Greetings, friends, it’s John Foster. I’ve described several indicator-free forex trading strategies in my previous articles, and now I want to explain another one. To be more accurate, our today article will be dedicated to several strategies may be combined. Principles described below are extremely simple and comprehensive for everybody. Novices and pro-traders work with them. The former use just 1-2 rules, and the latter can use up to 20 different patterns while trading.
1.What Are Patterns and How to Use Them?
2.Indicator-Free Forex Trading Strategies! The Most Common Patterns:
3.Which Timeframe to Use for Trading?
4.Alternative StopLosses Setup!
5.When to Leave the Market?
6.How to Gain Maximum Profit?
7.Are Patterns Often Noticed?
A graphical pattern is the combination of chart bars, which signalizes about the change of the trend, correction beginning or that the current trend continues. There are extremely many patterns nowadays, and every one of them is very understandable. “Price Action” strategy, described before, uses 2 patterns, and another model called the Inside Bar is used in the same-called strategy – “Inside Bar”. I am to explain the principle of how some patterns work.
I must mention that patterns emerge not as often as traders working without indicators would love them to. As a rule, patterns’ signals act with good accuracy, but you may not be able to enter the market too frequently. That’s why one’s recommended to combine several patterns to gain enough without violating money-management rules. Trading with the one pattern, you can gain about 30% of the initial deposit per month, and it will suit beginners. But if you want to trade more profitably, you will have to improve and adjust your system, becoming experienced, adding new rules in it. Thus, I’ve written this article, for you to choose the most comprehensive tools and start making money with them.
We’ll further talk about hot to set TakeProfits and when to leave the market.
Enter the market when the third bar is opened after the signal-one. StopLoss must be set at maximum of the signal-bar, if we buy, and at minimum, if we sell. Below, there is the image of the bullish “Harami” and also the level where the StopLoss for buying should be set.
This question is asked by backers of indicator-free pattern-using trading. Actually, there is no correct answer, as you may use any chart, from M5 do D1. The only thing is that I don’t recommend M1, as patterns of that are quite unclear and often give false signals. Using weekly and monthly also doesn’t make sense, as there, you will enter the market once a year at best, and if you choose them, you will have to engage fundamental analysis only.
The higher is the timeframe, the less is the possible quantity of market entrances, and the more accurate are signals of patterns. Respectively, the lower is the timeframe, the higher is the possible quantity of entrances and the less accurate are signals. You’d better choose the golden mean, considering not only profit, but also your preferences. I must mention now that the maximum profit can be gained with the M5 chart, via several assets, but it will take more than 4 hours per day for working. Your income can exceed 120% per month. If you feel more comfortable working 15-30 minutes per day and have 50-70%, then pay attention to long-term trading at H4 and D1 charts. For somebody, medium-term trading will be great, taking about an hour per day and giving up to 90-100% profit per month.
If your StopLoss set according to rules above is very little – then you may use standard rules of StopLosses setup, depending on how long you hold the order. These rules can be read in the article “StopLoss and TakeProfit: What Are They?”.
We entered the market. And when to close orders? It’s ambiguous, as patterns provide us with entrance, and the leaving point is defined by a trader themselves. Professionals can realize when to close the position, and beginners are usually divided into 2 groups:
To avoid all that, one has to follow clear rules about leaving the market, as it’s just half the battle to predict the direction of the chart, as we need to fix our profit. We have two ways for closing positions opened via patterns:
And you should keep some more rules in mind:
If you set StopLosses as it’s specified above, you will avoid losses of an abrupt turn of the price, but won’t be able to gain maximum profit from movement, as the continual trend at the daily chart can reach 300-400 pips, and we’ll take just 100-150. In order to save the insurance from abrupt turns, and to gain from the whole trend movement, you should do the following:
Using these rules can increase profitability of your trading more than in 2 times, as you will gain not with the part of movement, but at the whole one.
Advantages of indicator-free forex trading strategies using patterns:
Actually, patterns emerge relatively often, as practically any trend changes when another model appears. Another moment is that there are more than thousand models like these and even professional traders work with 20 of them, not more. So, there will not be so many entrance points in a single quote, by far less than working with indicators or other indicator-free analysis methods. For some, such calm trading with average profitability of 40-50% will be appropriate, and there is a solution for those who want everything in a moment – they may trade with several currency pairs. With that, one will spend more time, but profits will also be greater. I can’t limit you with the quantity of quotes to work with, the one thing – I don’t recommend working with exotic currencies from the Third World, as most patterns are designed for classical quotes like euro-dollar or dollar-franc.
So, that’s all I wanted to tell you about indicator-free forex trading strategies based on patters. I think I gave enough models to choose and start working. If not, I recommend study “Inside Bar” and “Price Action” systems and patterns described in them. The article got to be quite large, - maybe the largest on the website. If you’ve finished reading it, I’m sure you are serious about trading, and you will succeed in working at forex. Choose the strategy, the broker and make your first step to become a pro-trader at forex!
Get lucky and gain much!
Best Regards, John Foster.
for binary options
|Moving Averages:||Buy (9) Sell (3)|
|Indicators:||Buy (9) Sell (1)|