Trend trading, or like in this case, a long downtrend trading, is often challenging because it’s hard to pick the right time to get in and out of the trend.
But what if you can apply a simple strategy with clear Entry and Exit levels during a trend?
In this article, you will learn this simple trend-following strategy and also some moving average trading secrets!
What we use are just two technical analysis indicators that are available on TradingView:
- Moving Average (available for free on TradingView)
- Advanced Signal Bars (available with a free trial)
By simply combining these two indicators we’ve developed our downtrend trading strategy which you can see in action during the following long downtrend trading opportunity.
Trade setup – 1 Feb 2018
By looking at the price action, it looks like we are at the beginning of a downtrend and we get ready to apply our trend following strategy.
Moreover, we have a confirmed setup because:
-
- The price is below the 54 Moving Average
- The price just broke down the green horizontal line drawn by the Advanced Signal Bars
Because of this, we place our order with a 1:1 Risk-Reward.
A little secret: if you want to learn how to use moving averages in forex, especially for trend trading, then try to increase their length.
They will show you the bigger picture! (That’s why we chose 54 for our Moving Average.)
Trade update – 1 Feb 2018
This trade was very fast and within a few hours, we got our 1x return.
It now looks like the price will continue to move lower since it has made a very long down candle and the moving average is now turning to the downside.
Trade update – 2 Feb 2018
The price is indeed continuing to move down and we just got involved in a second trade.
Trade update – 5 Feb 2018
This second trade has been slightly longer but rather fast as well. The price is just falling and so we should expect even more opportunities.
Trade update – 5 Feb 2018
We got a third one so we just got involved with the same 1:1 risk-reward strategy.
Trade update – 6 Feb 2018
And even this one has been very quick which should not be a surprise considering that we can now confidently say that we are in a major downtrend.
Considering the price action, we should expect even more opportunities for this downtrend trade.
Trade update – 7 Feb 2018
After some tricky candles, we clearly got a fourth trade setup so, once again, we just execute the same easy forex strategy that we used so far and which already earned us a 3x profit.
Trade update – 8 Feb 2018
Unfortunately, we’ve been stopped out in this one but probably it’s just that we’ve been unlucky because the price is moving sideways, which should indicate a further downward movement continuation.
Trade update – 8 Feb 2018
After just a few hours we have yet another trade setup so we just got involved in the fifth trade.
Trade update – 9 Feb 2018
This time the trade was a winning one. What an amazing downtrend!
Let’s just wait and see if we can get more because the price is pretty far from the moving average and so it could just continue to move down.
Trade closed – 12 Feb 2018
After a couple of days, it looks like the major downtrend is over.
In the end, by following this trend following strategy, we ended our long downtrend trading with a nice 3x net profit.
Most of the time, by applying this strategy, we end up in a range between 2x and 5x profit during the whole uptrend or downtrend.
But now we’d like to hear from you!
If you like trend trading, have you already tried this strategy?
Let us know by leaving a comment on the video above.
