The
forex trading technique below is simply...awesome. If you are able to
look at a chart and identifywhen the market is trending, then you can
make a bundle using the below technique. If I had to pickone single
trading technique in the world, this would be the one! Make sure to
use proper positionsizing and money management with this one and you
will encounter nothing but success.
1
- To keep things simple, let's assume there is no spread. Open a
position in any direction you like.
Example:
Buy 0.1 lots at 1.9830. A few seconds after placing your Buy order,
place a Sell Stop order for 0.3 lots at 1.9800. Look at the Lots...
2
- If the TP at 1.9860 is not reached, and the price goes down and
reaches the SL or TP at 1.9770.
Then,
you have a profit of 30 pips because the Sell Stop had become an
active Sell Order (Short) earlier in the move at 0.3 lots.
3
- But if the TP and SL at 1.9770 are not reached and the price goes
up again, you have to put a Buy Stop order in place at 1.9830 in
anticipation of a rise. At the time the Sell Stop was reached and
became an active order to Sell 0.3 lots (picture above), you have to
immediately place a Buy Stop order for 0.6 lots at 1.9830 (picture
below).
4
- If the price goes up and hits the SL or TP at 1.9860, then you also
have a profit of 30 pips!
5
- If the price goes down again without reaching any TP, then continue
anticipating with a Sell Stop order
for 1.2 lots, then a Buy Stop order for 2.4 lots, etc... Continue
this sequence until you make a profit.
Lots: 0.1, 0.3, 0.6, 1.2, 2.4, 4.8, 9.6, 19.2 and 38.4.
6
- In this example, I've used a 30/60/30 configuration (TP 30 pips, SL
60 pips and Hedging Distance
of
30 pips). You can also try 15/30/15, 60/120/60. Also, you can try to
maximize profits by testing
30/60/15
or 60/120/30 configurations.
7
- Now, considering the spread, choose a pair with a tight spread like
EUR/USD. Usually the spread is only around 2 pips. The tighter the
spread, the more likely you will win. I think this may be a "Never
Lose Again Strategy"! Just let the price move to anywhere it
likes; you'll still make profits anyway.Actually the whole "secret"
to this strategy (if there is any), is to find a "time period"
when the market will move enough to guarantee the pips you need to
generate a profit. This strategy works with any trading method.
Asian
Breakout using Line-1 and Line-4.You can actually use any pip-range
you want.
You
just need to know during which time period the market has enough
moves to generate the pips you need. Another important thing is to
not end up with too many open buy and sell positions as you may
eventually run out of margin.
COMMENTS:
At this point, I hope that you can see the incredible possibilities
that this strategy provides. To sum things up, you enter a trade in
the direction of the prevailing intraday trend. I would suggest
using the H4 and H1 charts to determine in which direction the market
is going. Furthermore, I would suggest using the M15 or M30 as your
trading and timing window. In doing this you will usually hit your
initial TP target 90% of the time and your hedge position will never
need to be activated. As mentioned in point 7 above, keeping spreads
low is a must when using hedging strategies. But, also, learning how
to take advantage of momentum and volatility is evenmore important.
To achieve this, I would suggest looking at some of the most volatile
currency pairs such as the GBP/JPY, EUR/JPY, AUD/JPY, GBP/CHF,
EUR/CHF, GBP/USD, etc. These pairs will give up 30 to 40 pips in a
heartbeat. So, the lower the spread you pay for these pairs, the
better.
As
you can see from the picture above, trading Line 1 and Line 2 (10 pip
price difference) will also result in a winning trade. This method
is extremely simple:
1.
Just choose 2 price levels (High, Low, you decide) and a specific
time (you decide), if you have a High breakout then buy, if you have
a Low breakout then sell. TP=SL= (H-L).
2.
Every time you experience a loss, increase the buy/sell lots in this
numerical sequence: 1, 3, 6, 12, etc... If you choose your time and
price range well, you will not need to activate this many trades. In
fact, you will very rarely need to open more than one or two
positions if you properly time the market.
3.
Learning to take advantage of both volatility and momentum is key in
learning to use this strategy.
