You can compare a trend to a river. It is always easier to paddle in the direction of the river! Your speed of paddling can be assisted by the speed of the current. For if the current is real strong, you can make a fortune. What this means is that trading a strong trend can be highly profitable.
But how do you determine whether the trend is real strong or not? Now, if the trend is real strong and persistent, it is very likely that big money of institutional traders is at work. Watch this Freedom Forex Formula videos that show how to build a $34 million forex account from scratch using nothing but simple forex methods.
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So how do you filter a strong trend from a weak trend? Now, we have said that the 10 day EMA is going to be our focus when trading strong trends. Wha we need to do is to add a filter based on this exponential moving average (EMA) in order to be sure that this is no ordinary trend.
In case of an uptrend we want the 10 day EMA above the 20 day exponential moving average that should be above the 50 day EMA which should be above the 100 day EMA. Plus the price action should be above the 10 day EMA for a period of at least 10 candles to confirm that this is a real strong uptrend .
In case of downtrend, reverse the order of the EMAs. The 100 day EMA should be above the 50 day EMA. The 50 day EMA should be above the 20 day EMA and the 20 day EMA should be above the 10 day EMA. In addition to that the price action should be below the 10 day EMA for at least the last 10 candles in order to confirm that that uptrend is strong .
