Hi traders, I want to share strategy that I was trading for a while. I am going to share with you my trading plan and some additional information about this method. I am using New York close charts 5 day charts.
Price action signal to enter
• Very strong bearish or bullish candle (It not necessary must engulf previous candle)
• Candle must close within 1/4 desired direction
• Trade has space to move into (it is worth to invest)
• Do not trade right into near support or resistance area
• Signal must clearly show that buyers or sellers controlled the session
Timeframe
• Do not trade in lower than 4h timeframe (you can trade them on 1h timeframe as well but this is not what I encourage you to do at least at the beginning. I personally do not trade 1h chart.)
Entry
• At the break of the candle high or low
Stops
There are several options
• Above/below candle
• Above/below near support or resistance
• Above/below recent candles highs or lows
Trade management
It is very subjective thing and also depends on market environment (range, uptrend or downtrend). Use key areas to manage your trade. It is the places where price may turn around you (support and resistance areas). There is no single perfect method for trade management. My suggestion is:
• Open several positions
• At the target areas move to break even, take some profit, take full profit
• Never ignore or do nothing at the areas where price might turn against you
• Manage your trade only on one timeframe. If you took setup on 4h chart then all targets, entry and stop is also managed only on 4h timeframe.
Before any trade make your plan and stick to it!
Risk management
• Never risk more than 2% of your account
Examples
AUDJPY 4H chart. This is the setup from last week. That was the one and only setup I took that week. Patience and discipline is necessary.
EURCAD 10th of April setup. Daily chart
In above example you can see the importance of proper trade management because if you just ignore this level your winner just turns into loser which is a common problem amongst traders.
How many setups you can expect a month?
If you are patient, smart and methodical there should be approximately from 5 to 10 setups a month. Strong candles occurs quite often but the most of them leads right into trouble areas.
How to identify target area?
You just need to look where the price might reverse on you. Look at the chart and look for an obvious price flip points where price found support or resistance.
These setups are continuations or reversals?
It is both.
What about news?
Only avoid trading Non Farm Pay Rolls on intraday chart. Why? Because price moves wild during that day. So it can easily fake you out. Do not trade those intraday charts that day.
What pairs to look at?
On my watch list I have pairs contained of USD, EUR, CAD, JPY, AUD, NZD, CHF, SGD and GBP. Basically it is all majors and crosses with not big spreads.
What returns can I expect with this strategy?
It really depends on your trading skill. If you pick only the best trades and have proper trade management approximately 70-90% will be winners or break even trades.
