Here's A Long-Term Forex Trading System You Can Use

Just before I go on holiday, I thought I would leave you with a long-term forex trading system that you may want to play around with. I came up with it over the weekend and it does seem to be very promising so far. It basically uses four variations of the Supertrend indicator, and seems to be most profitable on the weekly charts (where you start to get the really big trends).

So the indicators you need are as follows:

- Supertrend (3,3)
- Supertrend (3,10)
- Supertrend (3,40)
- Supertrend (3,160)

(The 3 is the multiplier which remains constant, and the last number is the number of periods, or weeks in this case).

That's all you need. Then you basically go long (after the current bar/candle closes) as soon as all four indicators turn green, or go short as soon as all the indicators turn red. You can then exit your position as soon as one of these indicators changes colour, or you could close half the position when one of them changes colour, and hold on to the other half until the long-term indicator, ie the Supertrend (3,160) finally changes colour.

As I say, this seems to work extremely well on the weekly charts because this is where you get the major trends that can yield several thousand points profit.

To show you how profitable this basic system can be, just take a look at the weekly chart of the EUR/USD chart below.

Unfortunately I had to squeeze the chart up to fit it in, but hopefully you can see that if you had gone long in April 2006 when all four indicators turned green (1.2635) and exited when one of these indicators finally turned red in August 2008 (1.5008), you would have banked 2373 pips.

Similarly if you had gone short when all of the Supertrend indicators turned red a week later (1.4684), you would have banked a profit of 761 pips if you had exited your position as soon as one of these indicators turned green in December 2008 (1.3923).

So there's no doubt that it can be very profitable. The only downside to this system if that you need a great deal of patience and you need to use quite a large stop loss in case a trade doesn't work out. However on the whole it does look like quite a promising system if you are interested in long-term forex trading.