Trend Following Forex Day Trading Strategy

A trend following strategy for forex day traders based on a simple trend following indicator and a slow stochastic oscillator with default 5,3,3 settings.

You can use this strategy on the lower timeframe’s, from the 1 min up to the 30 min.

Chart Setup

Indicators: xzl_countdown_timer, Stochastic Oscillator (5,3,3), ForexMajorTrend (default settings)
Preferred time frame(s): 1 min, 5 min, 15 min and 30 min
Trading sessions: London and New York
Best currency pairs: Majors, EUR/JPY and GBP/JPY

Download

Download The Trend Following Forex Day Trading Strategy.

Example: EUR/USD M5 Chart

trend-following-fx-day-trading-strategy

As shown in the EUR/USD 5 min trading chart above, the trend indicator is blue colored, this means that the major trend is going up.

Now, we simple wait for the Stochastic oscillator to turn back above 20 from below.

This is our trigger to go long in an uptrending forex market.

Trading Rules

Buy:

  • ForexMajorTrend (DDFX) blue colored bars (up trend)
  • Slow stochastic oscillator turns back above 20 from below (oversold market conditions)

==> Open buy position and stop-loss below the most recent swing low point (support).

Price Objective: Exit the long trade at risk-to-reward 1:2 (i.e. risking 20 pips to make 40). Alternatively, ride the up trend until there’s an opposite sell signal.

Sell:

  • ForexMajorTrend (DDFX) red colored bars (down trend)
  • Slow stochastic oscillator turns back below 80 from above (overbought market conditions)

==> Open sell position and place stop-loss above the most recent swing high point (resistance).

Price Objective: Exit the short trade at risk-to-reward 1:2 (i.e. risking 30 pips to make 60).

Alternatively, ride the downtrend until there’s an opposite buy signal.

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