The Parabolic SAR Indicator Trading Strategy is based on the Parabolic SAR Indicator. This is how the parabolic sar works: when the market is in a downtrend, the parabolic sar will form above the candlesticks. This should give you the heads up that the uptrend may have ended and the market may be now going down. when the market is in an uptrend, the parabolic sar indicator will form below the candlesticks. Then you know that the downtrend may have ended and now the market is probably going to go up. The Parabolic SAR Indicator Is also good at making it clear to you the market swings. The Parabolic SAR Indicator Trading Strategy is one of the simplest forex trading strategies using the parabolic sar indicator just as it is: without any other forex indicators. What timeframes are suitable to trade the parabolic sar indicator trading strategy? Use the 4hr & the daily timeframes to trade this strategy. You may also use the 1hr timeframe-but this may lead to too many false signals. If you are trading in the smaller timeframes like the 1hr and below, it is important that you be aware of existing larger trends that may override the little trends that you may be trading on. HOW TO TRADE THE PARABOLIC SAR For Buy Setup: Wait until the parabolic sar dot forms below the candlesticks. Place your buy stop order above the high of the candlestick that the parabolic sar indicator formed under. Place your stop loss 5-10 pips below the low of that candlestick. Exit your trade when the parabolic sar indicator gives a sell signal (when a dot forms above a candlestick) For Sell Setup: Wait until parabolic sar dot forms above the candlestick. Place your sell stop order 3-5 pips below the low of that candlestick. Place your stop loss 5-10 pips above the high of that candlestick. Exit your trade when the parabolic sar indicator gives a buy signal (when a dot forms below a candlestick) DISADVANTAGES OF THE PARABOLIC SAR INDICATOR Responds late to price moves so your trade entries are made after a move (either upward or down) has happened. Because the Parabolic SAR indicator Responds late, your stop loss placements are not in the ideal locations (like behind support and resistance levels) A flat or non trending market in consolidation will cause you grief because there will be too many false signals. THE POSITIVES OF THE PARABOLIC SAR If you are new forex trader, this is a simple swing forex trading strategy which you can use to practice to trade the forex market. in a good trending market, the parabolic sar indicator forex trading strategy will work very well.
The Parabolic SAR and MACD Swing Trading System is a very simple forex swing trading system that uses two indicators: the parabolic SAR & the MACD This trading system can be used with any currency pair. HOW TO TRADE THE PARABOLIC SAR AND MACD SWING TRADING SYSTEM-THE RULES Wait for MACD line to cross-over. Once The MACD lines have crossed over then Look To See If the Parabolic SAR has also switched position on the chart. If It does so then Place A Buy stop/sell stop order above the high or low of the candlestick at the point where both the MACD & Parabolic SAR confirm trade entry signal. Your stop loss should be placed below the low or high of that candlestick-anywhere from 5-30 or so pips depending on what timeframe you are using as well-the larger timeframe you use, the stops may be a bit larger so you need to adjust your risk per trade accordingly. To Exit The Trade(Take Profit)-when an opposite trade entry signal is given, then you exit the trade. ADVANTAGES OF THE PARABOLIC SAR AND MACD SWING TRADING SYSTEM It is a very simple and easy forex swing trading system to use you can easily spot the trade setups happening in a nice trending market, you will make a lot of pips quite easily. DIADVANTAGES OF THE PARABOLIC SAR AND MACD SWING TRADING SYSTEM You will get stopped out frequently if the forex market is in consolidation (or moving in a sideways trend) The MACD & Parabolic SAR are both lagging indicators so your trade entries are based on lagging information when price would have made a big move already. you stop loss may be quite large. If you place your stop losses quite close, you may get stopped out frequently.
The 10 and 20 SMA with 200 SMA Forex Swing Trading System Is A Very Simple Swing Trading System You Can Implement WithoutAny Difficulty At All. But First Lets Talk about Moving Averages… WHY MOVING AVERAGES ARE USEFUL There are two main reasons why moving averages are useful in forex trading: moving averages help traders define trend recognize changes in trend. If you see any forex trading strategies that have moving averages in them, the use of moving averages would be pretty much related to the two reasons given. I don’t want to bother with too many details about moving averages here…so moving on. THE TWO SIMPLE MOVING AVERAGES(SMA):10&20 SMA’s With this swing trading strategy, when the faster SMA, 10, crosses the slower SMA 20, it often signals a trend change. So when you see 10 SMA cross 20 SMA to the upside then you know there is a great possibility that the market is in an uptrend. If 10 SMA crosses 20 SMA to the downside, then you know there is a great likelihood that the market is in a downtrend. The 10 and 20 SMA with 200 SMA Forex Swing Trading System Trading Rules Trading Timeframes: Stick to 4hr timeframe and the daily Timeframe. After the faster 10 SMA crosses the slower SMA 20 look for these reversal candlesticksto enter your trade For Selling, look for bearish reversal candlesticks and place sell stop order 5 pips under the low of that bearish reversal candlestick for buying, look for bullish reversal candlesticksand place your buy stop or buy stop order 5 pips above the high of that bullish reversal candlestick. Place your stop loss above 5 pips above the high of the entry reversal candlestick if you are selling and 5 pips below the low of the bullish reversal candlestick if you are buying. Set your take profits to 3 times what your risked or look for previous swing high/lows and use these price levels as your take profit target. How To Use 200 SMA With This Forex Strategy Now as an added measure to ensure you only trade with the main trend, the 200 SMA can be used a further filter. if 10 and 20 sma are above the 200 SMA only take long positions. if 10 and 20 sma are below the 200 SMA only take short positions. This ensures you take trades only based on the significant or main trend which 200 SMA gives you an indication of. Did you enjoy this? It would mean the world to me if you shared it:
The MACD Crossover Swing Trading System is a very simple swing trading strategy especially new forex traders can find it quite easy to use. The MACD is one of the most popular forex indicators used by forex traders to determine trend. That being said, the MACD indicator consists of two lines, the faster moving line and the slower moving line. When the faster moving MACD line crosses the slower moving to the upside, that means the market is in an uptrend so you look to buy. If it crosses to the downside, it means the market is in a downtrend, so you look to sell. That is a very simple explanation of the MACD forex indicator. THE TRADING RULES OF THE MACD CROSSOVER SWING TRADING SYSTEM To enter into a trade using the macd crossover system is very simple, here’s how: Wait for the MACD to cross Then Place your order-preferably a buy stop or sell stop order. You stop loss should be placed significantly away from your trade entry point to avoid getting prematurely stopped out. To exit a trade or take profit, you wait for the opposite trade signal before you exit. For example, if you were in a buy trade, then wait for a sell signal and when that happens, you exit your buy trade and enter a sell trade. DISADVANTAGES OF THE MACD CROSSOVER SWING TRADING SYSTEM Because MACD is a lagging forex indicator, by the time when you are ready to enter a trade based on the MACD signal, the market at the stage would have moved a lot. So what happens is that you may be entering a trade at a time when the market may be due for a reversal so guess what happens? you get stopped out! if price consolidates or moves in a sideways trend, you will get too many false signals and may get stopped out a lot too! SO ARE THERE ANY ADVANTAGES OF THERE MACD CROSSOVER SWING TRADING SYSTEM? Yes, here they are: in a nice trending market, the macd crossover trading system will work perfectly that means nice big profits in pips don’t forget, its a very simple trading system-no complications. You may try other forex indicators to combine with the MACD trading system to stay out(avoid trading) of those periods where the market consolidates.
