Strategy 1: Trend Following
The most reliable strategy when markets are trending. Go with the flow, not against it.
When to Use
ADX > 25 (strong trend detected)
Use trend indicators to confirm:
- Supertrend showing clear direction
- Price above/below Ichimoku cloud
- Aroon showing strong trend
Entry Signals
Enter a long position when:
| Signal | Weight | Description |
|---|---|---|
| Golden Cross | High | EMA 50 crosses above EMA 200 |
| Supertrend Bullish Flip | High | Price crosses above Supertrend |
| KST Bullish Crossover | High | Major trend reversal confirmed |
| Ichimoku TK Cross Above Cloud | High | All signals aligned |
| MACD Bullish + RSI > 50 | Medium | Momentum confirming |
Ideal Entry Setup
✅ ADX > 25 (strong trend)
✅ Golden Cross or Supertrend bullish
✅ Price above Ichimoku cloud
✅ MACD bullish
✅ RSI between 40-60 (not overbought)
Exit Signals
Exit your position when:
| Signal | Action |
|---|---|
| Death Cross | Exit immediately |
| Supertrend Bearish Flip | Exit immediately |
| KST Bearish Crossover | Exit or reduce significantly |
| Price closes below EMA 50 | Tighten stop or exit |
| Price enters Ichimoku cloud | Warning - prepare to exit |
Trailing Stop Strategy
Use Supertrend or EMA 21 as a trailing stop:
Entry: $100
Supertrend: $95
As price rises:
Price: $110, Supertrend: $102 → Move stop to $102
Price: $120, Supertrend: $112 → Move stop to $112
Exit when price closes below Supertrend
Position Sizing
Full position in strong trends (ADX > 25)
Strong Trend (ADX > 40): 100% of intended allocation
Moderate Trend (ADX 25-40): 75% of intended allocation
Weak Trend (ADX < 25): Don't use this strategy
Risk Management
| Parameter | Value |
|---|---|
| Stop-Loss | Below Supertrend or 2x ATR |
| Take-Profit | Trail with EMA 21 |
| Max Risk | 2% of portfolio per trade |
Example Trade
Stock: NVDA
ADX: 35 (strong trend)
Entry Signals:
- Golden Cross ✅
- Supertrend bullish at $420 ✅
- Above Ichimoku cloud ✅
- MACD bullish ✅
Entry: $450
Stop-Loss: $420 (Supertrend level)
Risk: $30 per share
Position Size (2% rule):
Portfolio: $100,000
Risk: $2,000
Shares: $2,000 / $30 = 66 shares
Position: 66 × $450 = $29,700
Trail stop with Supertrend as price rises.
Common Mistakes
❌ Fighting the trend - Don't short in an uptrend ❌ Entering too late - Wait for pullbacks to EMA 21 ❌ No stop-loss - Always have an exit plan ❌ Ignoring ADX - Don't use this strategy in ranging markets
Next: Mean Reversion Strategy →