January 25, 2010

Here's A Long-Term Forex Trading System You Can Use

Just before I go on holiday, I thought I would leave you with a long-term forex trading system that you may want to play around with. I came up with it over the weekend and it does seem to be very promising so far. It basically uses four variations of the Supertrend indicator, and seems to be most profitable on the weekly charts (where you start to get the really big trends).

So the indicators you need are as follows:

- Supertrend (3,3)
- Supertrend (3,10)
- Supertrend (3,40)
- Supertrend (3,160)

(The 3 is the multiplier which remains constant, and the last number is the number of periods, or weeks in this case).

That's all you need. Then you basically go long (after the current bar/candle closes) as soon as all four indicators turn green, or go short as soon as all the indicators turn red. You can then exit your position as soon as one of these indicators changes colour, or you could close half the position when one of them changes colour, and hold on to the other half until the long-term indicator, ie the Supertrend (3,160) finally changes colour.

As I say, this seems to work extremely well on the weekly charts because this is where you get the major trends that can yield several thousand points profit.

To show you how profitable this basic system can be, just take a look at the weekly chart of the EUR/USD chart below.

EUR_USD Weekly.png

Unfortunately I had to squeeze the chart up to fit it in, but hopefully you can see that if you had gone long in April 2006 when all four indicators turned green (1.2635) and exited when one of these indicators finally turned red in August 2008 (1.5008), you would have banked 2373 pips.

Similarly if you had gone short when all of the Supertrend indicators turned red a week later (1.4684), you would have banked a profit of 761 pips if you had exited your position as soon as one of these indicators turned green in December 2008 (1.3923).

So there's no doubt that it can be very profitable. The only downside to this system if that you need a great deal of patience and you need to use quite a large stop loss in case a trade doesn't work out. However on the whole it does look like quite a promising system if you are interested in long-term forex trading.



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7 Comments on Here's A Long-Term Forex Trading System You Can Use »

January 25, 2010

hosk @ 3:58 pm:

on this chart it would have worked with one supertrend indicator wouldn't it?

Austin @ 8:12 pm:

Looks like a great method for long term trading - certainly if it can pick up the big moves
I am definitely going to have a play with it to see how it performs
One question for you: where can I find the Supertrend indicator?
Is it part of a trading platform?

Keep up the great posts



James Woolley @ 9:04 pm:

hosk, yes it's often the case that the long-term Supertrend indicator is the critical one, but it's useful to have the other ones as well because they help you exit your position.

Austin, I get the Supertrend indicator from the ProRealTime platform, but you can also download it to MT4. The following link has some places where you can download it:


January 26, 2010

Austin @ 11:18 pm:

James, huge thanks for sending me the links
I shall look into this method, as on first glance it looks great, and in an area I would like to concentrate (long term trend trading)

Happy pipping


January 27, 2010

Archibald @ 3:41 pm:

will certainly look into this, been looking to change my trade from short to longer term, weeks maybe. Thanks

February 21, 2010

automated trading @ 4:02 pm:

Sounds Good, I'll must try this and try to change my Trade from short term to long term.


March 9, 2010

Forex Manager @ 2:35 am:

I'm a fan of long term trading systems for forex. And I have one very similar to this strategy. Although it uses a different set of indicators, it relies on the weekly charts just the same. Thanks for this strategy. Will certainly try it.

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