Trading Reversals – Powerful Moves The Commodity Channel Index (CCI) is used to identify cycles in a market and for trading reversals. It is applied to trading in two opposing ways: Identify beginning of a long position when the CCI crosses above 100 and the beginning of a short position when it crosses below -100. Identify overbought or oversold markets when the CCI crosses above 100 or below -100. We will present a trading reversals strategy that uses the second approach to identify overbought and oversold conditions and to indicate where to fade the market. This builds on the foundation of our Forex Swing Trading Strategy. The simplest way to fade the market is to wait for the CCI to cross below 100 for shorts or above -100 for longs. This can work quite well but in strongly trending markets can also result in multiple failed trades. To reduce this risk we add the following conditions: Wait for the CCI to cross above 200 before entering a short setup or below -200 before entering a long setup. Place the entry for a short several pips below the low or for a long several pips above the high of the setup bar for additional confirmation of a reversal. Figure 1 shows the strategy applied to a recent hourly chart on the EURUSD. Figure 1 The yellow circles shows where the CCI had crossed the 200 level prior to crossing the 100 level, indicating a setup. The dark blue lines indicate the entry price and the dark red lines the initial stop. The entry is three pips above/below the setup bar and the stop is five pips below/above the setup bar. With this strategy we trade two positions. After price has moved in our favor by the amount of the initial risk we close out the first position and move the stop on the second position to breakeven. When price moves in our favor by two times the amount of the initial risk we close out the remaining position. Each of the letters on the price chart represents a separate setup. Below is what happened with each one: A: The short entry was hit 12 bars after the setup. It advanced an amount equal to 100% of initial risk and we exited the first position and moved the stop on the remaining position to breakeven where it stopped out soon after. B: The long entry was hit on the spike three bars after setup. It also booked a first position profit of 100% of initial risk and stopped out of the second position at breakeven. C: It took twenty bars before the short entry price triggered but only nine more bars to reach both the 100% and 200% of initial risk for profitable exits on both positions. D: The long entry triggered nine bars after the setup bar, reached 100% of initial risk for a first position profit and then stopped out of the second position at breakeven. Notice in this example that although the initial stop was placed below the setup bar we later moved it below the swing low since the entry had not yet triggered. This was simply a common sense move to respect the recent price behavior. E: The short setup never triggered. When the CCI again crossed above the 200 level we cancelled the short order in anticipation of a new short setup. F: This replaced setup E. The short entry triggered one bar after setup and went on to hit both the 100% and 200% of initial risk levels for profitable exits on both positions. G: It took eight bars from setup to trigger this long. The stop was soon threatened and price came within a pip of stopping us out during this consolidation. We were lucky here. Price went on to hit the 100% of initial risk for a first position profit and we moved the stop for the second position to breakeven. We were faced then with a possible stop and reverse short setup (H) but it did not trigger so we were able to remain in the long trade until we hit the 200% of initial risk level where we exited the second position. H: At the time we got this short setup we were already in a long trade (G). This was a stop and reverse setup and we would have exited the long trade and entered a new short if the entry price was hit, but the entry was never touched and we cancelled the setup when CCI once more crossed above 200. I: The final short setup has been in progress while writing this article. For this one we added green lines to indicate the 100% and 200% of initial risk profit levels. Notice how price is approaching that first target. Once we get there we’ll book a profit on the first position and will move the stop for the second position to breakeven. As is the case with all trading strategies we will also see losses with the CCI strategy, but overall it does a very good job of giving us an early entry into price reversals. Test it out on your favorite markets and time frames and tune it for each of those. On this chart a three pip entry offset and a five pip stop offset work well, but on a four hour or daily chart you’ll probably want larger offsets. Similarly you can adjust the 200 and 100 levels. If you’re seeing too many failed setups then consider using a 250 level instead of 200 to confirm an oversold/overbought level, and if you’re entering trades too late then consider a 125 level instead of 100 for your setup bar. Load the CCI on your chart and see what works best on that particular chart. Below is a summary of the trading reversals strategy rules. Long trades Wait for CCI to cross below -200. When CCI then crosses above -100 we have a long setup bar. Place an order for two positions. The entry price will be three pips above the high of the setup bar and the stop five pips below the low. Calculate the risk as number of pips from entry price to stop price. Place a limit order for one position at entry price plus risk. Place a limit order for the second position at entry price plus two times risk. If the entry has not triggered and the CCI crosses below -200 cancel the order. If the limit order for the first position is hit then move the stop for the remaining position to breakeven. Short trades Wait for the CCI to cross above 200. When CCI then crosses below 100 we have a setup bar. Place an order for two positions. The entry price will be three pips below the low of the setup bar and the stop five pips above the high. Calculate the risk as number of pips from stop price to entry price. Place a limit order for one position at entry price minus risk. Place a limit order for the second position at entry price minus two times risk. If the entry has not triggered and the CCI crosses above 200 cancel the order. If the limit order for the first position is hit then move the stop for the remaining position to breakeven. It’s also possible to trade this strategy with a single position. In that case simply place your target at the 100% of risk level so you’ll see a 1:1 reward to risk ratio on each trade. Good luck in your trading with the CCI trading reversals strategy.
Exit profitable trades is the objective of all trading right? Let’s take a look to see various ways we can accomplish just that. At the end of October we took a look at the monthly EURUSD chart and saw a break of a wedge formation. You can see what we wrote back then in this post. We suggested that you wait for a pullback to the lower trend line to enter the trade. We got one on October 26th. For the entry we waited to see a red bar close and placed our entry below the low of that bar. This happened on the following day. Here’s an example of how you can exit profitable trades. Entry after pullback to bottom of wedge formation Exactly where you placed the entry will depend on how much confirmation you want. The simplest entry would have been at the close of the red confirmation bar (1.1013). A more conservative approach would have you placing your stop entry order below the 1.100 level, which also happens to be right below the low of the bar (1.0999). I took the more conservative approach. The first thing you need to do when placing a trade is to put a protective stop and a target order in place. This is essential to exit profitable trades eventually. At the close of the red setup bar there was no convenient swing nearby and since the setup was somewhat small I opted for the high of the last three bars as my initial stop. This was the bar from October 23rd (high at 1.1139). I placed the target at the low of the monthly formation, 1.0470. With my entry, protective stop and target orders in place it was time to plan my trade management approach. Assuming the setup triggers how will I manage the stop? Trend Line The simplest approach is often the best. I drew a trend line from the October 15th and October 22nd highs and extended it. I would keep my initial stop in place and trail the trend line once it moved below the initial stop. After that I would exit the trade on any close that broke the line. On December 1st price closed above the trend line and I moved my stop right above that bar (high of 1.0636). Two days later my stop was hit. An alternate approach would have had me exiting on a touch of the prior day’s trend line which would have had me exit profitable trades at 1.0606 for a slightly better profit. There’s a risk here that you might get stopped out on random noise which is why I like trail my stop several pips above the trend line and then wait for the trend line break. Exit the trade after a close above the trend line You can review this article on trend line breaks for more examples. Swing Levels In a trending market another simple stop management method is to use swing levels formed by price retracements. Whenever a new swing level is formed we move the stop down. Since the definition of a down trend is a series of lower swing highs and lower swing lows this approach could keep us in a trade for the long haul. It tends to give the trade more room to retrace than the trend line approach but because of that the stops will also be hit later and yield smaller profits. You can see in the chart below how I would have made only three adjustments to my stop after the initial setup. For this trade the stop would have been about 130 pips higher but still yielded a very nice profit. Stop trails each new retracement swing high We also cover this approach to stop management in our 50 EMA Swing Trading System. Parabolic SAR The parabolic SAR indicator places its initial stop above the recent swing level and then gradually tightens the stop as price advances. It gives the initial trade plenty of room to room to chop around but once it starts moving the stop gets ever tighter. It works very well with breakouts and you can read more about it in our Parabolic SAR Indicator Trading Strategy. You can see how well this stop would have worked in this picture: Parabolic SAR stop tightens as the trade progresses To use the parabolic SAR you would have kept your initial stop in place until the parabolic stop moves below it, and from then on you’d simply adjust your stop daily based on the value of the indicator. The final stop placement in this case was at 1.0636, a few pips below the trend line exit we described above. Mix and Match I like the parabolic SAR stop very much but don’t like the fact that it can take quite a while before you eliminate the risk on your trade. In the EURUSD we entered the trade October 28th and it wasn’t until November 11th that the parabolic stop dipped below our entry level. That’s why I would have kept my initial stop in place until then. I like to combine the SAR with a secondary strategy that has me locking in profit earlier, such as the swing level stop. The swing levels had me tightening my stop three times before the parabolic stop finally caught up on November 19th. Once it did it ended up giving me a much better exit than I would have had with the swing level alone, about 130 pips better. You can see what this looks like below. Swing level stop is combined with Parabolic SAR to lock in gains earlier Conclusion There are many more approaches to managing your stop once you’re in a trade. It’s key in particular to exit profitable trades since this is the outcome we’re all after. You can switch to a lower time frame chart, like a four hour or one hour, and then apply a trailing 50 EMA stop for example, or you can look for lower time frame support and resistance levels to plan your exits. And of course you can combine some of our other systems. The key is to minimize your initial risk and start locking in profits without risking stopping out due to simple market noise. And as always, keep it simple.
