Which moving average?

The 50 and 200 are common; consistency matters more than the exact number.

Trailing stops or a close below a key average.

Is it good for beginners?

Yes; the rules are simple and objective.

Education · Strategies

Trend Following Strategy.

Ride moves instead of predicting them. How trend following works, how to define a trend, where to enter, and why it needs patience with losing streaks.

Defining a trend.

Higher highs and higher lows (or lower highs and lower lows).
Price above (or below) a rising (or falling) moving average.
ADX above about 25 suggests a trend has strength.

Entries.

Buy pullbacks to support or a moving average in an uptrend.
Use breakouts of consolidation in the trend direction.
Trail the stop below swing lows to keep winners running.

The trade-off.

Trend following often has a lower win rate with larger winners. Expect losing streaks and size so that five or six losses in a row stay well inside your drawdown.

FAQ