Trend strategies are good - they may give significantly good results in any time frame and with any assets. The main idea of the ADX Trend-Based strategy is to try to catch the beginning of the trend.
2023-05-26 • Updated
Information is not investment advice
Bill Williams is the creator of some of the most popular market indicators: Awesome Oscillator, Fractals, Alligator, and Gator.
Most of these indicators are used in the trend market.
Let us present you with a new trend strategy based on Williams’ indicators.
Indicators: Williams Alligator and Williams Fractals with the default settings
Rules for a long entry
- Wait for the Lips line to break the Jaws line up
- The price breaks the nearest upper fractal resistance.
It is recommended to use the Stop Loss at the level of the nearest local minimum before receiving the signal.
Let’s look at the USDJPY chart. As you may see, the price started rising in February 2023 on the Daily time frame.
Two things happened simultaneously: the Lips line of the Alligator indicator broke the Jaws line up; the price broke the fractal resistance level up and continued rising.
Opening a long position with a Stop Loss lower than the previous local minimum became possible at 134.360. For conservative traders, it would be possible to set Stop Loss slightly lower than the last fractal line, which became a support level.
Rules for a short entry
- Wait for the Lips line to break the Jaws line down.
- The price breaks the nearest down fractal support.
It is recommended to use a Stop Loss at the level of the nearest local maximum before receiving the signal.
The same chart of USDJPY made it possible to open short positions at the pair when the price broke the last fractal support line, and then, the Alligator lines confirmed the signal – the Lips line broke the Jaws line at 132.620.
Note that we got the signal from the Alligator indicator after the Williams’ fractals. That’s okay for this strategy too.
The rule of setting a Stop Loss is precisely the same as in the previous time – higher than the local maximum or slightly higher than the resistance fractal line for those who are not too risky.
Rules for a Take Profit
The choice of take-profit is possible based on the ratio 3:1, i.e., a trade should bring 3 points of profit for one lost profit point.
It’s essential to pay attention that the strategy works only in trends. When there is a flat in the market, the strategy may give a lot of false signals.
This is for informational purposes only and does not contain — or to be considered as containing — investment advice, suggestion, or recommendation for trading.
Counter-trend strategies are always the most dangerous but also the most profitable. We are pleased to present an excellent counter-trend strategy for working in any market and with any assets.
As we know, strong trend movements are important on the market. We present you a trending strategy that will allow you to identify the very beginning of a solid incipient trend and open a deal.