In this forex strategy I am going to show you an example of profitable trading method in Forex trading. Before I go in details there are some important rules that you should always remember. No matter what you are trading, stocks or currencies, you have to follow these rules to profit. In our trading method we will stick to the rules as well.
1. Do not use high leverage. There are times it takes less than a minute for a currency pair to rally or dive 50+ pips. If you are on the wrong side of the market at that moment, it could wipe your account. Since high leverage brings high risks, such trades affect your emotions and therefore either you profit less or you close trades, which could bring lots of profit, early and take the loss.
2. Do not trade against the trend. We are not trying to find the tops or bottoms. What we are going to do is to follow the path that the price movement is moving. After I am done with the basic rules, I will give you examples on the real charts.
3. Follow the system. Stick to the trading method, do not make predictions, trust the charts and price action. People lose because they do not follow the rules. Whatever system, indicator, style you are using, if you break the rules and trade randomly I guarantee that you will lose your account.
Now let’s focus on our trading method. Since MetaTrader is the most common program I am going to explain this system on this platform. Now let’s open GBP/USD chart and set our time frame to “1 hour” and chart type to “candlesticks”. After that you will use the template supplied on our web site. What you will see looks like this:
Once attached, our candlestick pattern recognition pattern will tell you when to sell and when to buy. Lets explain the charts and this system works. Take a look at the chart below:
We are using Ichimoku clouds (Kumo, gray marked on the chart) to follow the trend and opening trades when candlestick pattern gives its signal in the same direction. So we are only trading the way which the price is supposed to move. To be more specific:
1. We are going to SELL when the price is below the Kumo (clouds) and the pattern recognition indicator show a red warning just above the price bar (check the red circled area on the chart above).
2. We are going to BUY when the price is above the Kumo (clouds) and the pattern recognition indicator show a blue warning just above the price bar (check the blue circled area on the chart below).