The trend is our friend.
But... what is the trend? How to track the trend? There will be dozens of methods.
Today I'll make a brief introduction of my Algo Trader System, which could well define and track the trend on 60 min and 240 min chart.
It was created and backtested in Esignal.
I just translated it into MT4 for several days.
The logic of Algo Trader includes price action, pivot and my own trend following method.
It could work on 9 pairs (H1 and H4 timeframe)：
The basic logic are the same, but the calculation method and filters are different for every pair and every timeframe.
Chart 1: Algo Trader System (Click on the image to enlarge)
1. When short term trend, medium term trend and/or long term trend all turn green, and the price also closed above the upper bands, this should be a perfect buy opportunity, exit on price close below lower bands.
(The stop loss level could also be 5 pips below recent swing low)
Chart 2: Perfect buy trade setup (Click on the image to enlarge)
2. When short term trend, medium term trend and/or long term trend all turn magenta, and the price also closed below the lower bands, this should be a perfect sell opportunity, exit when price close above upper bands.
(The stop loss level could also be 5 pips above recent swing high)
Chart 3: Perfect sell trade setup (Click on the image to enlarge)
H4--Medium term trade
H1--Intraday short term trade
Chart 4: Intraday short term trade setup (Click on the image to enlarge)
4. Combined H1 and H4 timeframe, we could well read the market.
Chart 5: Recent EURUSD Moving (Click on the image to enlarge)
5. Combined with Elliottwave theory to maximize profit and avoid potential immature entries
For a long time, I traded on manually Elliottwave analysis and look for top and bottom signs at potential turning points.
After Algo Trader system was created, I find the whole work becomes very easy.
To my experience, try to trade wave 3 and wave 5 should be more profitable.
Now let's see recently USDJPY uptrend from 104.63 to 111.39.
After all the candles are flagged on the chart, we find it is a textbook 5 wave rally.
However, it is extremely hard to identify it during the trend developing.
Combined with Algo Trader system, we could pick most of the movement in wave 3 and wave 5.
Also could avoid the sell trade of a potential double top formation in wave 5.
Chart 6: track the movement of wave 3 (Click on the image to enlarge)
Chart 7: identify wave 5 (Click on the image to enlarge)
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Views are my own, not trading recommendations.