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Showing posts with label Forex Trading Strategies. Show all posts
Showing posts with label Forex Trading Strategies. Show all posts

Sunday 28 July 2019

3 Forex Trading Strategies For Serious Traders That Work!

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forex trading strategies tutorial coverIf you’ve found yourself on this page – I am going to assume you’re very passionate about Forex trading and want to go places with it.
The sad truth is that there are a lot of potato strategies getting cooked up in bedrooms, and passed around on forums, branded the holy grail.
Everyone’s time is precious! There is nothing worse than wasting a lot of your time on a trading system that leads you down the wrong rabbit hole.
Time is a commodity that is non-refundable.
Don’t get me wrong – there is some golden information out there, but you need to have a bit of industry experience under your belt to be able to ‘filter’ what’s worth investing energy into.
The crazy amount of foreign exchange information that poor in when you do a google search can be an overwhelming, and dilute your ability to find reliable trading strategies to get you going.
You might already be trading Forex, but looking for simpler Forex trading strategies to supplement your current regime.
In this tutorial, I am going to share 3 strategies with you which are:
  • Forex Trading Indicator free, only need clean price charts
  • Require no ‘extra’ tools, just your charting software
  • Have a simple & effective price action approach
  • Reveal straight-froward, uncomplicated trade signals you can spot easily
When Forex strategies have these kinds of properties, they are easy to stick with for the long run (like a well designed diet).
Let’s put things into gear, and begin…

Forex Trading Strategies Using ‘Indecision Doji’ Candles As Breakout Trading Setups

This is one of the most overlooked and underestimated Forex trading strategies!
There are many definitions for a Doji candle – you can probably find over 10 variants! I am going to stick with the generic definition here, which I think works best.
The ‘indecision’ Doji‘ is the one I trade – it’s a very simple to understand signal, and extremely easy to spot on the charts too.
An indecision Doji candle has a small centered body, with wicks protruding out both ends of the body.
doji candle anatomy
As the title suggests, this candlestick pattern represents indecision. The market is communicating to you that it tried to move higher, and it tried to move lower, but ultimately closed off back around the opening price.
The idea is to catch the breakout of the indecision. In general, we aim to catch bullish runs as price breaks the high, or bearish moves as the market breaks the low of the Doji.
doji forex trading strategy basics
Above: The basic way to trade these is to wait for a breakout from the ‘indecision’ the candle represents. We do this by catching price as it breaks above (buy), or below the candle range (sell).
There are also some more advanced tactics where we wait for a break of one end of the Doji, but only take action if it fakes out, reverses, and breaks the other end instead.
Doji candles print very frequently, and can be seen across a few time frames. Very easy also to spot with your eye!
doji candles all over the chart
Above: Yep, Doji candles form often, across all time frames.
One important thing to remember is that the more ‘data’ that you have packed into a candlestick pattern, the more reliable it will be.
Meaning: A Doji on the Daily time frame has magnitudes more value than a Doji on the 5 minute time frame – which is true for any price action Forex trading strategy.
In my crazy price action Forex tips article – I talk about how traders screw themselves over constantly by trading candlestick signals in isolation and give away my approach to a candlestick signal trading strategy decision.
So, the first lesson is: don’t trade every single Doji you see!
What is the difference between a good and a bad Doji signal?
We want to target them at points on the chart which have high technical value. Locations where you know the market has a ‘decision’ to make.
Looking for key locations like:
  • Proven support and resistance levels
  • Swing levels within a trend
  • Trend line structures
  • Any point on the chart your technical analysis tells you the market should ‘break or bounce’
Check out this Doji setup below…
doji candle setup on weekly support
Above: The indecision signal formed on a weekly support level – where we highly anticipate a ‘bounce’.
With that logic in mind – we only look for bullish breakouts
doji candle weekly support breakout strategy result
Above: As expected, a ‘bounce’ occurred off the major level, and price broke above the indecision high – kicking in our bullish trade order.
It’s all about using your technical analysis to find key areas where you know the price action has a ‘break or bounce’ decision to make. Wait for an Indecision Doji to form, then trade the expected outcome (usually bounces).
indecision doji trading strategy on resistance
Above: With simple technical analysis – we easily spot a clear resistance level on the chart.
An indecision Doji candlestick pattern forms, so we look for bearish follow through off resistance (trading the bounce), and use the break of the Doji low as a trade trigger.
doji candle successful breakout trade
Above: The market follows through with the indecision breakout, and explodes downwards.
We can also use them in trending conditions to catch trend continuation.
The best place to target Dojis in a trend is at swing levels (old support turned new resistance, or reverse of that).
doji in a trend strategy
Above: In a trending environment – look for indecision Dojis that form at swing levels. Target breaks in the direction of the trend.
doji trend strategy after result
Above: A nice result after trend momentum picked up via the swing point, broke the Doji high to trigger the trade, and continued to trend higher for days.
It is as simple as it is critical, that you perform good technical analysis first – then you can line up your Doji breakout idea to see if it fits.
good vs bad indecision signals
Above: A glance at what separates a good indecision breakout opportunity from a bad one.
Remember, Dojis form very regularly – it’s your job to use your basic technical analysis to filter the bad from the good.
If you don’t have good chart reading skills, and can’t pick up the basic structure or context of the market – you might run into frequent trouble trying to trade these candlestick patterns…
When you apply this Forex strategy – just remember you will see a lot of Dojis printed, but only a small selection of them will be good trading opportunities.
Checkpoint
Dojis are a very common candlestick pattern. The indecision Doji is the one I use as a breakout signal.
Some key points to remember
  • Do your technical analysis first before you consider the Doji as a trade opportunity. In most cases, simple price action analysis will rule it out as a viable trade
  • Match them up with important technical points on the chart, where you know the market has an important decision to make – then plan to trade the ‘break or bounce’ via the Doji breakout
  • Don’t be tempted to trade Dojis on low time frames – the less data in the candlestick, the less reliable the pattern.

