Indicator advanced: ‘Trend Tracker’

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This is the second blog dedicated to illustrate the power and possibilities of Trading Temple’s ‘Trend Tracker’. In this blog post I will show a few charts including the indicator and discuss the more advanced options it gives you as a trader to improve your trading.

In this ‘Indicator advanced’ blog I will start with talking you through the mindset with which the indicator is built, discuss how to use ‘timeframe cycling’ to maximize the benefits of the ‘Trend Tracker’ and show you a few combinations with standard indicators to improve your trading.

I highly recommend you to read the ‘Indicator basics: ‘Trend Tracker’‘ first before diving into the advanced trading parts described below.

#1: Indicator mindset
I want to start this blog with one of the most important things you can learn about our indicator, which is actually the mindset with which we built it. In sharing insight into our thought process, I think you can make more effective use of the indicator. Here’s the philosophy for the indicator:

  • We wanted it to be focused on high timeframes. So less trades that take longer.
  • We did not care about catching tops and bottoms, we wanted the indicator to catch the price movements between those two extremes.
  • We expected the indicator to help us take emotion out of the trade, by giving us a clear indication of where the trend is currently moving towards.
  • Making losing trades is okay, as long as we catch all the big movements. We accept the losing trades as a form of risk management.

Taking this into account, you can see how we built the indicator to fulfill these exact wishes. In choppy moments we will accept the hits because we know the last signal of the indicator will get us into a winning trade, as can be seen in this example:

LTC/EUR 2D, Indicator Mindset

#2: Timeframe cycling
In this example, you have taken the ‘buy’ signal on the 1D chart as an entry and opened a long position. Here’s the interesting part, you also keep the higher timeframe (in this case, the 3D) in check and it gives a ‘buy’ signal as well.

BTC/EUR 1D & 3D, Timeframe Cycling

This means you ‘cycle’ your trade onto the 3D chart and will manage the trade on the higher timeframe from that moment onward. Because of this you ignore the first ‘sell’ on the 1D chart because it’s not there on the 3D chart, keeping you in the trade for a longer amount of time.

Using this technique you can switch from lower to higher timeframes or the other way around to have more precise entry / exit points. For example, when price is nearing a support / resistance area, you can choose to go into lower timeframes to get a better entry / exit for your trade, cycling it up on the timeframes whenever possible.

#3: Indicator combinations
Adding our indicator to the trading techniques you already use will make it that much more powerful. Below are some charts with examples of this:

LINK/BTC, 1D, using the indicator together with broken resistance.
REN/BTC, 1D, using the indicator together with Stoch RSI.
BTC/EUR, W, the indicator was confirmed by a substantially larger volume compared to prior weeks.