Using The RSI indicator by itself as a forex trading strategy is not a good idea. RSI indicator is best combined with other forex indicators and tools to create a trading strategy to give it a much more reliable performance. When RSI is above 70, the market is considered overbought. When RSI is below 30, the market is considered oversold. If you don’t know what these terminologies mean, then let’s get into understanding RSI a bit more, shall we? RSI OVERSOLD AND OVERBOUGHT EXPLANATION When a market is in an uptrend for a period of time, it won’t continue going in up. At some stage in time, the uptrend will change to a downtrend. The market gets “heavy” in other words. This heaviness is what “overbought” condition means in RSI terminology. So if you see RSI above 70 and then it starts to go down below 70 level then it may mean the the market may be changing to a downtrend. The opposite is also true, when RSI is in an oversold condition, it means that the market has been in a downtrend for some time and now it may be due to change to an uptrend when RSI line starts to cross the level 30 and points up. So there you have it…RSI indicator is used for determining the market oversold and overbought conditions. WHAT IS THE RSI FOREX INDICATOR? RSI stands for Relative Strength Index and is a momentum oscillator. Here’s what RSI does: Measures the speed and change of price movements. It oscillates between zero and 100. HOW TO TRADE THE RSI Buying Rules: RSI must cross the 30 level line to the downside. Then wait for it to move back up above the 30 level. Buy when RSI is above the 30 line and is pointing up. Make sure the candlestick is closed first before you buy to ensure that the RSI is definitely above the 30 level. Set you stop loss 10-20 pips above the high of the candlestick that made the RSI line pointing up when that candlestick closed. Set your take profit target 3 times what you risked or you can use previous swing high point as your take profit target. Selling Rules: RSI must cross the the 70 level line to the upside first. Then you have to wait and watch for it to fall back down below the 70 level. As soon as the RSI is below the 70 line and the RSI is pointing downward you sell. Make sure that the candlestick closes first before you initiate a sell order. Set you stop loss anywhere from 10-20 pips below the low of the candlestick that caused the RSI line to move below the 70 line and point downward during that candlestick’s close. Ok, for take profit, set it to 3 times what you risked initially or look for a previous swing low point and use that level as your take profit target level. DISADVANTAGES OF THE RSI FOREX TRADING STRATEGY Tends to give false signals Monitoring is required. You need to combine RSI with others to make if work effectively. ADVANTAGES OF THE RSI FOREX TRADING STRATEGY RSI is a very good forex indicator used in combination with other forex trading strategies as a means of confirmation to trade (or not trade). Try to combine this RSI Trading Strategy with Price Action Trading, it may be a much better system than just using the RSI by itself. Do you have a RSI Forex Trading Strategy or Any other forex trading strategy That You’d Like to share? Please use the “submit button” on the right hand side and and submit your forex trading strategies to me so that I can post them on this forex trading strategies website. Thankyou
These types of images where a trading chart is cluttered with indicators always makes me laugh. There is so much information going on and no doubt one will conflict with the other. Some will say more information the better. Depends on the quality of information as well as the source. TIME TO SIMPLIFY Look at what is on the chart in terms of indicators. On the main screen it looks to be some type of bands….could be Bollinger bands given the Bollinger “balloon that happens near the far right edge. There are certainly buy and sell markings which would indicate that it’s a 100% mechanical trading system. They may have some discretionary aspects to it but at face value, mechanical. There is also overlap in when looking in the bottom panels. Except for the volume analysis, there are 2 momentum indicators and one has 2 settings given 3 levels of information in regards to momentum. The difference is that the stochastic may be used as an oversold/overbought indicator and the MACD is the true momentum indicator. The truth with indicators as discussed is that they require price in order to calculate which means they are going to lead price. Someone skilled in price action trading could look at the chart and get roughly the same type of information. You can see momentum on the chart. You can see when a market is overbought or oversold. You really don’t need a trading indicator to show you that. Keep Your Trading Chart Simple Indicators are not totally useless on a trading chart though. They can make great tools in terms of scanning or as a “second opinion” about what you are seeing or saw. You just want to make sure you are using the bare minimum and the use of the indicator has been shown to IMPROVE your trading. Something that does not add to your trading system is not worth having on the chart. Trading Chart with 50 SMA Let’s say you have a basket of charts you scan through and you are looking for trending market. You plot a 50 sma on your charts and look for price that is far away from the average (define what far is to you). Like the stretched rubber band, you anticipate a pullback trade and you put charts that fit your definition on a watch list. You can quickly flip through charts and then flag the ones of interest for a second look at price. Each chart should take about 2 seconds. What about scanning for breakout trades? You can quickly scan for charts that have price hugging the moving average. Get drawing your support and resistance lines, either diagonal or horizontal, and play breakouts depending on your trade trigger. Trading indicators are not all that bad but it really depends on how they are used. To be honest, most people use them as the holy grail and that’s not true!
