STT - Simple TrendLine Trading

Hi,

For those who come from my other thread, I hope you will find this upgrade to the system pleasing, to the new comers, Feel free to ask and I will try to describe things in more detail.

Let me first state that all of what you read here are my thoughts and they are not trading advices in any mean. You are always responsible for your own trades. Do a demo and make sure you are successful before going down to the real live business.

The System:

Its simply based on trendlines, no any other indicator will be needed, as the price tells you everything even without reading news. I will show you a few examples. On how I interpret the chart.

First of all all trend lines are drawn on wicks, and between two touch points, not a single wick or candle can cross the trend line when drawn. This can come to a point at the early stage of a trend that the trendline can be drawn on two candles as well. Why? As you see, there is always a lower time frame, so if the trend line fits on two candles, on an H1 chart it can be a proper swing on the M1 chart. I try to post examples.

Also I believe in an advancing trend, hence until a trend is concluded, it can be redrawn, I will show you examples what I mean on concluded.

Last and but not least the Stops and TP levels are finally clearly declared as in the previous thread, these were not well defined as it was hard to set. But this is the big improvement, that technically we can now trade kinda everything at anytime.

So, how to make your first drawing, firts its always the best to scroll back the chart to a point where it is 100% that you had an up or a down trend that eventually ended. This will help you to analize the chart until today and then you will see what can be the next step.

Example of this is here:



So the white lines are showing how the trend evolved. As the trend goes lower it kinda weakens, but the very first uptrend line was drawn up on those few candles, it got crossed, with that big red wick then made a new high. Hence I have redrawn the trendline, and used that wick as the new touch point for it once the new high was reached. Why? because the trend was not concluded. It would have been if the first RED trend line gets crossed. Which is the original touch point of the trend.

So as we advanced in time, we had a second crossing which is the highest RED line, and that crossing was not concluding the fresly drawn trend, but eventually we got a newer high, hence I have redrawn the trend once more. Leaving me with the final solid white trend line.

How this can be traded? Well every trend is based on a fact, if its an uptrend it makes higher highs, if its a down trend it makes lower lows. So, technically if we catch the right time around these crossings we can go for a trend continuation and gain fixed money knowing that the price must get to a newer high or newer low based on the trend.

This is the general idea, that we will always know what is our TP in a trend continuation, and the other fact is, that the trend line will always have to be crossed and concluded, which means the red lines will have to be reached eventually.

Now this was the original Idea, which had two flaws, I had no real Stop Losses here, as I used the current main trend line as a stoploss for buys in this example, and after making a new high, my TP would have been the trend line as well or the current RED line in case the trend might have turned.

However, I run into a problem, The price can get to a new high, which meant a good entry point for a short back to the trend line, but as the price might rally off, I can get so far away, that eventually my trend line might get above of my original trade, and giving me a fixed loss. Stop losss wise, its the same, if I traded againts the trend, my Stop was always the last all time high, which could have been crossed many many times. And my best entries were always around the trend line it self.

You can see a better discusison on this in my other thread, but I don't want to mix things up here with giving bad examples.

Now the upgrade to the system is this:



Conditions, Whenever you see a forming down trend, two new lows and a lower high, I start to draw my trend line (orange), if that line's last touchpoint, gets crossed, it means that trend is concluded, so no more down move to be expectedm hence I can get my trade going with the trend, first stop is the new high, but we can let it run by moving our stops to the new higher lows.

What is important are the pink lines, those are my so called "subs" And I use them for the first stop on the trade, actually that subs's last touch point. That is the key Upgrade, as that touchpoint helps me move my Stop higher and make it tighter, and that is the signal for a trend reversal. I will show you in another example.

Traditional stop loss setup: ratio 2.83



Using the Sub's touchpoint ratio 4.3

This is quite a change.

And finally the reversal:




As you see the last trade upwards was a loss trade, but the stop gave quite a close stop, and once that stop ended, we turn around immedeatly, and aim for our original trend line's conclude point the red dotted line.

