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Advanced strategy #10 (Trend Line Trading Strategy)

A truly great work has been done by Myronn, the author of the current Trend Line Trading Strategy.
Support-resistance trading, trend line trading, checking higher time frames, money management — the strategy has a concrete-like theory base and a simple implementation — a winning combination, that places it into the category of advanced strategies.

Remember, your feedback, comments and suggestions are always in great demand!

Edward Revy

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Hi Myronn,

I use stochastic as a filter in this strategy.For short entries i look for overbought zone when price intersects trend line and for long entries i look for oversold zone when price intersects trend line.I avoid all long entries if the stochastic shows overbought condition and avoid all short entries if stochastic shows oversold condition.I use 1 hour chart and 10 minutes chart.I go short when all the condition for short entry in your strategy is confirmed and stochastic is above 65 and I go long when all the conditions in your strategy is confirmed and stochastic is below 35.

Very nice work Myronn!!! Just what I was looking for. Simple, effective and timeframe independent.

Just a couple of ideas to help tweak it.

1) We never know where the bounce will take us. Follow the trend and the trend is the trend until the end. Cut your losses let the winners run. Profit targets are nice, but it's like knowing what Santa is going to bring you. Why not keep things interesting? Let things run. You are with the big, mid and small time trend, so who knows where it will go?

This CAD illustrates the point, and if you look at your added JPY you will see the same. You sold just before the big drop.
There were no candles that said that things were turning, so why not just trail the stop?

USDCAD trading

I made a big mistake a while ago that I will never forget. In the Euro pic, I was long.

EURUSD trading

This was when it was ranging, but trending up, I rode up and down three times 100+ every time. Great. My exit strat was when things were oversold, I would dump it. As you can see there were three days of indecision around 1.48 where I sold. I had bought around 1.4450 so had about 350pts. I was happy. Then it went up and up and up and didn't stop or retrace until 1.59, 1100pts later. Whatever size your lot, that is a big difference. It tasted bitter. I learned it. Learn from my mistakes, please.

There are three sides to making it in this business-- trade strategy, risk reward, and money mgmt. I am confident you have the first, maybe the second looking at your profit/loss pics, bigger winners than losers, but in real life you need . . .

2) Money Management. The 2 books that made the most difference in my trading longevity were by Van Tharp and Curtis Faith and they deal at length about position sizing and risk reward. Position size is often hard with a small account, but there are some brokers like Oanda that you can size your lots as you like, rather than in 10k or 100k lots.

I risk no more than 4% on any trade, usually I go 2% so I can trade correlated markets (which is most everything these days). 4% of my Balance goes to not the leverage, but stop loss.

Example. You have $5000 balance. You see a trade that calls for a 80pt stop. How many lots can you afford?

4% of $5000 = $200.

Then divide the $200 you can lose by the amt of pts, 200/ 80 and you get 2.5 lots. (minis) On Oanda, I can do this, but if you have standard lot sizes, I would suggest rounding down to 2. Say your R is 2 (Risk reward is 1:2). You make $400. Balance is now $5400, so 4% is $216. That is the power of compounding.

An option for this is to liquidate half at that PT and let the other run. Best of both worlds.

I have made more money using smaller lots and larger stops than larger lots and smaller stops. Before Oanda, thinking of a 100pt stop made me sweat.

Van Tharp just came out with a whole book on position sizing worth $150. I sold book reports as a kid, now I take paypal for my synopsis of trade methods. The account number is . . .. just kidding. Buy me a bottle of good rum on your first million.

Myronn, I don't know what your background is, stocks, commodities, hammering nails, but this idea is good. Put it all together and you will do well.

Pura Vida

Grant

Hello all,

good to see some comments on the trendline trading strategy. To the user who submitted a comment on stochastics, (that reminds me, could you pls put your names/nicknames whatever so we can address you as a person pls & not a faceless characters becuase i understand you are flesh & blood like me)

It you can futher refine this trading strategy by using a certain indicators to filter entries & if that works for you fine, then that is good.

Grant, I agree completely with your comments & on letting profits run & to illustrate the point I have attached a screenshot of GBPJPY that I went short on, I have place profit target on a significan support level furhter down. The significant previous swing low has been broken & and i expect the price to continue heading down.

Also attached is a screenshot of a short trade I took on the AUSUSD.

Regards

Myronn

PS: My background???? hammering nails seems pretty close...lol.

(Click to see full size image)
AUDUSD 15 min trading




GBPJPY 30 min trading

Did you implement this strategy into live trading or just as a demo? If you are currently trading a live account, I would like to know how long do you test a strategy before starting to use it in real account?

Thank you for your valuable information.

Hey Myronn

Playing with your sys in real today. got an interesting one. right now almost 11am EST. CHF on a 5 min is doing exacly what it should, BUT, its hitting support (six times) @1.1310, the low of the day. its making a wedge, which usually breakout in the direction of the trend which is dn.

Remember the CAD and JPY breakouts?

I have my orig lot, which i could have bought and sold 5x already. I'm just not a good scalper, I guess. If i had 2 lots, i could hold one and scalp the other.

Trying to upload some pics, but in the meantime . . .

. . . keep right

Grant

Okay, Myronn, I'm mad.

Working and playing. I am still S CHF @1.13409, which is good. As I write, that's 63 pips.

BUT, the MAD part:

I said that i could have, using your system (and my judgement) bought and sold 5x. Well, it was 4x and I added up the pips and it works out to 115.

I think it's 2 lots tomorrow.

Grant

Hello all,

just REMEMBER that this strategy works very well in trending markets. If you cant identify an obvious trend, best advice is stay out unless you have another non-trending trading system under your arsenal that you can utilize.

A little tip: sometimes, when I look at the 1hr(for example), I cant see an obvious trend: the market may look to be in a congestion or going nowhere. But when I switch to a much smaller timeframe like the 15mins or 5min timeframe, I tend to see trending inside those smaller timeframes which I can used to collect a few pips here & there.

Happy trading.

Regards.

Myronn


 
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