Price action trading, whether in Forex, Futures, Stocks or any other instrument, is simply reading what price is telling you and then taking action if your trading plan covers what is occurring. Learn a few price action setups, master them, repeat them consistently and you may just end up on the right side of the winning/losing fence. But first…let me say this about trading indicators: Trading indicators on a chart are not a bad thing if you are using them in more or less a general way and not as a prime method of deciding on a trade setup. For that, you can use simple price action trading strategies like the one I am going to explain that just occurred in the Forex pair AUDCAD. Can You Make Money In Forex Using Price Action Trading? That question comes up a lot as if price action is some mysterious force that inhabits our charts. Understand that if you use an indicator, it is going to need the action of price to calculate what it spits out on your charts. Think of trading indicators as derivatives of price action and you can understand why going right to the source, the clues left behind by price movement and structure, makes a lot of sense. It won’t make you rich though. It can, but unless you have consistency in risk, method and can battle the demons of fear and greed, you will end up like most. Losing. Can You Swing Trade Forex With Price Action? You most certainly can and depending on your style, it can even be a “set and forget” type of trade which is not a bad thing. The more we stare at charts, especially while carrying a position, the more apt we are to do something stupid that falls outside of our trading plan. Truth be told, swing trading, given the HFT’s on the lower time frames and big money position players on the higher time frames, looking for one clean swing in the market is not a bad play! Price Action Reversal Patterns Played Out In This Trade Remember I mentioned that swing trading is probably the best for most traders? This trade in the AUDCAD currency pair is a swing trade strategy and as I said earlier, a swing trade for me is playing for one nice swing in the market and getting out when the tables are turning. Another thing, this trade was not just one thing. Trading Forex with confluence and price action analysis is where I think the money is to be made. I will explain that as I go through the chart. AUDCAD Forex Swing Trading Using Price Action And Confluence In the daily chart below, you can see the current up move took out what could have been possible resistance (PR). The highlighted candles show strong momentum into highs where price resisted further movement to the upside. Trading Price Action In Forex What price reject again? Well, we never really know what price will do so we should have some type of trading strategy for several outcomes. On lower charts for day traders, you could see why traders would jump on the big green candles but without experience, they can’t say whether it is simply a blow-off or true momentum. We can see price race into the zone and pause. Some would consider that to be a lack of strength but a consolidation at highs after a move like this is not a bad thing. In fact, depending how long the consolidation takes place the higher probability of a break upwards. I mentioned trading price action with confluence and for me, the momentum into highs was part 1 of the confluence I needed. Part 2 is the yellow highlighted candle. You can dial into a smaller time frame to get a better view of the price action but since I trade generally end of day, I was just looking at that candle. What I see is a price action reversal pattern not with just the candle but the confluence of a strong momentum move into highs which will sucker in traders looking to go long. They were rejected soundly and a break of the low of that candle is the price action entry. Was It A Set And Forget Trading Strategy? It was in terms of setting the entry and protective stop order and letting the trade trigger. Let’s take a look at the four hour chart for a better view and you can see what actions I took. 4 Hour AUDCAD Forex Chart Trading alerts are great and I set an order to take out partial position at 1X risk plus a little lunch money. In doing so, risk is reduced and I will get at least a partial trade. I was alerted to the profit taking which made me look at the chart and I still saw momentum. Took more risk off by adjusting my stop. A smaller candles starts to form, which is to be expected after a move like this but as a swing trader, I want the one clean and easy swing. Dialing into a smaller time frame so I can see the trails that price action left behind, I could see a range forming and place my stop a few pips above it. Trailing stop hit for 117 pips giving me an average pain free trade of 94 pips. Would I really want to sit through what you can now see on the chart? What Will Price Action Show Next? I am out of the trade and price may just drop with momentum again but that’s fine. I was playing a reversal in a current uptrend so I expect smaller profits. If another trade setups up using price action in this Forex pair will I take it? Depends on the context. I think you can see though how simple price action trading principles can assist you in banking profits.
Moving average crossovers are a popular method of approaching a trading strategy. You can use long term exponential moving averages to take advantage of a “macro view” or short term averages such as the one discussed here, 5 EMA And 8 EMA. The short term moving averages crossing over indicates the short term trend has changed and we want to trade in the direction of the cross. If the 5 is above the 8, we will look for long trade entries. If the the 5 ema is below the 8 ema, we will look for short trades. Keep in mind this is a short term swing trading strategy so keep your profit expectations in check. 5 EMA And 8 EMA Trading Strategy Details Timeframes: 4hr/daily Indicators: 5 ema & 8 ema Currency Pairs: Any Long Entry Rules: Wait for 5 ema to cross 8 ema to the upside. You can buy stop the high of the candle that turned the moving averages or simply enter at close. Short Entry Rules: When 5ema crosses 8ema to the downside, you can sell stop the low of the candle that turned the moving averages or simply enter at close. Stop Loss: Set your stop 5 pips above or below the entry candlestick. If that entry candlestick is a narrow range candlestick, use the previous candlestick. Take Profit: You can use a couple of options for take profit Look to the nearest chart structure Use a cross of the moving averages Use a reversal chart pattern to signal your trading exit. This is a daily chart of the AUDUSD with our 5 ema and 8 ema moving averages applied. I am using the conservative entry of setting a sell stop below the low of the setup candlestick. If you used the moving average crossover as an exit and exiting at the close, this short trade banked 178 pips or a 1.38R You can trade as an “always in” trading strategy and this trade sets up with a spinning top candlestick but you are triggered in on a momentum candlestick. Using a resistance structure (see #1), this trade banked 256 pips (2.4R). Using the crossover at 3, the pips total 298 pips. Fibonacci 272 profit target 376 pips or 3.5R This short trade does not trigger as price never passed the low of the setup candlestick. Triggered long but trade appears to be in danger of taking a close upon the cross of the moving averages As you can see, the 5 ema and 8 ema crossover trading strategy is pretty straight forward. As you gain experience, you will tend to use other tactical trading plays or trading strategies (breakouts, pullbacks) to enter the trend if you missed the actual crossover trade trigger. Manage A Profitable Trade How would you manage a profitable trade placed with the 5 ema and 8 ema crossover swing trading strategy if you are looking for higher returns? If trade moves in favor, and you want to lock in profits, the best option is to move stop loss and place behind the high(or low) of each subsequent candlesticks that forms. That means for a short trade, move stop loss and place above the high the candlestick that continues to make lower highs. For a long trade, move stop loss and below the low of each subsequent candlestick that continues to make Higher Lows. Or if on the daily time frame, you may try to use a 50-80 pips trailing stop. If on the 4 hr time frame, use 25-40 pips trailing stop. Use an ATR trailing stop Use trading stop placement tips from this article. Good (and bad) of 5 EMA And 8 EMA Cross Over Swing Trading System Easy to understand and implement. In a strong trending market, there is potential to make a lot more profit when you ride out the trend with good trade management. This trading strategy would give a lot more false signals in a ranging market (which you can also trade) Stop loss can be quite big depending on the time frame that is used so you need to adjust your position sizes to bring your trading risk to an acceptable level. Moving averages are lagging indicators and every entry taken based on this swing trading system is effectively “late”. This means that price had already made a big move and you would have not gotten into the trade at the start of that move because the entry of the 5 ema & 8 ema trading system is based on lagging moving average indicators
Price action trading is where traders use bar or candlestick patterns to analyse any market such as Forex to find trading opportunities. One of the more popular price action trading strategy is using an Inside Bar candlestick pattern. One reason the inside bar trading strategy is a popular technical analysis technique is it is one of the best ways to indicate a potential breakout and momentum move in the market. Understanding that the inside bar signifies a “pause” in the movement of the market, you can start to see why this price action strategy ranks as one of the best. Let’s zero in on what’s behind the inside bar trading pattern, what traders are thinking, and how you can trade them. What Is An Inside Bar An inside bar is a candlestick pattern that needs at least two candlesticks or bars to form. The bar on the left is called the “Mother Bar” and the inside bar forms within the range of the previous candlestick. The inside bar is fairly easy to see on a chart as you will see bigger bars and then smaller bars. Note: On a daily chart, this pattern is usually called an “Inside Day” trading strategy but the trading concepts are the same. 4 quick inside bar facts: Inside bar forms within the trading range (or shadow) of the preceding bar. It is at least a two candlestick formation Mother candlestick can be either bullish(green) or bearish(red) The inside bar can be bullish or bearish It is not a complicated price pattern and although you will see many of them on your charts, you want to make sure you are using the inside bar trading strategy only in certain locations on your chart. We will cover that further. What Are Traders Thinking Price action traders will look at this chart pattern and see that the inside bar represents a pause or consolidation in the market. These are low volatility ranges and the next course of action