And along the way as we were getting there these were all the other opportunities to catch this move:




So we were kinda never too late to do this trade

I will post more of this but have to go for the morning. Please check your charts and post if you see this forming.

Further on this thread I am showing you the entries based on the strategy:



I will go in a timely order so you can review on your chart and see if you can draw the same



I am trying to highlight that when a counter trend emerges how to wait out for the perfect entry which is the touch point of the counter trend, and knowing our original trends touchpoint we can aim for that. Of course should any of the counter trends end up turning, we close all trades.

Moving stops would have ended our turning trades:





As for the trade's TP would have been the touch point of our original uptrend way down. It ended as there was a newer high in the way kicking up our stops. Pushing the price to a newer high, where it started to counter and give us a new formation to trade. Since we have not concluded the original uptrend. We can play for a new high safely as a TP.

Going further in:




I had a strong spike hitting a possible trailing SL, but it gives a new entry option, which again would have hit a triling stop to the previous swing high. The next trades are also bouncing off from the same spot making a 3 bottom barely making a newer low.

We now reached a turning point, as the downtrend, could not continue:





We had a setup for an entry but it was not triggered, isntead the counter trend gained power. Where Our Aim would have been the down trends touchpoint marked with the green, but that was not caught as a trailing stop would have SL our trades.



This is the next time where we saw a counter trend, As you see the entry point would be so high, with a STOP unbelieveable, Here we set up our SUBs and see if they if so that is a point of entry.

Then we end up with another turn, where we did not really get a good entry signal, also these trades were quite weak... So its really up to us if it worths going in for them. The conditions met, the RR is up to you to take.

Since we got a new high, its obviouse that the trend has changed so we can look up the counters and try to trade them same way as before:

The last trade, is either a SL or a TP with the last High-s price, most probably as I know my self it would stop out and would trigger a turn.



I am just drawing you guys now how it continued, every option we had is shown, even the stupidly small ones:



Then we had a huge rally but could not really get any good signs for entry:




Then the first counter after the trend change gave a good postions, and a good smaller one.

Some news, just kicked the volumes out of the ski, and did not really produce a good safe entry until it touched the uptrends touchpoint,




Giving us a clear indication of the trend change, we could look for entries. (I cleared the chart so we can focus ont his better)

Now I am skipping the potential trades and want to show you examples if trend turns and how to handle them



Here we just got a signal to enter short for a new low, where as it turned around immedeatly, and we had to act and aim for the other direction.


Breaking the green marker means our uptrend is now concluded. So from there on we are aiming downwards.




I am also trying to mark how the trend shifted and gave us newer touch points.



Another turning point, Same setup, gave an indication to step in downwards, failed to make a new low, which is the key signal of a turn around.

Final verdict on the EURUSD:




Currently we are witih 2 green candles range, as long as the price stays in we can't do much on the H1.




On the M1 we see a lot more opportunities, with higher failure rate, reason is simple. SPREAD. Each broker's chart is different a bit. Hence here applying the wick based Stops is a bit risky, as a 1-2 pip change can totally wipe your trade. Two tings you can do, have a a safe 2x spread rate stop loss, or a safer one you feel right to skip a few unlucky misses. Of course this adds risks, but the above chart shows the actual EURUSD time frame.

Let's see if I am right about my marker and we get to 1.1353. Currently we have a possibly enrty forming, but if we cross the top green marker, we are going for a possibly new high. I will keep you posted.

I have cleared off the chart, so from here it won't be that mess and will be easier to track:

Entry:

Pending order in place in case we turn:

Its already a good trade as it made a new low, our target is within reach:




Could have been partially closed at the last low

TP hit,

Waiting for new counter trend to form:



Chart cleared for simpolicity:

In trade:

Stop in plus:

Maybe it was a bit early to move the stop




Anyways trade in pending if we turn. I await for a new entry.

Trade was valid, I messeg up moving the stop too early. Anyways, the signal was good:

Thank you for continuing to share your knowledge, approach, and constant desire to improve (which is the most important thing), good luck and happy holidays,

Some follow up: