Three White Soldiers-Three Black Crows Swing Trading System
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?
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.
Hedging was never interesting to me, I just didnt see the advantage. Except now I think theres a practical way to use it.Let me explain with this morning release of Employment rate on CAD. In the first picture, we have an usual hedge. In blue you buy, and in red you sell at the same time.Now when the news is out, and its start going down, you close your buy and you are now only selling. But at this moment, there is no difference between you than the next Joe who just opened is sell order... Except maybe, you saved a little on the spread Now in the second picture, you start trading earlier before the release. You buy when price is low, and sell when its high. Its really not that difficult because price will always do this before a big release.Now the advantage here, beside entering on a low spread, is that once you close your hedge (either way) you will be protected from a pullback.
The two indicators we are going to talk about here are found to be very well working when used side by side. This Forex trading system is an another simple discovery; and hundreds of such discoveries can be made when traders are there to learn and experiment. Any currency pair and time frame can be used.Indicators: Parabolic SAR default settings (0.02, 0.2), ADX 50 (with +DI, -DI lines) Entry rules: SELL When the +DI line is below the -DI line, and Parabolic SAR gives sell signal. When the +DI line is above the -DI line, all Parabolic sell signals must be ignored. Entry rules: BUY when the +DI line is above the -DI line, and Parabolic SAR gives buy signal. When the +DI line is below the -DI line, all Parabolic buy signals must be ignored. Exit rules: when +DI line and -DI lines have crossed again. Advantages: allows filtering entries and predicting good exits. Disadvantages: Both Parabolic SAR and ADX are follow-up indicators. Although they complement each other very effectively, the “weakest” in chain is ADX, because during trading it can give one signal, but later change to the opposite. Once given a signal from ADX, waiting for the current price bar to close to avoid such misleading is advised.
While many traders love volatility and need it to trade in their timeframe it creates as many risks as it does opportunities. If you are on the right side of volatility you can make a lot of money but being on the wrong side will cost you dearly. Here are the top 10 dangers that traders and investors face during times of high market volatility. Volatility can trigger a stop loss to only have it reverse and go back in the favor of your old position. Stop losses are still crucial for traders to keep losses as small as possible. Losses can be larger than expected as moves can be many times larger than expected based on historical volatility even when using usual position size parameters. When volatility is twice as much as usual half position sizes are safer than your normal position size. Gaps in price action can cause stop losses to be missed and larger losses than expected. Volatility can mentally exhaust you and cause traders and investors so much stress that they stop trading or investing at all. Volatile price action can cause traders to have style drift into time frames and systems that they do not usually trade and do not have an edge in. If trading both the long and short side of the market you can double your losses by being on the wrong side of the market twice as it moves quickly in both directions in a short period of time. Option writers can have losses far bigger than they thought possible as a price moves several standard deviations in a short period of time. Option contracts can be so expensive that the passing of time and the expiration date can cause large losses if a move doesn’t happen fast enough for option buyers. Volatile markets can cause large trading losses and big drawdowns that are hard to come back from as the math works against you. If you lose -20% of your capital you need a +25% gain just to get back to even. Investors that get out during volatile price action and go to cash don’t know when to get back in and miss the next big run up in price.