is a high volatility market and that equals a swing trading opportunity. The high and low of the mother bar actually forms a short term support or resistance price and the inside bar shows that, at that point, there is not enough conviction in either direction. That is why you only want to trade them in certain locations because it is easy to counter-trend trade in the middle of the chart. You want context! Trading Inside Bars As with any trading Forex trading strategy, you want to make sure you are using a trading plan and have back tested the strategy you are using. You have learned that you must trade inside bars with some context that indicates the potential of a turning point or continuation in the market. The inside bar setup gives you exact places to put your important stop loss as a breakout of an inside bar should be met with momentum if it is a true resolution of the price pattern. As mentioned, you want to trade inside bars in areas that have the potential to affect price: Areas of support & resistance levels Pivot points Daily high or low of candlesticks if you are trading in the 1 hr or 4 hr time frame Fibonacci levels When an inside bar forms around these locations, it is considered significant. You need to take note of that. This example is using a daily chart so we could call these setups “inside days” but for simplicity, we will stick with “inside bars” I have the mother bars high and lows sectioned off and the candlesticks forming inside are called the inside bars. You can see that all inside bar setups shown are taking place in chart structure locations – in this case resistance because we are in a down trend. Selling the inside bar pattern (buy setups are the exact opposite): Identify inside bar patterns in areas such as resistance Place your sell stop order a few pips below the inside bar Place your sell stop order a few pips below mother bar Stop loss can go above the inside bar OR the mother bar This is a very simple and mechanical trading setup but we are missing one thing…… Taking Profits On Inside Bar Setups Remember that inside bars are consolidation patterns (look at a lower time frame to see it better) and breakouts can lead to a sustained run in price. You may not want to take profits at something like 3R because the risk is often small on these setups especially if you are using the high of the inside bar (for shorts) for your stop. You may look at: Average true range Use a measured move Look for turning points below price that caused a large rally. There is no perfect profit taking plan in any swing trading strategy so whatever you choose to use, be consistent. Day Trading With Inside Bars You can day trade with this price pattern and you will see a lot of them forming all over the chart (especially in Forex). This 15 minute chart of the GBPUSD is a great example of how many inside bars actually appear on a day trading chart. What did you learn though? Most of the inside bars that form will be ignored in this trading strategy. We are only interested in inside bars that form at certain locations on the chart. I have highlighted a few structure areas like a resistance level and even a double bottom pattern where we can look to trade. Hikkake Pattern This chart pattern takes advantage of those traders who are always looking to catch a reversal in the market. The steps are the same where we looking to find an inside bar forming around locations that matter on the chart. We want to see the inside candle get taken out with the next candle putting in a higher high and higher low (in the context of a downtrend). Counter-trend traders will think they’ve caught a reversal and jump in long. Like all trapped traders, they must exit and in their exits, we get price momentum in our favor because we are looking to follow the the trend. In this chart, price is an overall down trend and price had just broken support (with momentum) at the left. Price is rallying up to potential resistance and price bases below the level. You can see the mother bar all the other bars are inside bars. We even have a smaller inside bar just before price pops up over resistance. Look what happens! Traders think this move will continue upwards and pile in only to get slammed. Price then slowly drops to the low of the mother candle range and traders still have hope. Price slams through the mother candle low, pauses and then another momentum drop to the downside. Can you see the power in these moves! Best Time Frames I’m a big fan of trading inside bars on the daily chart instead of trading inside the inside bar on the lower time frames. This bar formation takes advantage of consolidation and from consolidation comes breakouts. Trends begin with price breaking out and being in one or two major trends a year can increase your trading account greatly. You may want to really consider just sticking with the trend and only look to reverse when given a major shift in the dynamics of price (strong resistance broken and acting as support). Do you trade the inside bar strategy? Let me know what you think.
Dear fellow traders, I am happy again to meet you all through my new release of my Heiken Ashi based Keltner EA. I have backtested it and it gives good results. But still i want to confirm its performance with your backtesting. I am posting the EA here for your use. Please test it and post the results on this thread. If it goes, well, all will get a chance to use . Download the EA and copy the Keltner_Channels to Indicator folder.
Outside Bar Forex Trading Strategy is a price action candlestick pattern for the Forex market, Futures or any other market you choose to trade. It can be both a bullish reversal pattern, a bearish reversal, or even be used during a continuation move from some type of consolidation. It’s actually similar to the inside bar Forex system except for the larger bar or candlestick being on the right side of the most recent price action. Think of the “mother bar” of an inside bar pattern being on the opposite side of price. Where the inside bar indicates lower volatility, an outside bar indicates higher volatility and can often lead to a strong momentum run in price. The outside bar Forex trading strategy can be used a swing trading strategy when taken around swing points on your Forex price charts. What Exactly Is An Outside Bar? Whether you use the term bar or candlestick, the pattern is the exact same: high and low overshadows or engulfs the candlestick before it. The outside bar can be either bullish or bearish and how you trade them will depend on your trading strategy. If you trend trade, you will probably only trade the outside bar pattern that conforms to your directional bias in the market. Other terms you may have heard for an outside bar are: Bullish Engulfing pattern Bearish Engulfing pattern Not shown in this graphic are the upper and lower shadows however as long as the outside bar completely covers the bar beside it in any form, it will no doubt trade the same. This chart pattern will be easily visible on a chart and they can appear virtually any place on the chart. This does not mean you will simply trade them as they appear. You want to add some variables to any trading strategy that utilizes an outside bar. Trading Outside Bars Trading the outside bars is straight forward and here are the rules of the outside bar Forex trading system: When an outside bar forms, for your entry, you place a buy stop order if bullish outside bar and a sell stop order if bearish outside bar 2-5 pips above the high(if bullish outside bar) and 2-5 pips below the the low (if bearish outside bar). When there is a breakout of high or low, you are triggered into the trade. Place stop loss in a similar manner on the other side, 2-5 pips away from the low if its a buy stop order and 2-5 pips above the high if its a sell stop order. Take profit has a few options: target previous swing high points (if its a buy order), or previous swing low points if its a sell order. Or 3 times your risk…if you risk 50 pips initially, then you you should set your take profit target at a price level where once hit, will give you a 150 pips profit (3 times your risk). Trade Management One of the best trade management technique is to use trailing stops behind the low if its a buy order and above the high if its a sell order. You will get stopped out when a candlestick knocks out the low of the previous candlestick(for a buy order) or you will get stopped out when the high of the previous candlestick is intersected for a sell order. Note that the chart above is for a buy trade only. A sell trade setup would be the complete opposite of that. Inside Bars Don’t Have To Be A Trading Strategy Understanding what the inside bar means on a chart is useful information. If the previous candlesticks are smaller in structure and you get an outside bar formation, something has changed in the market. An outside bar can actually be part of a price scan that shows markets that have the potential to start a run in price. Once you see an inside bar, you could use any number of the trading strategies on the website to find trades. In other words: A quiet market suddenly forms an outside bar You know that volatility may have returned to the market You implement another trading strategy to take advantage of the potential moves to come Inside bars can simply be information and not an event you trade. Watch Where Inside Bars Form As mentioned, on any time frame, in an uptrend or down trend, you can get this chart pattern to form. What you would like to see is this formation taking place at important structures or even an indicator zone – where other traders may see what you are seeing: Support or resistance zones Extreme highs or lows Forming after a pullback to a moving average such as the 20 EMA or 50 period moving average You can see that increased volatility at a specific area that has the potential to either hold price or even cause a price reversal, is a great potential trade. The key is to monitor for follow-through in price and to ensure that this increased volatility is not due to some news release. Disadvantages To Trading With Inside Bars Stop loss distances can be huge (the larger the time frames used, the larger the stop loss), which means you need to calculate lot sizes based on the risk you are willing to take. It may take a while before you can start to see some profits on your trades. This is because the outside bar has already moved a great dealand the next 2-3 candlesticks may be digesting the move that just happened. We all see how after a run in price, it seems that price just stops moving. Tempting to trade wherever you find them. You should take trades on outside bar when the chart pattern happens around support or resistance levels, Fibonacci levels, pivots etc. Why Are Inside Bars A Decent Pattern? Easy to Spot and the trading rules are very easy to understand and implement. Market has potential to move a very long way when these outside bars form and can bring you hundreds of pips if you ride out the swing or trend by using trailing stops especiallyif you are a swing trader. You may even be catching a full trend reversal if you are catching them on daily charts and above.
