Power Trend Trading System For MT4
Please note: This strategy was publicly published in the trading community and is free to use. We do NOT make an attempt to decide if this strategy is profitable or not, because we know that the major factors regarding trading results are the skills/experience of the trader who executes the strategy. Therefore, we are mainly explaining the components and rules of the strategy. If applicable, we are highlighting advantages, disadvantages and possible improvements of the strategy.
The Power Trend Trading System For MT4 is a trend-following trading strategy. We all know the trend is our friend in the Forex market. So, by using this trading method, we can ride the existing trend in all currency pairs. But do not think the system will generate 100% profitable trades. The long-term established trend often gets changed due to the high-impact news.
The existing trend is identified with the help of the EMA. The functions of the MACD indicator are closely linked to the trade filtering process.
The Power Trend Trading System For MT4
You might be thinking, why the EMA is used instead of SMA. The answer is simple. EMA is more reactive and the short time frame trader gets the data signals based on the recent price actions of the market.
However, if we change the period settings to 100 or 200, it is better to use the SMA instead of EMA. the 100 and 200 SMA will be acting as the dynamic pivot levels for the asset.
So, the key indicators used in this systems are:
- Exponential Moving Average (EMA) 14.
- EMA 34.
- Moving Average Convergence Divergence (MACD) (12,26,9).
Lets have a look at the chart after installing the necessary indicators:
In this trading strategy, the existing trend will be identified with the help of EMA 34 and 14. The slope in the EMA 14 and 34 must be positive and the price should trade above these two EMA. After checking this data, we have to wait for the bullish confirmation in the MACD indicator.
MACD is a great tool to eliminate unnecessary signals created by the EMA. The histogram bars will be green in color during the bullish rally. On the contrary, the histogram bars will be red and they will be placed below the 0 lines during the bearish trend.
Bullish Trade Setup
The Power Trend Trading System For MT4 works well in every time frame. But it is better to avoid the M1 and M5 charts since the EMA may create too many false signals by analyzing the short-term movement in the price. According to the inventor of this strategy, we need to use this system in the M15 or higher time for maximum efficiency.
Bullish Trade Conditions
- The price should be trading above the EMA 34.
- EMA 14 should cross above EMA 34.
- At the MACD indicator, the histogram bars will be green in color and it will be above the reference line zero.
Entry
Execute the trade after the above conditions are filled. If possible, use the bullish price action signal.
Stop Loss
The stop loss may be placed 5-10 pips below the last swing low.
If the stop loss point exceeds 30 pips, the developer of this system suggests ignoring the trade signals.
If the slope of the EMA changes to negative, close the trade.
Take Profit
The take profit level can be set to the nearest resistance level. But we have to care about the risk to reward ratio.
The minimum risk to reward ratio should be 1:2 so that we can deal with the losses without facing any stress.
It is better to close the profitable trade right before the major economic news release.
Bearish Trade Setup
For the bearish trade setups, we will be looking for the trade signals in the 15-minute chart or higher time frame.
Bearish Trade Conditions
- The price should trading below EMA 34.
- EMA 14 should cross below the EMA 34.
- MACD histogram bars will be on the negative side and they will be colored in red.
Entry
Execute the short trade after the conditions are filled. Try to open the trades right at the opening price of a new candle.
Stop Loss
The stop loss may be placed 5-10 pips below the last swing high.
If the stop loss point exceeds 30 pips, the developer of this system suggests ignoring the trade signals.
If the slope of the EMA changes to positive, close the trade.
Take Profit
The take profit level can be set to the nearest support level. But we have to care about the risk to reward ratio.
The minimum risk to reward ratio should be 1:2 so that we can deal with the losses without facing any stress.
It is better to close the profitable trade right before the major economic news release.
Summary
The Power Trend Trading System For MT4 is mostly used as an intraday trading system. So, try not to use this strategy to trade the major news. To get better results, you should be looking for the trade signals during the stable state of the market. So, keeping yourself tuned with the latest economic news release will be added advantage while using this strategy.
Let's summarize key steps associated with The Power Trend Trading System For MT4:
- The function of the 34 EMA is to determine the direction of the trend.
- We will be using 14 and 34 EMA cross to identify the change in market sentiment.
- The trades should be open at the opening price of the new candle.
- The minimum risk to reward ratio for this system is 1:2. But it is better to look for higher risk to reward ratio trade setups.
By now, you know the core functions of this system. Before you start using this strategy in the real market, we suggest learning its function properly by using a practice trading account. By doing so, you can avoid unnecessary risk exposure in the learning stage.
Please note: You should always try a new trading system on a demo account first. That way you can avoid unnecessary losses while learning the new rules.
Download the complete system description and the files here:
Partially Automated Trading Besides Your Day Job
Alerts In Real-Time When Divergences Occur
