Introduction
The Trend Rider strategy, developed by Mario Singh, is a powerful trend-following trading approach designed for all major FX pairs, including EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, AUD/USD, and NZD/USD. It addresses a common frustration among traders: exiting trades too early and missing out on significant profits. By focusing on trending markets and using a combination of Exponential Moving Averages (EMAs) and the Average Directional Movement Index (ADX), this strategy aims to maximize profits by riding trends to their fullest potential.
Concept
The Trend Rider strategy is based on the principle that “the trend is your friend until it bends.” It leverages the power of trending markets to capture significant price movements. This strategy is unsuitable for calm, ranging markets, and it works best when the price action is trending strongly.
Key Elements:
- EMA Crossovers: Uses the crossover of the EMA 12 and EMA 36 to identify trade entries.
- ADX Indicator: Utilizes the ADX to determine the optimal exit points, ensuring trades are exited when the trend shows signs of exhaustion.
Moving Averages for Precise Entries
A moving average smooths out price data to identify the direction of the trend. The Trend Rider strategy employs two specific EMAs:
- EMA 12: Adds more weight to recent price data, making it more responsive to recent price changes.
- EMA 36: A longer period EMA that helps filter out noise and provides a clearer trend direction.
When the EMA 12 crosses above the EMA 36, it signals a potential long entry. Conversely, when the EMA 12 crosses below the EMA 36, it signals a potential short entry.
Trending Markets Only
The strategy thrives in trending markets, characterized by a series of higher highs and higher lows (for uptrends) or lower lows and lower highs (for downtrends). Heightened volatility, often driven by economic news events, further enhances the effectiveness of the Trend Rider strategy.
Using ADX for Take Profit
Instead of a predefined take-profit level, the Trend Rider strategy uses the ADX indicator to signal when to exit a trade. The ADX measures the strength of a trend, and when it crosses above 40 and then falls back below, it indicates that the trend is losing momentum, signaling traders to exit their positions.
Trading Guide and Strategy Rules
Setup
- Select a Major FX Pair: Choose from EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, AUD/USD, or NZD/USD.
- Set Time Frame: Use either a 1-hour or 4-hour chart.
- Add EMAs: Apply two EMAs to your chart with periods of 12 and 36. Distinguish them with different colors.
- Add ADX Indicator: Include the ADX indicator and place a horizontal line at the 40 mark.
Rules
- Long Entry: When the EMA 12 crosses above the EMA 36, enter a long position on a retest of the EMA 12.
- Short Entry: When the EMA 12 crosses below the EMA 36, enter a short position on a retest of the EMA 12.
- Stop Loss: Set the stop loss at the EMA 36 or at least 30 pips away, whichever is greater.
- Exit: Use the ADX indicator to exit the trade. When the ADX crosses above 40 and then falls back below, exit the trade.
- Risk Management: Risk no more than 3% of your total balance per trade and avoid multiple positions in the same currency.
Trading Example
Conclusion
The Trend Rider strategy is designed to help traders capture significant profits by riding strong trends. By focusing on trending markets and using EMAs for precise entries and the ADX for exits, this strategy provides a structured approach to trading. As with any trading strategy, it’s essential to practice and refine your skills on a demo account before committing real capital. Remember to trade only with money you can afford to lose and continuously evaluate market conditions to ensure the strategy aligns with current trends.
Risk Disclosure
Trading involves significant risk and may not be suitable for everyone. Carefully consider your financial goals, experience, and risk tolerance before trading. This strategy does not guarantee profits and should be practiced on a demo account before real trading.