The Flag Pattern – A Trend Continuation Strategy

In my opinion, flag breakouts are one of, if not the best Forex trading strategy for trending markets.
Because of the simple nature – flag breakouts are another overlooked gem, usually because Forex traders are always chasing the more complicated methodologies!
Like always, flag breaks work well on higher time frames – but I’ve even seen them work well on charts like 1 hour time frame!
Here is my ‘to the point’ breakdown of what flag patterns are, and how I trade them:
  1. A trending structure must be in place.
  2. A counter sloped, trend line develops against the existing dominant trend (the flag line)
  3. The flag line breaks in the direction of the trend
  4. Trade the ‘breakout candle’
Let’s look at an example.
bullish flag strategy setup on daily chart
Above: This is my text-book scenario for a bullish flag breakout. A strong trend in place, then shorter frequency lower highs develop against the trend – creating a counter-trend, trend-line.
We’re now waiting for the flag line to break, which signals trend continuation.
bullish flag breakout signal
Above: A breakout signal! A bullish candle closes above the flag structure. We’re looking for a convincing close here, not a candle with a large upper wick.
Once we have the breakout candle, that’s our cue to get long. There are a few different entry, stop loss, and money management combination you can apply here.
I can’t cover them all here, I’ve dedicated a few modules to these subjects in our War Room Forex course.
The basic way is to buy/sell the breakout candle event (after it closes), and place a stop loss below the breakout candle.
If the breakout candle is really large, then other strategies need to be deployed to tighten the stop.
bullish flag breakout success
Above: The follow through move after a breakout candle busted the flag structure.
Hopefully you can see the value in this as a trend continuation strategy.
When the market is trending, these flags are actually forming all the time, right under your nose. If you haven’t been looking for them, then you’ve probably been overlooking many opportunities.
If you’re into the lower time frames (like 1 hour), open up your charts and check out what you’ve been missing…
flag breakout candle events on 1 hour
Above: Even on a 1 hour chart, flag structures are actually worth looking out for.
You can see above during a strong trend, even the 1 hour chart produced the goods. The 1 hour chart is normally a difficult chart to apply swing trading strategies to, but flag breaks within trends just work so nicely.
examples of bearish flag breakouts on a 4 hour chart
Above: The power of catching flag breakouts within a trending environment. They key is to make sure the broader market is trending before you consider looking for flag trade opportunities.
You do see flags form within consolidation or in ranging cycles, but they just don’t offer the reliability, or reward potential. That’s why I only use them as a trend continuation trading strategy.
Checkpoint
Flag structures are counter directional trend lines that form against an existing trending structure. The event we’re looking for is a breakout candle. Once a breakout candle signals trend continuation by closing on the other side of the flag – that’s our cue to pull the trigger on a trade in the dominant trend direction. Flag trades surprisingly work well on lower time frames, as well as higher swing trading time frames.