The Bloomberg trading terminal polled it’s users and the most used trading indicator was the RSI, the relative strength index. The RSI trading indicator is a measure of the relative strength of the market (compared to it’s history), is a momentum oscillator and is often used as an overbought and oversold technical indicator. To explain oversold and overbought: If the momentum in price movement is increasing to the upside, an over extension will lead the oscillator into the overbought zone, generally the 70 level. It’s at this point, theoretically, the traders will see the extension in price and begin to unload long positions. At this point as well, counter trend traders will look to short the market. If price momentum is to the downside, the RSI can reach the 30 level and at this point, theoretically, traders will see a market that is oversold and sellers will look to take profits. Other traders with other methods and thoughts about price will look to buy into the market. The RSI was created by Welles Wilder and many trading strategies have been designed around this indicator. From trading oversold and overbought levels to trend determination via the 50 level, the RSI momentum indicator makes up the backbone of many different types of strategies. For our trading strategy, we are going to use the RSI along with the 20 period simple moving average (SMA) and is great as a swing trading strategy for Forex and other markets. If trading Forex, this trading strategy can be used on any currency pair that is actively traded. Generally, I still with the majors and add in a few others such as EURJPY and GBPCHF. We Need A Trending Market This trading strategy will rely on a market that is trending. There are trading strategies for non-trending markets but for this, we want to latch onto a move that leads to a large potential swing trade. We can use structure to determine the trend but for a quick and dirty trend determination, we are going to use the moving average in two ways: If price movement is cutting back and forth through the moving average, we will consider that to be a range bound market. If there are gaps between the moving average and price, and price is predominately on one side of the average, we will consider that to be trending. Note that after you have objectively identified a market that is ranging, you can often mark of the support and resistance levels of the range. When price breakouts out of that range with strength and conviction, you may start looking for trending price action. You can often see the momentum candlesticks breaking from either the support or resistance level that which will tip you off, using price action, that the range is completed. Moving average can highlight trends and consolidation You can see in this graphic that when price chops back and forth through a moving average, you are looking at a market in consolidation. That’s not a bad thing if you are looking for break out trading opportunities with your trading system. A gap between the moving average, in our case the 20 SMA, we are looking at a market that points towards a trending market and is what we need to see for this trading strategy. You can use other technical analysis measures to determine a trending or ranging market however price that is not making a trending price pattern, is generally consolidating. Trending Market But Uptrend or Downtrend The 20 SMA with RSI swing trading strategy in a trending market has the potential to add hundreds of pips to your count. This is especially true on the higher time frames, four hour and above, as smaller time frames can change their trend direction state more often. I have always preferred daily charts for swing trading positions: There is less random noise in the higher time frames News events that cause large moves on smaller time frames often don’t make a dent on the larger time frame I can hold traders longer and not get knocked out of a trade too early Position sizing is important as stops are usually larger. As a Forex trader, you are looking at some of the best trending markets available. This is a great strategy to take full advantage of that fact. Is this method suitable for day trading? If you have time to sit at your computer and have identified a trending trading session, you may want to test the RSI trading system to see if it fits you as a day trader. I find day trading to be a J.O.B., more prone to random price movements, and trading costs can add up. How do we determine what direction our trend is? We will use a very simple determination for trend direction and that will come via the relationship between price and the moving average. Note that I also prefer to see a slope in the moving average when the price is above the 20 sma the market is in an uptrend. when the price is below the 20 sma the market is in a downtrend RSI Indicator Settings The RSI settings should be set to 5 days RSI and we are going to use the “50” level for this strategy. The standard look back period is 14 and by using 5 days, we will be able to take advantage of increased momentum sooner. The purpose of the RSI in this trading strategy is to confirm the strength of the trend: When the RSI peaks above the 50 level and starts to turn down, it indicates that the uptrend (or minor rally) is weakening and it is a good time to be looking to go short When the RSI bottoms below the 50 level and starts to head up, it indicates that the downtrend (or minor pullback) may be weakening and it may be a good time to look for a trade entry signal to go long Note that we will not be using bullish divergence, bearish divergence or the overbought and oversold levels. We are going to keep this trading strategy simple. Sell Signal Rules of RSI Trading Strategy The chart below will walk through the 5 steps that follow. We will be using the 20 SMA as our trading action zone: Price has to be below the 20 SMA -indicating a downtrend. Wait for price to rally back up to touch the 20 SMA line. Once 20 SMA line is touched, look down to see if the 5 day RSI has peaked above 50 level and has started to turn down-confirming a weakening upward momentum. Place a sell stop order under the low of the candlestick (after it closes). This candlestick should coincide with the RSI starting to turn down. Place Your stop loss above the high of that candlestick. Your profit target: Ideally, you would like to see a 3R profit Another option would be to exit with whatever profit you have when the opposite trading signal is given. Also consider a trade management strategy of scaling out combined with a trailing stop. RSI Trading System With 20 Simple Moving Average Buy Signal Rules Like many robust trading strategies, you can use this strategy for taking long and short trades. Here is how to setup and manage a buying opportunity when the buy trading signal appears: Price has to be above the 20 SMA – indicating an uptrend. Wait for price to pullback down to touch the 20 SMA line. Once 20 SMA line is touched, look down to see if the 5 day RSI has bottomed below 50 RSI level and has started to turn up-confirming a weakening downward momentum. The buy signal is active. Place a buy stop order above the high of the candlestick (after it closes). This candlestick should coincide with the RSI starting to turn up. Place Your stop loss below the high of that candlestick. Your profit target: 3 times what you risked. Another option would be to exit with whatever profit you have when the opposite trading signal is given (which is when a sell signal is given). Advantages of this RSI Trading System Simple to learn and implement When a market gets on a good trending run, you can have one trade make your entire year Stops are well defined and gives no excuse to ignore this vital order Reward to risk ratio, although never guaranteed, can be quite incredible if using a trailing stop approach The Disadvantages If you are not strict with your definition of a trend, you could find yourself trading in market that has no trending momentum You must learn the difference between climax price movement and natural price movement You must keep watch on the strength of any pullback. We do not want to see momentum in the prive movement during a pullback Moving averages lag so the trend may be well on its way before the 20 SMA catches up to price HOW TO IMPROVE YOUR TRADE ENTRY TECHNIQUE Here is one really effective way to improve your trade entry technique. How? Buy using reversal candlestick patterns and price action that form when the price touches the 20 SMA line. Look for reversal candlesticks like: Harami Engulfing pattern Dark Cloud Cover Evening Star Doji Shooting Star/Hammer. Remember that all technical indicators such as the RSI and moving averages NEED price to happen first before it calculates. Knowing how to trade price action at the 20 SMA when the RSI lines up with a trade can get you into trades earlier.
