Skip to content Skip to sidebar Skip to footer

Hyper Trend Forex Trading Strategy

The forex market is probably the largest trading market. The forex market is traded at an average volume of about $5.1 trillion per day. The sheer size of the market means that the market can slightly push the FX pair in one direction.

A veteran trader with more experience trading stocks once warned me about the volatility of the forex market. He warned me about the types of forex market movements, which are much more volatile than the stock market can handle. Another experienced forex trader has also told me that in his experience the forex market may be ten times more difficult than the stock market because of its volatility.

It is true that the forex market is volatile and therefore can be very difficult to master, it is also a source of endless opportunities. Traders make money on volatility. Without them, prices stagnate and they end up paying commissions and swap fees overnight without making any money. Volatility causes prices to move and traders make money, and the forex market has a lot of money.

The Hyper Trend Forex trading strategy is one that takes advantage of this volatility. It aims to spot strong trending market conditions right at the start so traders can take advantage of the trend. Traders can easily multiply their profits if used in the right market conditions.

Hypertension Volatility

Hyper Trend Volatility is a special indicator that helps traders see trend direction and potential trend reversal based on strong market reversals.

This indicator is based on the Average True Range (ATR). It identifies the direction of the trend based on the price movement in a particular direction. It also indicates a possible reversal when seeing the price reverse from the current trend by more than the ATR multiple.

The volatility hypertrend also behaves similarly to the Relative Strength Index (RSI). It also quite reliably follows and shadows price action movements. The difference is that this indicator plots two intersecting lines to identify trend direction and trend reversal.

The volatility hypertrend is displayed as an oscillator with a separate window. It draws two lines that mimic the movement of price action. The main line is green, while the signal line changes color depending on the direction of the trend. When the green line is above the signal line, the signal line turns red. This indicates the direction of the bullish trend. On the other hand, if the green line crosses the signal line, the signal line turns blue. This shows a downward trend. The cross between the two lines indicates a trend reversal. The indicator also conveniently displays arrows to indicate the direction of a trend reversal whenever it detects it.

Relative Strength Index

The Relative Strength Index (RSI) is a technical indicator that measures the magnitude of current price movements compared to historical prices. This helps traders see the direction of the trend as well as the strength of the momentum.

It is an oscillator that displays a line that oscillates in the range from 0 to 100 with the middle line at 50. When the RSI line remains above 50, the market is in a bullish trend alignment. On the other hand, if the RSI line stays below 50 then the market is in a bearish trend bias. Some traders add marks at 45 and 55 as additional support or resistance. In their opinion, the RSI line may temporarily cross 50, if these two levels hold then the market has not yet reversed.

The RSI also usually has markings at 30 and 70. These levels indicate overbought and oversold levels. When the RSI line is below 30, the market is considered oversold. When the RSI line is above 70, the market is considered overbought. 

Instead, momentum traders use this as a basis for identifying momentum. If the RSI line breaks above 70 then they believe the market has bullish momentum and if the RSI line is below 30 then the market has bearish momentum.

trading strategy

This trading strategy is a trend following strategy that trades on reversals based on the confluence of the volatility hypertrend indicator and the RSI.

The volatility hypertrend signal is based solely on the crossing of the green line and the signal line, which also causes the line to change color and draw arrows on the price chart. 

The RSI line only confirms the direction of the trend based on the position of the RSI line in relation to the 50 mark.

When the two signals converge, the trade setup can become valid.