As
I mentioned earlier, timing and the time period can be crucial for
your success. Even though this strategy can be traded during any
market session or time of day, it needs to be emphasised that when
you do trade during off-hours or during lower volatility sessions,
such as the Asian session, it will take longer to achieve your profit
objective. Thus, it's always best to trade during the overlapping
hours of the European/London sessions and/or the New York session.
In addition, you should keep in mind that the strongest momentum
usually occurs during the opening of any market session. Therefore,
it's during these specific times that you will trade with a much
higher probability of success. TIMING + MOMENTUM = SUCCESS!
March
29, 2007 was a typical example of a dangerous day because the markets
did not move much.
The
best way to overcome such a situation is to be able to recognize
current market conditions and know when to stay out of them.
Ranging, consolidating, and small oscillation markets will kill
anyone if not recognized and traded properly (you should, in fact,
avoid them like the plague!). However, having a good trading method
to help you identify good setups will help you eliminate the need for
multiple trade entries. In a way, this strategy will become a sort
of insurance policy guaranteeing you a steady stream of profits.If
you learn to enter the markets at the right time (I sometimes wait
for price to pullback or throwback a bit before jumping in), you will
find that you will usually hit your initial TP target 90% of the time
and price will not get anywhere close to your hedge order or your
initial stop loss. In this case, the hedging strategy replaces the
need for a normal stop loss and acts more as a guarantee of profits.
The
above examples are illustrated using mini-lots; however, as you
become more comfortable and proficient with this strategy, you will
gradually work your way up to trading standard lots. The consistency
with which you will be making 30 pips any time you want will lead to
the confidence necessary to trade multiple standard lots. Once you
get to this level of proficiency, you profit potential is unlimited.
Whether you realize it or not, this strategy will enable you to trade
with virtually no risk. It's like having an ATM Debit Card to the
World Bank!!!!!! (In exchange for sharing this amazing technique with
you, I would truly appreciate it if you would pay me back by opening
up a forex trading account by going through the links on my website
here – no extra commissions will be charged and as you become
rich I will also receive a small percentage of the spread. Enjoy this
strategy, have a successful future and spend time with your family!
2)
A variation of the strategy using a double martingale
This
strategy is a bit different but is quite interesting as you still
profit when you hit a stop loss! Using the below picture as an
example, you would purchase 1 lot (indicated with B1) with the idea
that it will rise. But you will also sell 1 lot (at S1, which is the
same price as your buy price) at the same time, in case the price
goes down. Then follow the diagram. When a martingale stops, the
other one takes over. This strategy can earn pips during periods
where price is ranging. As your winning transactions only require an
additional lot to be put into play, it doesn't really make much of a
difference in relation to the other martingale. There is always a
risk for the first martingale during ranging periods (flat
consolidation periods), but this risk is mitigated by the pips you
are earning from the second martingale!
3)
A lower-risk martingale strategy (my favorite of the 3
strategies
in this document!)Here's what you do: if price is trending up, place
a buy order for .1 lots (also place a Stop Loss at 29 pips and a Take
Profit at 30 pips). At the same time place a Sell Stop order for .2
lots 30 pips below with a 29 pip SL and 30 pip TP. If the first
position hits SL and second order is triggered, place a Buy Stop
order 30 pips above your new order for .4 lots. Etc... Your order
sizes will be .1/.2/.4/.8/1.6/etc...
If
ever your stop loss is hit and the new order has not been triggered
because price has reversed, place this new order on the opposite
side, where price is now headed towards (in this situation you will
have both a buy stop and sell stop order set up for the same lot
size).
I
recommend that if you have a $10,000 (or €) account, your first
position be .1 lots. If you have a
$20,000
account, I would recommend trading two different pairs (ex: if you go
long on EURUSD, also go long on USDJPY, that way you're sure to see
half of your open positions hit a take profit, and this will
therefore divide your overall risk in half). I would go so far as to
trade 3 different pairs if you're trading a $30,000 account, and only
increase the weight of your first positions as you have more capital
to trade with.
I
like this strategy because your overall position sizes (and therefore
risk) end up being lower:
-
Original sure-fire strategy position sizes: .1, .3, .6, 1.2, etc.
-
This strategy's position sizes: .1, .2, .4, .8, etc.
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