This ADX Swing Trading Strategy is based on the ADX Indicator. If you don’t know what the ADX indicator is, here is a brief lesson: This indicator stands for Average Directional Index The ADX indicator measures the strength of a trend and can be useful to determine if a trend is strong or weak. ADX will not tell you if the trend is up or down-it just tells you the strength of the current trend, whether it be uptrend or downtrend. High readings indicate a strong trend and low readings indicate a weak trend. When this indicator is showing a low reading then a trading range is likely to develop. Avoid trading currency pairs with low readings! You want to be trading pairs that have high readings. On some charting packages there are two other lines on the chart, +DI and -DI (the DI part stands for Directional Indicator). Ignore these lines. Trying to trade according to these two lines is your surest way to lose money-and its even more confusion. The only thing that we are concerned with is the ADX indicator itself. Here is a chart to give you more clarity: In the chart above, the ADX indicator is the blue line . The other lines are the +DI (dotted green) and -DI (dotted white), you should ignore these. The area in the brown rectangle box shows how this indicator identifies trading ranges and times when the market is not trending. The ADX is showing a low reading and notice that the currency pair is trending sideways. Now look at what happens when the indicator gets into higher territory, generally above 25. A strong trend develops! If you are looking to trade the ADX indicator, then trade when the ADX indicator is above 25. HOW TO USE THE ADX INDICATOR SCALE To setup the ADX scale, follow the instructions shown on the chart on the right. You will have a box pop up and then you can add ADX scale values like 25 as shown on the previous chart above. If ADX is between 0 and 25 then the currency pair in a trading range. It is likely just chopping around sideways. Avoid Trading these. Once ADX gets above 25 then you will begin to see the beginning of a trend. Big moves (up or down) tend to happen when ADX is right around this number. When the ADX indicator gets above 30 then you are staring at a currency pair that is in a strong trend! You should be looking to trade these pairs when this happens. Note:You won’t see very many currency pairs with the ADX above 50. Once it gets that high, you start to see trends coming to an end and trading ranges developing again.
This CCI Swing Trading Strategy is based on the Commodity Channel Indicator. A bit of history and lesson about the CCI: Commodity Channel Index (CCI) is an oscillator introduced by Donald Lambert in 1980. Though its name refers to commodities, it can also be useful in equities and currency tradingas well. CCI measures the statistical variation from the average. It is an unbounded oscillator that generally fluctuates between +100 and -100. ForexTraders use the CCI in a variety of ways. Three common uses are: -CCI in retracements -CCI on breakouts -CCI in divergent trades But today we are going to just focus on trading the CCI divergence. HOW TO TRADE CCI IN DIVERGENCE Before you trade the CCI, first identify the direction of the prevailing trend. If you are trading off of a 4 hour chart, determine the direction of the daily trend. If you are trading off a 15 minute chart, determine the direction of a trend on the 1 hr chart etc. Why? You may ask? Than Answer is simple: because you want to be taking trades based in the direction of the main trend when you are trading in smaller timeframes. And you will have much more clarity on what the main trend is when you check in larger timeframes. Here are some few important points you need to be familiar with: When CCI is above +100 value, it is considered overbought while below the -100 value is considered oversold. As with other overbought/oversold indicators, this means that there is a large probability that the price will correct to more representative levels. Therefore, if values stretch outside of the above range, a retracement trader will wait for the cross back inside the range before initiating a position. Buy Trade Setup For CCI Swing Trading Strategy: Wait and watch for CCI value to go below -100(oversold region) and once it comes back and crosses above the -100 line, you place a pending buy stop order 3-5 pips above the high of the candlestick after it has closed. Place you stop loss below the swing low or if the candlesticks is quite long, then place it anywhere from 5-10 pips below the low of that candlestick. Your take profit target should be place at least more than 2 times the distance of what you risked. Sell Trade Setup For CCI Swing Trading Strategy: Its just the exact opposite of the Buy Setup… Once CCI Value goes above 100 (overbought region) you watch and wait until the line comes down and crosses the +100 line do the downside and then you place a pending sell stop order 3-5pips below the low of the candlestick that was formed that caused the CCI value to fall below the +100 line. Place you stop loss at the swing high or if the candlestick is quite long, then place it 5-10 pips above the high of that candlestick where you placed the sell stop order at. Similarly, aim for profit targets 2 or more times what your risked or simply Risk:Reward Ration of 1:2 or more. So there you have it, the CCI Swing Forex Trading Strategy . Try it out and see how it works for you. Did you enjoy this? It would mean the world to me if you shared it
Three White Soldiers & Three Black Crows, what’s these got to do with forex swing trading??? Well, relax, these are the names given to two very specific reversal candlestick chart patterns shown below: Three white soldiers pattern The three white soldiers pattern is a bullish reversal candlestick pattern and here is how it forms: first the market has to be in a downtrend. next you have 3 green bullish candlesticks that form-giving you the three white soldiers chart pattern. Usually when the three white soldiers pattern is formed, it signals the end of the downtrend. Three black crows pattern. The three black crows pattern is a bearish reversal candlestick chart pattern that consists of 3 bearish candlesticks. Here is how the three black crows chart pattern forms: the market has got to be first in an uptrend. then three bearish candlesticks from-the three black crows. Once the three black crows are formed, usually it signals the end of the uptrend. HOW TO TRADE THE THREE WHITE SOLDIERS & THREE BLACK SOLDIERS PATTERN Do you need to trade all the 3 white soldiers or 3 black crows patterns that you see? No. The location where these chart patterns form is very important. You want to be able to trade these chart patterns in areas of: support and resistance levels pivot levels. Fibonacci levels It does make more sense to trade these chart patterns on these kind of level as there will be more significance involved. THE TRADING RULES ARE VERY SIMPLE if a three white solider is formed, place a buystop order 3-5 pips above the high of the 3rd candlestick or if a three black crows form, place a sell stop order 3-5 pips below the low of the 3rd candlestick. Place your stop loss above the 3rd candlestick’s high if you placed a sell stop order or place a stop loss below the 3rd candlestick’s low if you entered a buy stop order. Take profits may be placed targeting previous swing highs or lows (peaks or bottoms). Move stop loss to breakeven when price moves by the amount risked or move stop loss to break even when price has made a swing high or swing low. Learn to take partial profits off the table when price moves at least halfway point to reach your take profit target level.
