Positron Investments

Trading & Education in Options, Futures, Stocks, Forex
  • Home
  • Technical analysis
    • Technical analysis basics
    • Candlesticks patterns
  • Options
    • Options basics
    • Options strategies
    • Binary options OTC
  • Futures
    • Futures basics
  • Forex
    • Forex basics
  • Market View
  • Contact
  • el

Calendar

⇐ ⇒January 2021
MTWTFSS
28293031123
45678910
11121314151617
18192021222324
25262728293031

Categories

  • Day/swing trades
  • Economy/Politics
  • Trading signals
  • Trading strategies

Archives

A very simple trading strategy

A simple trading strategy doesn’t mean an unreliable strategy, on the contrary. Success in trading lies on a set of simple rules that have to be followed strictly. By rules we basically mean technical analysis and risk management rules.

A very simple trend following strategy which works in all time frames (day & swing trading) is to open long positions when the price of a financial instrument (currency pair, stock, future, etc.) is visiting a clear trend-line after a correction, just like the daily chart of stock ALL below in which we have a clear uptrend and a clear trend line.

 daily chart trend following strategy

Notice that trends are not always accompanied by a clear trend line and in that case we cannot apply the strategy.

In the above chart first we have to spot the trend by defining two consecutive higher lows and higher highs (points 1, 2, 3, 4) and then entering long at points 5 or 6. 

The stop loss order should be placed below the trend line and the profit target should be above the previous high (based on the assumption that the price will continue up trending).

Additionally, in a downtrend we should open a short position after defining two consecutive lower highs and lower lows, like in the 5 minutes chart of PKI below.

 pki trend following strategy

We can spot the downtrend by using points 1, 2, 3, 4 and we can open short positions at points 5, 6. The stop loss will be above the trend-line and the profit target below the lower low (based on the assumption that the price will continue down trending).

Of course just like in every trading strategy don’t always expect to be correct, mostly at the times that the trend is about to reverse. Also very tight stops might close the position prematurely although the price could still move as anticipated.

Last and more important we are actively managing the trade and changing the stop order if the price is moving in our favor in order to ensure profits.

 

trading strategy, trend following, trendline

Leave a Reply Cancel reply

Your email address will not be published.

Links

  • Bloomberg.com
  • Capital.gr
  • chartmill.com
  • Finviz.com
  • Forexfactory.com
  • Freestockcharts.com
  • Yahoo Finance

Recent posts

  • Possible breakdown in Greek stock exchange
  • Application of a simple strategy in EUR/USD
  • S&P 500 runs out of fuel
  • Short term downtrend in Greek stock exchange
  • Possible upward movement in S&P 500

Blog categories

  • Day/swing trades
  • Economy/Politics
  • Trading signals
  • Trading strategies

About Positron

Curriculum vitae
Sitemap

Share

Copyright © 2018 Positron-investments.com - All rights reserved.

  • En En
  • Gr Gr