Dynamic trend indicator, as the name suggests is a trend indicator which can be used either as a stand-alone indicator or used alongside any trend based trading strategies. The dynamic trend indicator comes with the default setting of percent (15) and Max period (50). The indicator then plots the trends on the chart. Prices are said to be in an uptrend when the trend indicator is below the lows and of course posting higher lows. Conversely, price is said to be in a downtrend when the trend indicator is above price high and plotting lower highs.
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The Dynamic Trend Indicator can be used across any time frame of your choice and it shows the trends for the time frame in question. Additionally, the Dynamic Trend filter indicator can be used to assist the day trader to time their entries when there is a strong trend in place.
Dynamic Trend Indicator Forex Trading Strategy
Alongside the dynamic trend indicator, add the Stochastics oscillator to the chart as well. It is optional if you want to keep the trend filter indicator. By adding the Stochastics oscillator to the dynamic trend indicator, traders will use the Stochs’ overbought and oversold levels as timing system to enter long or short into the trend.
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Buy signal – Dynamic Trend and Stochastics
Once the Stochastics is added with the default settings of 14, 3, 3, buy when there is a bullish signal from the Stochastics and price is in an uptrend as shown in the chart below.
As an explanation, you can see that the trend is down because the dynamic trend indicator was plotting above price. After the Stochastics oscillator rises above 80 and gives a sell signal, a short position is based on the previous swing low represented by the black horizontal line. The stops are placed at the recent swing high.
A couple of sessions later, a new short position is triggered. However notice that this short trade wasn’t triggered as price prematurely reversed without even triggering the trade. With an open system for take profit, traders could have easily booked profits on the first short trade.
Trading with the Dynamic Trend Indicator – Conclusion
The dynamic trend indicator is a rather simple but effective indicator to determine trends. The indicator works perfectly with the analogy of buy the dips in an uptrend and sell rallies in a downtrend. The take profit system is open meaning that day traders who want to scalp for 10 – 30 pips a day can do so with ease (but at the cost of a bad Risk/Reward set up), while swing traders can utilize the dynamic trend indicator and build positions into the trend.
As a final thought, here is the trend for EURUSD, daily chart.
The indicator is pointing to a potential up trend that could be forming, meaning that traders will need to keep an eye out and wait for EURUSD to dip (and wait for the Stochastics to signal a buy) in order to buy into this evolving uptrend.
We have this powerful Indicator for download for a low price of $12.95. In the download you will receive the Dynamic Trend Indicator along with the Dynamic Trend Filter. Included is a detailed user guide to show you the exact Buy and Sell entry rules which is really easy to follow.