Cloud Indicator Trend System

It’s very simple to identify trend using the cloud trending system, you don’t need to look at the golden or death crosses, just look at the color and the width of the indicator.

Red indicates an upwards trend, green indicates bearish trend, and market is ranging when two colors swaps. It is not difficult to see that the trend indicators will have an advancing effect when the price retrace back near the cloud. In an upward trend, if the price pulls back to the red cloud area, it may continue to rise. In the downward trend, when price rebounds to the green cloud area, it may create pressure to push the price to continue downward.

In this cloud trending system, we will use cloud indicators to determine the market direction. Only trade long during uptrend (red cloud), only trade short orders during downtrend (green cloud), and avoid using trend trading strategies in a ranging market. This can avoid the risk of trading against the trend and avoid low-quality trading opportunities.

Red Cloud – The heavier cloud, the stronger uptrend

No Trend
Green Cloud – The heavier cloud, the stronger downtrend

In order to avoid the ambiguity of single moving average and reduce false signals, the three trend systems mentioned above are all composed of two or more moving averages.

The author of “Trading for a Living”, Dr. Alexander Elder once used the more flexible and elastic “ranch wire fence” to describe support resistance, rather than the “glass wall” that will shatters once broken. I think this description is very appropriate, and illustrates the market well.

“Keep in mind that support and resistance are flexible – they are like a ranch wire fence rather than a glass wall. A glass wall is rigid and shatters when broken, but a herd of bulls can push against a wire fence, shove their muzzles through it, and it will lean but stand.”

-Trading for a Living: Psychology, Trading Tactics, Money Management by Alexander Elder

Currently the Cloud Indicator Trend System is only working with selected brokers (for copyright reason). You may download it from there, with a typical MT5 template file.

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As stated, the traditional usage of Trend Scalper is a scalping strategy. Traders who like to do really short-term can refer to the following video from Zachary. When the trend is down and the energy increases, you can take advantage of the trend to place orders. Cloud Chart and TrendScalp indicator parameters are as follows.

[See Parameter and Video Below]

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