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[overgrowth]

I'd be interested to hear from folks as to what they consider a trending market to be.

As I'm intraday trading I tend to ride any short term trends though miss out on the real biggies and am wondering if a slightly longer term swing trading approach might be better to use when the market is obviously trending strongly.

Reputedly the Forex markets are supposed to trend about 30% of the time and range for the other 70%. What timescale do these figures refer to ? Daily/weekly ?

I would say that we're in a consolidation/ranging market at the moment probably waiting for $US strength to return would you agree ?. Assuming that we see a stronger $US can we expect another strong trending phase ?

When do you consider was the last trending market (as given by the 30%) ?

[trendfollower]

Hi as my name implies I am a trendfollower. I wait for a new trend to emerge & then take a position. I trade on the daily charts and sometimes stay in for 2-3 weeks depending how long the trend runs. I identify a new trend using a combination of Bollinger Bands & Starc Bands (Stoller True Average). Allowances for retracements are required to stay in the trade. (healthy stop loss) I have definite entry & exit strategies. I have been trading on this system for the last 3 years. If you would like to look at my chart setup you are welcome.

[overgrowth]

Hi trendfollower,

Thanks for the reply.

I've only used bolls for short term trades in a ranging market a la "gimme bars" and I've never heard of Starc bands before !

I'd be very interested to see one of your chart setups.

[trendfollower]

Hi please checkout the attachment. The Starcs are the solid white lines and my Bollingers are thin black dotted lines. I like the Bollingers to narrow and come inside the Starcs before breaking out. When the top Bollinger breaks outside of the top Starc you have the start to a new downtrend. When the reverse happens , you have an uptrend.There are other settings I use which you can see at the top of my GFT CHART. Any questions please ask. No obligations

[overgrowth]

Trendfollower,

Wow! This looks like a great longer-term system - many thanks for sharing it.

I've got loads of questions:

1) If you've been trading the system live for the past 3 years, then that sounds like the perfect backtest to me! What percentage of the time do you get false signals? It appears from your example that provided your stops are large enough as you say, that drawdown should be minimal which leads me into my next question.

2) Do you have a fixed stop level of say 300 pips ?

3) Have you tried the system on smaller timeframes? I'd be interested to see if it works on an hourly chart also.

4) It's interesting that you've got SMA and WMA on the chart - do you use the MA cross as confirmation that a band breakout is about to occur soon?

5) I can't see how the RSI and Stochs are particularly useful as all the information needed appears to be in the main chart - though I'm sure that I'm missing something here.

[Coastie]

Originally Posted by trendfollower

Any questions please ask. No obligations

Hi Trendfollower,
an interesting use of Starc channels. On the chart you supplied you show a "End of trend" around mid August. Why was that? I thought (from your brief explanation) that you waited till the boll band re-entered the starc channel. Or have I missed something here
cheers

[trendfollower]

Hi Overgrowth & Coastie. I will try and answer your questions jointly. Firstly I am always in with at least 3 currency pairs at any one time. As I close positions, I may be opening new ones. Because of the long term nature of my trades pip spreads are not important to me so I look for new trend breaks amongst 17 odd currency pairs. I trade mini lots,so it is nothing to be in with multiple currency pairs. Also good for risk management as you dont have all your eggs in one basket. False signals about 30 -40%. Because I look at so many currency pairs I can afford to be fussy so my hit rate is fairly high. I will only enter with the trend when all criteria is in place. The RSI & STOCHASTICS are just nice to haves. Normally my stop loss is around 150 pips but tighten it to take me out when ready to exit. I use smaller time frames (30 mins) with the trend to find the entry to the market. The SMA & WMA I only use AS ONE OF THE INDICATORS when I want to exit. Coastie, I use the Bollinger/Starc breakaway to enter a trade. My exits are a little more complicated. I have about 3 different methods for exit. I normally take the first to appear or pull my stop up tight and let it run further if it wants to. Hope this helps. When time permits, I will expand on my exit strategies with chart examples.The nice thing about trend trading, is that you dont need to be at the computer all day long. 3 looks a day is enough.

[Coastie]

Originally Posted by trendfollower

When time permits, I will expand on my exit strategies with chart examples.The nice thing about trend trading, is that you dont need to be at the computer all day long. 3 looks a day is enough.

Thanks for the explanation. I look forward to you expanding on your strategy.
3 looks a day would suit me fine...instead of hobbled to the keyboard...lol

[overgrowth]

I look forward to hearing more about the exit strategies also.

I like the idea of being able to use some of the more "exotic" currencies and being freed from watching candlesticks go up and down all day lol.

[trendfollower]

Hi Overgrowth & Coastie. Here is one of my exit strategies. When you enter a trade draw a yellow vertical & horizontal line as per attachment. When the Bollinger line comes round and intersects the horizontal line, exit and take profit or wait until the SMA & WMA cross at the bottom. There is another scenario I will explain after this. Hope this makes sense to you.

[Coastie]

Originally Posted by trendfollower

Hi Overgrowth & Coastie. Here is one of my exit strategies. When you enter a trade draw a yellow vertical & horizontal line as per attachment. When the Bollinger line comes round and intersects the horizontal line, exit and take profit or wait until the SMA & WMA cross at the bottom. There is another scenario I will explain after this. Hope this makes sense to you.

Hi Trendfollower, thanks for the example. Had me scratching my head there.
*edit* lol..was looking at the wrong bands....needed that cup of coffee to clear the fog. Definitely an intriguing way of using bolls.

[overgrowth]

Many thanks for going to the trouble of posting these charts for us trendfollower.

What an intriguing way of determining an exit point - I'm seeing Bollinger bands in a whole new light !

Am I right in thinking that if the candle on the vertical line is going against the trend you take profits, else you wait for the MA's to cross ?

[trendfollower]

Hi Overgrowth & Coastie. Both my Bollinger intersect with the horizontal yellow line or the SMA/WMA cross will give you approx the same pip profit in this instance 700 odd pips. However this is not a hard & fast rule. Here is my other exit strategy which might occur 1st. When the top Bollinger starts curving downwards the run is probably starting to slow down, but not always. Less profit available but profit is profit if you dont feel comfortable trading longer.

[Coastie]

Originally Posted by trendfollower

Hi Overgrowth & Coastie. Both my Bollinger intersect with the horizontal yellow line or the SMA/WMA cross will give you approx the same pip profit in this instance 700 odd pips. However this is not a hard & fast rule. Here is my other exit strategy which might occur 1st. When the top Bollinger starts curving downwards the run is probably starting to slow down, but not always. Less profit available but profit is profit if you dont feel comfortable trading longer.

Great stuff Trendfollower. I've been eyeballing the 4hr chart and your system appears on first glance to do quite well on the TF also. I've also added on my own 34/0.2 boll setting for trend confirmation/rejection. Looking good. Will burn some midnight oil on this combo. Thanks again.

[overgrowth]

Cheers trendfollower, lots of food for thought there.

It's refreshing to see a system which is so novel (to me anyway lol!) compared to the common ones which a lot of folks latch on to.

Now all I need to do is to break out of the 20-30 pip stop intraday trading mindset and look to the slightly longer term (it's a bit like trading shares again - though more predictable I hope).

All the best with your trading.