Greetings, friends. It’s John Foster. Traditionally, beginners at forex market become scalpers, i.e. start short-term trading at minute- and 5-minute-charts. But is it always efficient? Experience shows that sometimes novices can’t stand against psychological stress of scalping and make mistakes. That’s why I has been looking for daily forex trading strategies which let engage medium-term and long-term trading. One of key features of such trading is the fact that you have to spend just half-hour a day, and sometimes – even less. Thus, you can allocate your time to other activities or just enjoy your effortless life.
1.Price Action – The Daily Forex Trading Indicator-Free Strategy!
2.Where To Use Price Action?
3.Swap Is Everywhere!
4.How To Define The Trend Change Using Price Action?
5.How To Define The Change With The One Bar?
6.How To Reduce Risks?
7.Some Nuances About Price Action Daily Forex Trading!
8.My Trading Experience!
Price Action is the most famous and traditional long-term trading strategy. While trading, you will not use any indicators but just will visually analyze the chart, draw figures, etc. Why did authors of the system sideline indicators? The matter is most indicators are late with forecasts. As a result, a traders enter the market in the middle of the trend, and sometimes in its end. All traders working with indicators know the situation when they enter the market with the trend, and then it turns at once. Surely, one can trade profitably using indicators, but only in short terms, via scalping methods. For long-term trading, either indicator-free ways or advanced advisors should be used.
Price Action system contains so-called patterns. Pattern is a graphical model must be detected by a trader. Appearance of some pattern is your signal to enter the market in the matching direction. This system consists of more than 10 different patterns, and some of them are designed only for pro-traders. Further, principle of trading using 2 most comprehensive and simplest patterns will be described. If you properly follow instructions of the step-by-step instruction, you will have guaranteed income – it’s tested with 2-month testing.
As you can guess, this strategy should be used at daily forex trading charts. Surely, this algorithm can work at hourly, 4-hour and sometimes at 5-minute-timeframe, but the daily chart gives the most accurate signals to enter the market. What’s to the currency quote, there is a wide choice, as the strategy works well either with traditional euro-dollar and dollar-franc, and with USD/RUB, which has become popular recently. Also, you may trade with precious metals, such as gold and silver, or even with oil, if there is such possibility of your broker. As for me, I tested the system with EUR/USD.
As this strategy is long-term and you will hold the position open for about a week, you are recommended to choose a swap-free account of your broker. You can study what a swap is in the article “Swap: What Is It?”. There, you can also find the info about swap-free accounts and their using. Actually, it’s optional, as you may trade with swaps, let alone sometimes they can lead to profits.
One of the most profitable pattern of this strategy is the breaking of the previous price minimum/maximum, as we can define the turn of the global trend with it. It has nothing in common with those tendencies which change 3 times a day. The global trend stands for from several days to several months, and within this time, the price passes from 200 to several thousand pips. All that can be counted in your profit, if you have entered the market in the very beginning of the trend. The indicator-free strategy “Price Action” allows this, if you follow the algorithm:
Step 1! Open the daily chart of any preferred quote. Define the trend, i.e. the direction of price movement. If you don’t understand what I am talking about, then you’d better read “Encyclopedia For Dummies” and then return to this article.
Step 2! Mark tops and bottoms of the trend, as it’s pictured below. The price doesn’t move in the only direction but with zigzags, so the chart always creates new maximums and minimums. And one must recognize the following points:
For uptrend: each new top must be higher than the previous one. Each new bottom must be higher than the previous one. If the rule is not met, wait for the change of the trend.
For downtrend: each new top and bottom is lower than the previous one. If the rule is not observed, the trend is likely to change soon.
It’s most convenient to mark tops and bottoms with colored rectangles or short segments.
Step 3! Depending on the direction of the trend, we wait for the signal to buy or sell. As we’ll trade toward the new tendency, we should enter the market against the previous one. In other words, if you have uptrend, wait for the selling signal, and if you have downtrend – wait for the buying signal.
