Do you know trend lines trading strategy which is
- dead-simple to use,
- a high probability trade setup with pin-point accuracy and capture maximum profits effortlessly,
- price-action on what happens on touch of Trend Lines,
- a trend following strategy and that means you have the odds stacked on your side.
Then you have come to the right place.
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Trend Lines trading strategy is a trend following system. So, before you use trend line, you need to identify the market structure.
Whether price is trending upward, downward, or range-bound. Depending upon the market structure, you need to draw the Trend Lines.
So, if price is making higher high and higher low, that means trend is up. In case, price is making lower high and lower low, then trend is down.
Apart from that, if price is neither making lower high nor higher low, then it will be better to hold your hands. This is because, trend is sideways and you need to avoid sideways market.
However, if you found sideways market, then you can expect breakout in either way. At this time, you can enjoy the show.
Sometimes it is better to sit idle and that might test your patience. So, wait patiently till your levels come.
Trend Lines Trading Strategy
You can draw a trend line on candlestick chart by connecting major swing highs and swing lows.
Generally, what a Trend Lines trying to tell you while trading is very crucial. You must look cautiously this magic lines.
Trend Lines is one of the very strong tools which unfortunately I have discovered very lately in my trading career.
This Trend Lines act as a very powerful support and resistance. Moreover, it also gives you an idea about the current trend.
You may have heard perhaps billion times that “Trend is your friend”. However, most of the time we trade against the trend.
Most probably this is one of the top reason, why more than 95 percent of traders failed.
Okay, so lets come back to Trend Lines trading strategy.
Well, in this trading strategy, we will use three awesome tools and absolutely no fancy indicators.
- Trend Lines – It helps you to find the diagonal support and resistance.
- Horizontal Support and Resistance – It lets you to detect, of course horizontal areas where price react.
- Candlestick Chart Patterns – Helps you to identify reversal of the current trend.
In fact, Trend Lines trading strategy is nothing but a simple price action strategy. If you can able to notice, that all three tools actually help you to figure out what price is trying to do.
In trading, you need multiple confirmations before you entered into a trade. Multiple confluence lets you have an edge over the market.
That’s why we have used this three magic tools to trade. And the best part is, you can use this strategy in all time frames.
Trend Lines allows you to get into a trade at almost the beginning of a new trend. It also lets you capture the swings as it is also one of the best swing trading systems.
Trend Lines are so simple yet powerful because it does not involve any indicators. All you need is to draw a valid trend line and use that with price action alone.
I wish I know Trend Lines trading strategy before I started day trading.
RULES – Trend Lines Trading Strategy
Before I get you into the rules of the Trend lines Trading Strategy, you need to understand how it actually works.
So, before you just dive into the strategy, you need to know
- how to draw a valid Trend Lines
- when a Trend Line gets invalidated
- the common mistakes in drawing Trend Lines
- which Trend Lines are most likely to respect and the ones which may broke
- and understand trends and know whether you are at the starting or at the end of the trend
- chart patterns which is the best way to analyse charts without any indicators.
So, having a key points in your heads while trading, is very essential if you want to be a profitable trader.
Long Entry Rules
You need to draw two trend lines, one is the major trend line which is the upward trend line. Whereas, another trend line is the minor trend line which is the downward trend line.
Rule#1: You need to draw a trend line by connecting a minimum of two previous significant higher lows.
Rule#2: Make sure the candle touches or almost touches the trend line. However, keep an eye on the candle whether it intersects the trend line but does not close significantly below it.
Rule#3: Draw another downward trend line connecting previous Higher High or peak to the upward trend line.
Rule#4: Enter into a trade, if price breaks and closes above the downward trend line.
Rule#5: Place your Stop Loss just below the current low or trough.
Rule#6: Place your profit target within previous Higher High or peak.
SHORT ENTRY RULES
Like Long Entry Rules, you also need to draw two trend lines, one is the major trend line which is the downward trend line. Whereas, another trend line is the minor trend line which is the upward trend line.
Rule#1: You need to draw a trend line by connecting a minimum of two previous significant lower highs.
Rule#2: Make sure the candle touches or almost touches the trend line. However, keep an eye on the candle whether it intersects the trend line but does not close significantly below it.
Rule#3: Draw another downward trend line connecting previous Lower Low or trough to the downward trend line.
Rule#4: Enter into a trade, if price breaks and closes below the upward trend line.
Rule#5: Place your Stop Loss just above the current high or peak.
Rule#6: Place your profit target within previous Lower Low or trough.
Just follow the rules and you will be profitable.
Let me know which price-action trading strategy you are using and why?
Leave a comment below and share your thoughts with me.
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Published on: October 6, 2020
