Follow Trend Indicator

The Follow Trend Indicator is a straightforward trend-following forex indicator which presents its signals in a very simple format with the aid of lines and dots. Signal line crossovers with corresponding dots colors reflects bullish and bearish market circumstances. It is suitable for both novice and experienced forex traders.

What is the Follow Trend Indicator?

The Follow Trend indicator is a trading indicator that closely tracks the price of any tradable asset. The indicator can be used to detect both trend reversals and trend continuation. This technical indicator is based on an algorithm that tracks the most recent market sentiment formed by the previous candlesticks. The outcome of the tracked data is represented visually on the chart by blue and red lines. In addition, the indicator is appropriate for both novice and experienced traders. It also works well with various trading techniques such as scalping, day trading, and swing trading.

Setting up the Follow Trend Indicator
Setting up the Follow Trend Indicator

Follow Trend Strategy

When the price is above the blue line, it indicates a bullish trend. In this case, the trader could be looking for opportunities to go long. On the other hand, when the price is below the red line, it indicates a bearish trend. In this case, the trader could be looking for opportunities to go short. Aside from the red and blue lines, the indicator also includes red and blue dots that serve as confirmation for bearish and bullish moves respectively.

Buy Signal

The following could be your checklist for a buy trade:

  • When the blue indicator line crosses above the red indicator line.
  • When the blue indicator dot appears below the candlesticks.

Once these events occur:

  • You could open a buy position after you confirm your entry with bullish candlestick patterns.
  • You could set your stop loss just below the nearest swing low.
  • You could set your take profit at the nearest resistance zone, or you could exit trade when the blue indicator line crosses below the red indicator line.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Follow Trend Indicator Buy Setup
Follow Trend Indicator Buy Setup

Sell Signal

The following could be your checklist for a sell trade:

  • When the blue indicator line crosses below the red indicator line.
  • When the red indicator dot appears above the candlesticks.

Once these events occur:

  • You could open a sell position after you confirm your entry with bearish candlestick patterns.
  • You could set your stop loss just above the nearest swing high.
  • You could set your take profit at the nearest support zone, or you could exit trade when the blue indicator line crosses above the red indicator line.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Follow Trend Indicator Sell Setup
Follow Trend Indicator Sell Setup

Follow Trend Pros & Cons

Pros

  • The Follow Trend Indicator can be used to detect both trend reversals and trend continuation.
  • This indicator may be used to predict possible support and resistance zones.

Cons

  • Follow Trend Indicator may not be very suitable for narrow-ranging markets on smaller timeframes.
  • This indicator may require additional knowledge of price action to utilize optimally.

Conclusion

The Follow Trend Indicator may be worth adding to your trading arsenal, but keep your expectations in check. It, like any other technical analysis tool, is not capable of generating 100% correct indications. As a result, this forex indicator occasionally generates erroneous signals. Its performance will be highly variable depending on market conditions. You are free to create your own trading method based on it.

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