The 3EMAS swing trading system is a very simple trading strategy that is based on 3 exponential moving averages(ema). These are 10ema, 25ema and the 50ema. A trade is initiated on the FAILURE of the retracement that happens after the 10ema crosses the 50ema. Now, you may wonder, why not initiate a trade when the 10ema crosses the 25ema on the very first instance? Well, the simple answer I can think of is this: the 50ema line acts as a support if price is above it and acts a resistence when price is below it, therefore, to make sure that price does not bounce off from this 5oema line, the 10ema must cross the 50ema before a trade can be taken. Timeframe: 1hr and above Indicators: 10ema, 25ema and 50ema Currency Pairs: Any Trade Entry Rules: Place a buy stop order 2-5 pips above the the high of the candlestick which has a lower high than the previous candlestick after the 10ema crosses the 50ema to the upside. Place a sell stop order 2-5 pips belwo the low of the candlestick which has a higher low than the previous candlestick after the 10ema crosses the 50eam to the downside. If the buy stop/sell stop order is not executed then continue to move the buy stop /sell stop order above/below each new lower high/higher low that forms until the retracement fails and the high/low of the candlestick is broken and trade is executed. Take Profit You can use previous swing low levels as your profit target for a sell trade or previous swing high level for a buy trade. Or another option is not to have a profit target but use a trailing stop to place behind each lower swing high(for a sell trade) as your trade moves in favour so that your can ride out that trend for as long as you can extracting maximum pips out of the price swing until you get sopped out. Do the exact opposite for a buy trade. Stop Loss Placement For a buy order, place your stop loss 2-5 pips below the low of the candlestick that has its high broken which then activated your buy stop order. For a sell order, place your stop loss 2-5 pips above the high of the candlestick that has it low broken which then activated your sell stop order. Trade Management One of the best way of trade management is to trail stop behind lower swing highs (for a sell trade) or trail stop below higher swing lows, This enables you to lock in profits as trade moves in favor until your profit target is hit or if you don’t have a profit target, you can ride our the trend as far as it can go until you get stopped out. See the attached chart for more clarity regarding this. Advantages of the 3EMAS Swing Trading System A very simple forex trading system, easy to understand and use. In strong trending markets, there is potential to make large profits very quickly. Disadvantages of the 3EMAS Swing Trading System Ema’s are lagging indicators therefore any trade taken based on these indicators means that you are getting into a trade after price has moved, sometimes to a great deal already so you may not be entering a trade at right time If price moves a great deal, when you enter a trade, it may be due for a reversal and this would also get you stopped out. This trading systemwill perform poorly in ranging markets.
Here’s how many traders would normally trade a daily pin bar: as soon as the high of the daily pin bar is broken, a buy order is initiated and stop loss is placed below the low of the pin bar. But I believe this is not the best way of trading the pin bar and I will list the reasons why here: if you know, the daily pin bars are unusually long candlesticks which creates a problem because it means your stop loss would be huge which means at the place where you enter a trade may not necessarily be a good one. So is there a better option? A low Risk Entry Method? You bet there is! In here, I will show you a better way to trade the daily Pin Bar. Here’s the Daily Pin Bar Low Risk Entry Method: After the daily candlestick has formed, you need to identify it to see whether its a pin bar or not. Once you’ve identified that it is a pin bar, you then need to switch to either the 4hr or 1 hr timeframe (which ever you prefer). Once you are in the smaller timeframes like the 1hr or the 4hr, you have to watch and wait for price to go down. The buy entry candlestick is the candlestick that takes out the high of the previous candlestick. This is your signal to place a buy stop order above the high of that candlestick and place your stop loss a few pips below the low of that candlestick. If you get stopped out, keep looking for the next buy entry candlestick. It is preferable that the buy entry candlestick be happening within the high and low range of the pin bar. With this trading method, you will have a low risk entry in anticipation of a breakout of the high of the daily pin bar. So you want to get into a low risk entry trade before the breakout happens. Advantages of of Trading The Daily Pin Bar With The Low Risk Entry Method: Switching to 1hr or 4hr timeframes to look for the buy entry candlestick allows you to enter early before a breakout happens when the daily pin bar high is broken to the upside. Which also means low risk entry, instead of a 100 pips stop loss on the daily timeframe pin bar, you could be entering a trade with 25 pips stop loss using 1hr or 4hr timeframes as shown by the charts. if a valid and nice breakout happens, you make a lot of profitable pips easily. know also that when a pin bar forms in the daily timeframe, it gets the attention of many breakout traders who would be stacking their buy orders just above the high of pin bar in anticipation of a breakout so once price hits these orders, the markets tends to shoot upwards quickly. Daily Pin Bars forming around strong areas of Support worth paying attention to because as mentioned above, many traders would be watching it. Any Disadvantages of this Forex Trading System? Not all daily pin bars may have strong breakouts when their highs are broken. Pin bars can form anywhere but not all of them would be good to trade. Pin bars forming on support levels or major fib levels and pivot points are the ones you should be focused on trading. Did you enjoy this? It would mean the world to me if you shared it:
This Is A Simple Breakout Forex Trading Strategy based on the GBPUSD forex pair. This breakout strategy is designed to capture an early move of price when it is starting to establish its trend or market direction for the day. TIMEFRAMES Here’s what you need to do about trading timeframes: The Frakfurt Market Opens at 2:00 AM Eastern Standard Time (if 7:AM Gross Median Time) Then the London Market (the giant forex mover) opens an Hour later (8AM GMT). This is the European forex session and forex market starts its day in Europe first. CURRENCY PAIR Ideally, you’d want to trade only the GBPUSD pair in this one as this tends to have more volume when the London session opens. Others may include EURGBP or any pairs that has a GBP in it. FOREX INDICATORS You don’t need any forex indicators for this breakout system. HOW TO TRADE SIMPLE FOREX BREAKOUT TRADING STRATEGY Here’s how you trade this forex breakout trading strategy: Start with 1hr timeframe You need to find out the “price range” from 1:00 EST to 2:PM EST (This is the 1hr candlestick you should be looking for) Look for the highest high (peak) and the lowest low (bottom) of the price in that range. Then Draw parallel horizontal lines through those two price extremes-this will create a tunnel. Now switch to a 5minute chart and wait and watch to see if a 5min candlestick closes outside of the tunnel. If it closes above the highest high, you initiate a buy order If it closes below the lowest low, you initiate a a sell order. Buy order can be at market order or buy stop order. A sell order can be a market order or sell stop order. Place your stop loss at least 5 pips outside the tunnel (should not be exactly on the tunnel lines). This chart below is the 1hr forex chart where you begin your trading analysis following the steps given above: This 5 minute chart below is where you wait patiently to see any 5 minute candlestick breaks out of the tunnel and and if it closes above/below it, that’s when you enter a trade. Pretty simple forex breakout trading strategy really. You just have to have the ability to use multi-time frame analysis and you’d be fine. TAKE PROFIT TARGETS: As usual, I would give you a couple of options: 3 times what you risked. if buy trade, set your Take Profit targets within the previous swing high (peak) or if sell then use a previous swing low point (bottom). TRADE MANAGEMENT. move initial stop loss to break even when market moves by the amount risked and continue to trail stop it behind each new low peaks that form (for sell order) and higher bottoms that form (for buy order) So there you have it…a simple forex breakout trading strategy. It’s pretty easy, isn’t it?