Megatrend trading system is a swing trading strategy. It is used in the time frames of H1 and higher. It can be used in any currency pairs. This Megatrend strategy consists of three components. They are Heiken Ashi chart, Bbandsstop (30,2) and silver trend signal. This strategy is quite simple, the chart doesn’t look messy, and everything is net and clean so that it will be easier for the traders to trade. The main idea of this strategy is to enter the market in the direction of the trend. You will be opening long position only when the market trend is up and will be shorting only when the market is down trending. Another great thing about this system is that it will show you the arrow to buy and sell the market which will make the trading life really simple.
The Heiken ashi candles on the chart will help the users of this strategy to see the smoothened form of price action. It is noise free. Meaning that when you might be confused by the highly fluctuating prices on the price chart, Heiken Ashi doesn’t fluctuate like that. It shows the average form of those fluctuations which makes the chart really pleasant to our eyes. Heiken Ashi candle changes their color as the price changes its trend. When the market is making a progressive up trend the Heiken Ashi candle are blue in color while when the price moves in a downtrend manner the Heiken Ashi candle changes to red in color.
Another tool used in this Megatrend strategy is the Bbands Stop, which is obtained by using certain statistical calculations. It is somehow similar to the parabolic SAR but it is not. Bbands stop used in this system contains of dots joined by a line. When the market is up trending this indicator remains below the price like in moving averages. Its color is blue when the market is up and it is red when the market is down.
Silver trend signal is another tool/indicator used in this trading system. It is used to confirm the direction of the trade. When a blue arrow appears on the chart in an uptrend it is a buy signal while when the red arrow appears on the chart in a down trending market it is a sell signal.
Megatrend Condition for Buy Signal:
- Major trend should be up. (Usually a trader can notice this by naked eyes without the help of any indicator).
- Heiken Ashi chart should be blue in color or should be below the price chart.
- Bbands stop should be blue in color or it should be below the price chart.
- Silver trend signal should show a blue arrow below the price. (like shown in the figure).
Megatrend Stop Loss and Take profit
Stop loss should be placed 10 pips below the silver trend signal indicator in a buy position and 10 pips above the silver trend indicator in a sell position.
Without any doubt this is a great trading strategy for the swing traders. Good luck.
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