The Rejection Candlestick Reversal Trading Strategy

The rejection candle is one of my most utilized candlestick pattern signals.
The anatomy and concept is similar to the classic ‘Pin Bar’ – which is the most engaged topic of interest in all the price action discussions, and communities online.
Rejection candles are a candlestick pattern that communicates denial of higher or lower prices. The market tries to move to an area, but it ‘rejected’ by the market.
This denial leaves a very distinct feature in the anatomy of the candlestick – a long lower or upper wick.
The better quality rejection candles pack thicker candle bodies (closing in the direction of the rejection).
rejection candle anatomy
Above: Simple anatomy diagram, comparing the classic pin bar to the more authoritative rejection candle pattern that I use.
Rejection candles have a thicker body. The ‘bounce’ from the rejection causes the closing price to be higher or lower than the open price.
The thicker body demonstrates more strength and authority as a reversal signal in the rejection candle anatomy.
What’s the #1 quality factor for rejection candles?
I am going to stay something stupidly simple here – the key is to match them up with technical areas on your chart, where you expect price to reverse.
Such a simple concept that many traders don’t use! Most Forex traders out there will trade any and every rejection candle (or pin bar), that pops up on their chart.
I like to target these guys at:
  • Weekly support or resistance, the major turning points (counter-trend opportunities)
  • Swing points within a trend (trend continuation opportunities)
  • Range tops and bottoms
  • Very over extended prices (mean reversion opportunities)
Check out the bearish rejection setup below…
rejection candle at resistance
Above: A nice bearish rejection candle forming at a resistance level. Remember, rejection candles are a reversal signal – and strong resistance levels are an expected turning point. The signal matches the context!
rejection candle after result
Above: A very nice follow through move to the down side, after the bearish rejection sell signal printed.
Don’t fall into the trap of ‘trading every candlestick pattern’, just because they’re there. Get into the habit of doing technical analysis first, then build that analysis to the candlestick trade idea, for synergy and quality control.
bullish rejection trade signal at new support
Above: Simple technical analysis tells us this level is likely to cause the market to bounce, as old resistance holds as new support.
The bullish rejection is printed as a result of a bounce (at least the beginnings of one) – therefor it fits well with our technical analysis, and has a lot of synergy with what’s going with the chart.
support holding and bullish price action signal strategy pays
Above: The technical analysis and the rejection signal both play out as expected, and become a profitable trade idea.
It’s just as simple as lining up the rejection candle (a reversal signal), which those likely reversal points on your chart.
Try to avoid trading rejection candles when there is a lot of congestion to the left.
bad rejection signal examples
Above: An example of not lining up technical analysis, context, or reversal points with your rejection candle signals.
These are dud signals because they hardly met any of the analytical quality control points we’ve talked about in this tutorial.
If you see heavy congestion to the left, and the rejection candle formed in the middle of it all – then that’s a red flag.
Also if you plan to go against the trend (which can be profitable), you better line up strong rejection candles with major reversal points (tip: get these from weekly time frame)
When you look back through your charts to evaluate these signals, take note: you will find them everywhere!
Be careful of confirmation bias – which means you only ‘see’ the profitable signals located at the tops and bottoms of moves in history, but you over look the signals in-between, which are the ones you would have likely been screwed over ‘in the trading moment’.
Rejection candles & pin bars are a fairly straight forward signal, but they are not the holy grail ATM machine that prints out everlasting money (which is how I’ve seen them promoted). They are only lucrative when combined with good technical, and price action analysis.

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All information is for educational purposes only. Nothing should be considered as a buy or sell recommendation. The risk of loss in trading stocks, commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if trading is appropriate. When trading stock, futures or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. This email may is a paid advertisement. It could be for a product or service that is not offered, recommended or endorsed by Stock Alphabets and neither the company nor its affiliates bear responsibility or control over the content of the advertisement and the product or service offered. Proceed at your own risk.
The information and material contained in these pages and the terms, conditions, and descriptions that appear are subject to change without prior notice. Investments in equity shares, debentures etc, are not obligations of or guaranteed by the Stock Alphabets, and are subject to investment risks.