As an experienced trader, I am always on the lookout for indicators that can accurately identify market trends early and generate reliable trading signals. After testing many options, I have found the QQE indicator to be one of the best trend following tools for any market.
The QQE, short for Quantitative Qualitative Estimation, utilizes a weighted moving average calculation along with elements of the widely-used Relative Strength Index (RSI) and Average True Range (ATR) to determine trend strength and produce buy and sell signals.
Unlike lagging indicators like moving averages, the QQE is able to quickly react to shifts in market momentum thanks to its use of the RSI component. At the same time, incorporating the ATR volatility factor allows it to account for periods of increased market volatilitywhen generating signals.
How to Trade QQE Signals
The basics of trading QQE are straightforward – a cross of the blue and red lines generates a signal, with the blue line crossing above red for a sell and vice versa for a buy signal. However, like with any indicator, I always recommend confirming the strength of the signal with price action before placing a trade.
For example, when we receive a QQE sell signal on the EUR/USD currency pair, I first check that price is also rejecting away from a key daily level or demand zone, ideally with strong bearish candlestick patterns like long upper wicks or bearish engulfing bars. This gives me further confidence that sellers are in control.
Conversely, for buy signals, I want to see support holding strong on pullbacks along with bullish reversals and breaking of resistance. Essentially, think of the QQE as produces the initial buy/sell “tags” but use price action for verification.
Enhancing QQE with the QQE Mod
While the standard QQE is powerful for trend following on its own, the custom QQE Mod indicator takes it a step further by adding a moving average crossover system similar to the MACD. This helps gauge overall market momentum and spot potential trend changes earlier.
The faster line of the QQE Mod is essentially a RSI/MA hybrid while the slower line is a pure weighted moving average. Crossovers of these lines can highlight shifts between bullish and bearish momentum ahead of price itself turning. Divergences between price and the QQE Mod can also flag impending trend changes.
A Systematic Approach
Over the years, I have developed a systematic approach for entries, exits and risk management when utilizing the QQE family of indicators that works very well across crypto, forex, stocks and other liquid markets. Here are the key rules:
Sells:
- Wait for initial QQE sell signal
- Confirm price is under 200 EMA and second MA line is red
- Enter trade with stop loss just above recent swing high or resistance
- Target 1:2 or more risk-reward
- Trail stop below MA and exit 50% at key levels
Buys:
- Look for QQE buy signal to anticipate opportunities
- Wait for break of key level and confirmation candle close
- Manage risk carefully as buys are trickier
4.partial profit at key zones and trail stops
The great thing about these rules is they require minimal guesswork or discretion when it comes to entering and exiting trades. Just follow the confirmations and manage risk accordingly!
Now, this is just a brief overview of utilizing QQE effectively. Proper backtesting is critical prior to risking capital as each instrument will have nuances. But the advantage of the QQE lies in its broad applicability across markets once the rules are fine-tuned.
Overall, if you are looking for higher probability trades with predefined entry and exit rules, do explore integrating the QQE or QQE Mod into your current system! It may very well take your trading results to the next level. Let me know if you have any other questions.