Step 4! StopLoss for the order should be set beyond the maximum for uptrend, and beyond the minimum for downtrend. If the price turns after you’ve entered and goes against you, it doesn’t mean the signal was false. It can be the ordinary continual correction and the market will turn.
Step 5! TakeProfit is optional. We leave the market when the opposite signal appears. For instance, if you have an open order to sell, then you ought to close in when the new top is higher than the previous one. With that, we open the new order to buy. You also have to close the position, if the market is in the continual flat (doesn’t have any certain direction). With that, don’t open a new order.
Pattern called Pin-Bars is the trump of the “Price Action”. This signal is the most accurate and frequent. And you don’t define the change of the global trend but can make money with continual corrections.
Before the step-by-step instruction, I want to tell you something about Pin-Bars. A pin-bar is the candlestick with the small body and big tail, as it’s pictured below. A bearish pin-bar’s tail points up, and a bullish pin-bar’s tail points down. And color of the body of the bar doesn’t matter, as it’s too little. The main thing is the direction of the tail. As you may guess, a bullish pin-bar is the signal to buy, and a bearish pin-bar is the signal to sell. Let’s make clear the principle of trading in the form of the step-by-step instruction:
Step 1! Open a daily chart of any quote or precious metal. So far, don’t draw any lines or figures, but, if you want, you can define levels of support and resistance. Again, if you don’t understand what I’m talking about, read “Encyclopedia For Dummies”.
Step 2! Be attentive to the chart and look for pin-bars. As the needed candlestick appears, move to the next step.
Step 3! Once a pin-bar is found, you can enter the market against the tail of the candlestick. But, in order to make trading more accurate and to bolt out false pin-bars, we should check the signal. For that, take a look at the chart and define whether the price bounced off the pin-bar level anytime ago, as it’s in the image above. If yes, this level is the level of support or resistance, and the chart will be likely to turn.
Step 4! TakeProfit may be set at the next key level of support/resistance, from which the price bounced off in the past, as it’s in the picture above. If you can’t find this level, set the TakeProfit in 100 pips from the opened position, and once the price passes 40 pips in our direction, move the StopLoss to the breakeven. You will find more information about principles of setting StopLosses and TakeProfits in the article “StopLoss and TakeProfit: What Are They?”. Keep in mind that pin-bar trading is medium-term trading.
To cut risks of entering the market via s false signal, you are recommended to use pending orders like Buy Stop and Sell Stop (don’t confuse with Buy Limit and Sell Limit). Now, I am to explain how to use them with both patterns.
“Price Action” daily forex trading strategy is one of the most profitable ways of long-term trading. To make trading yet more efficient, be advised about the following rules:
It took 2 months to test the strategy, i.e. its two patterns described above. And, I started with trading at EUR/USD chart, and added pound-dollar and dollar-franc in the second month. I could gain 33% of the initial deposit for the first month, and I entered the market 4 times (1 time via the trend change and 3 times via pin-bars).
There were 13 entrances in the second month (2 times via the trend change and 11 times via pin-bars). Despite of the unfortunate number, I could gain 104% of the initial deposit, and I had only 2 false signals, while others led to profits. One of the signals for the trend change gave me 406 pips of profit, which was about 25% of mu deposit.
All in all, I am pleased by this strategy, and I love that it doesn’t take long – just half-hour a day to analyze the charts is enough. If you use pending orders, you will be able to avoid almost all the false signals, which fully reduces losses. I recommend the system for pros and newbies.
“Price Action” daily forex trading strategy is the great choice for traders with limited time for work. You can work somewhere at the same time, manage your own business or just rest and enjoy your life. Surely, this trading system can’t give 200% profit per month, as some scalping strategies, but with good preparations, you will gain enough for wealthy living. The accuracy of the strategy without pending orders is 8/10 correct signals, and with pending orders, it’s 9.5/10 correct signals. Profitability of one-quote trading is 20-40% per month, and 80-100% of trading with 3 and more quotes.
Get lucky and gain much!
Best Regards, John Foster.
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|Moving Averages:||Buy (7) Sell (5)|
|Indicators:||Buy (8) Sell (1)|