Identify a new downtrend using the simple definition:
   “The new low is lower than the previous low, and the recent high is lower than the previous high.”

2. Confirm that the Stochastic is falling from overbought levels near 80, then enter a short trade.

 TRADING ORDERS

■ Take Profit: 100 pips

■ Stop-Loss: 40-50 pips

■ Profit/Loss Ratio: 2

CHART: Riding the Trend Strategy

■ Riding the Trend Trading Strategy

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THE MOVING ENVELOPES TRADING STRATEGY

Moving averages can be a great tool for identifying the master trend and signaling trades by using Moving Average Envelopes.

 TRADING STRATEGY

■ Style: Swing Trading Strategy

■ Name: Trading the Moving Envelopes Strategy

FINANCIAL ASSETS

■ Forex Majors | ■ Metals and Energy | ■ Stocks | ■ Indices

 TIMEFRAME

■ H1 timeframe (1-Hour)

 INDICATORS & SETUP

This strategy uses two Moving Averages and the ADX.

To create the envelope, you need two simple moving averages (SMAs). Any signal generated by the SMAs is confirmed using the Average Directional Movement Index (ADX).

1. Two SMAs (Two Simple Moving Averages)

Settings:

• SMA-1 (fast): choose 9 periods
• SMA-2 (slow): choose 21 periods

2. ADX

At a Glance: ADX

The ADX (Average Directional Index) measures the strength of the trend (not direction) on a scale from 0 to 100. Values below 20 suggest a weak or sideways market, readings above 25 indicate a strengthening trend, and levels above 40 reflect strong momentum. It is commonly used alongside the +DI and –DI lines to determine the trend’s direction.

Settings:

• MetaTrader-4 default settings (ADX 14)
• Level 40 is added

 TRADING SIGNALS

This is how you can implement the Trading the Moving Envelopes Strategy:

■ (↑) Long Trades

If the fast SMA (9 periods) crosses above the slow SMA (21 periods), you get a buy signal. Confirm this signal with a falling ADX, which indicates decreasing market volatility—often a positive sign for an upcoming bullish trend.

■ (↓) Short Trades

If the slow SMA (21 periods) crosses above the fast SMA (9 periods), you get a sell signal. Confirm this signal with a rising ADX, which indicates increasing market volatility.

 TRADING ORDERS

■ Take Profit: 240-300 pips

■ Stop-Loss: 80-100 pips

■ Profit/Loss Ratio: 3

CHART: MOVING ENVELOPES (EURUSD)

■ Trading the Moving Envelopes Trading Strategy

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