The Trend Bars indicator plots bullish and bearish bars to identify the current trend. This guide will talk about how the indicator works and how you can apply it as a strategy.
What is the Trend Bars Indicator?
The Trend Bars indicator uses the 14-period Moving Average to determine the direction of the trend. The indicator doesn’t plot the MA on the chart but applies calculations. This way, the indicator draws bullish and bearish bars.
The green color bars signify bullishness, while the red bars illustrate bearishness. You can enter the trade by looking at the green and red bars.
If you don’t want to trade the indicator individually, you can apply it as part of your strategy, as it can be a useful tool.
Trend Bars Indicator Strategy
You must look at the green and red bars to trade with the Trend Bars indicator. There is an uptrend whenever the green bars appear, and you can take long positions.
Conversely, if there are red bars, it shows bearish momentum, and you can take short positions.
Although the indicator works fine, you can still add other indicators like the RSI, MACD, or Moving Average for further signal confirmation. It is because sometimes, even if the price is moving downwards/upwards, the Trend Bars aren’t signifying the trend.
For instance, if the price is moving downwards, and the Trend Bars are plotting green bars, it suggests you shouldn’t be taking the trade. That’s why the use of additional indicators can add confluence.
The good thing about the Trend Bars indicator is you can apply it on longer and shorter timeframes. There can be false signals on shorter timeframes, so it’s best to look for trading signals on longer timeframes, even if you are trading short-term strategies.
Buy Signal
- The indicator must plot the green bar.
- Wait for the bar to complete, and then enter the next bar.
- You could place a stop-loss at the recent low.
- You could set take-profit at the previous high or exit the trade when the red bar appears.
Sell Signal
- The indicator must plot the red bar.
- Wait for the bar to complete, and then enter the next bar.
- You could place a stop-loss at the recent high.
- You could set take-profit at the previous high or exit the trade when the green bar appears.
Trend Bars Indicator Pros & Cons
Like many others, the Trend Bars indicator isn’t the perfect indicator. So, let’s see what its strengths and weaknesses are.
Pros
- The Trend Bars indicator is simple to identify and trade.
- It presents clear entry and exit points.
Cons
- Sometimes even though there are green/red bars, the trend moves in the opposite direction.
- The indicator is prone to market noise on short timeframes.
Conclusion
The Trend Bars indicator draws bullish and bearish bars to mention the direction of the trend. It is simple to use, and you can apply it as a confluence in your strategy. However, you may want to confirm all signals with additional market analysis. I would be looking at price action including support and resistance levels along with any bullish or bearish candlestick patterns. As with any forex strategy, you should have excellent money management so that one bad trade does not cancel out a consecutive run of winners. You can always practice trading on a forex demo account to begin with to improve your trading skills and build up your confidence. Most forex brokers provide a free demo account, including IC Markets. They are my top choice for both manual and automated forex trading systems. This is because they have tight spreads, quick execution speeds, low commission fees and excellent 24/7 support.
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