Profitable trend forex trading system
For more information on this particular strategy, see the lesson on the Forex pin bar trading strategy. Unlike the pin bar, the inside bar is best traded as a continuation pattern. This means we want to use a pending order to trade a breakout in the direction of the major trend.
Below is an illustration of an inside bar during a rally. Notice how the bar preceding the inside bar is much larger in size. These are the best inside bars to trade because it shows a true consolidation period which often leads to a continuation of the major trend, which in this case is up. For more on this strategy, see the lesson on the inside bar trading strategy. This strategy is different than most of the conventional breakout strategies out there. Here is an illustration of the Forex breakout strategy.
Notice how the market has worked itself into a terminal wedge, which simply means that the pattern must eventually come to an end. The opportunity to trade this pattern occurs when the market breaks to either side and then retests the level as new support or resistance. In the case of the illustration above, the entry would have come on a retest of support-turned-resistance. Notice how in the USDJPY 4 hour chart above, the market touched the upper and lower boundaries of the wedge several times before eventually breaking lower.
As soon as the 4 hour bar closed below support, we could have looked for an entry on a retest of former support, which came just a few hours later. Although the pin bar trading strategy is my favorite, I have had some of my largest trades using the Forex breakout strategy above.
The market will often react quite aggressively after the breakout occurs, allowing traders to secure a large profit in a relatively short period of time. Summary: So there you have it. Three simple Forex trading strategies for beginners. These strategies are by far my favorite and for good reason.
If used properly, they can quickly build your trading account into a sizeable amount. The additional line of the DSS of momentum at the signal candlestick should be green. This line must be above the signal dotted line that is, it is breaking it through or has already broken. Enter a trade when the signal candlestick closes. I recommend setting a stop loss at a distance of points in four-digit quote.
A take profit is points. The arrow points to the signal candlestick where Trend Envelopes colours change. Note purple ovals that the blue line is below the orange and is moving otherwise the signal should be ignored. At the signal candlestick, the green line of the DSS of momentum is above the dotted line.
Conditions to open a short position: The price breaks the blue line of Trend Envelopes downside. At the same candlestick, the rising blue line changes into the falling orange line. The candlestick is below LWMA. When the previous condition is met, expect a candlestick to appear below the moving average.
It must close under the red line of LWMA. There must orange line of Trend Envelopes at the signal candlestick. The DSS of momentum additional line should be orange at the signal candlestick. It should be located below the signal dotted line that is, it is breaking through it or has already broken. The below screen displays a candlestick that closed at the level of MA the red line , almost fully below the line.
The below screen shows that the DSS is below its signal line at the signal candlestick. Besides, the blue line is flat, not rising. Signals are relatively rare, you can wait for one signal for a few days. Do not trade when the market is flat. Test this strategy directly in the browser and assess the performance.
It is based on the springy action of the price — if the price rose quickly, it should fall sooner or later. We can use a chart in any terminal and a timeframe W1 although you can also use a daily timeframe. You should analyze the size of the candlestick body of different currency pairs.
Next, choose the pair with the longest distance between the opening and closing prices within the week. You will enter a trade on this pair at the beginning of the next week. Conditions to open a long trade: The bear candlestick, indicating the price action for the previous week, has a relatively big body. You enter a long trade at the beginning of the next week.
You should set a stop loss at a distance of points and a take profit - at points. In the middle of the week, exit the trade. It may be closed with a take profit or a stop loss. Then, again expect the beginning of the week and place a new order. Do not place orders at the end of the week. It is clear from the chart that, following each bearish candlestick, there is always a bullish one although it smaller.
The matter is that what period you should take to compare the relative length of candlesticks. It is individual for each currency pair. Note that some small bear candlesticks were followed by rising candlesticks. The relatively small fall, occurred in the previous week, may continue. Conditions to open a short position: The bullish candlestick, indicating the action during the previous week, has a relatively big body. Open a short position at the beginning of the next week.
Red arrows point to the candlesticks that had large bodies relative to the previous bullish candlesticks. All signals were profitable except for the trade that is marked with a blue trade. The disadvantages of the strategy are rare signals, although the percentage of profit is quite high. And you can launch the strategy trading multiple currency pairs. This strategy has an interesting modification based on similar logic. Investors, day traders, working with a trading volume prefer intraday strategies.
They do not have enough money to make a strong influence on the market. So, if there is a strong market action in the weekly chart, this signal the pressure made by big traders. Differently put, if there are three weekly candlesticks in the same direction, the fourth candlestick should be in this direction too.
The psychological factor is also important here. Those, who have been pushing the market in one direction, should start taking the profit in a month. It is good if the next following candlestick is bigger than the previous one. Doji candlesticks candlesticks without bodies are not taken into account. A stop loss is set at the close level of the first candlestick in the sequence.
An example of such trade setups is in the screenshot below. It can take 2 or 3 months. But if you launch the strategy on multiple currency pairs, this term of expectation is justified. Take swaps into account! This is a trend strategy. Most sources suggest using it in different timeframes, including minute ones, but market noise lowers its efficiency in very short timeframes.
Indicators used: EMA with periods 5, 25, and Apply to — close closing prices. Parabolic SAR. Leave the default parameters you can only adjust the colour if you want. Parabolic SAR is below the candlesticks. Parabolic SAR is above the candlesticks. You can enter the trade at the same candlestick when the moving averages have crossed.
A stop loss is set close to the local low, take profit is points. But if you manage trades manually, you can make a bigger profit. It indicates a change in the slope from a rise to a flat. It is clear from this screenshot that all the three signals two longs and one short yielded profit. One could have entered the trade at the next candlestick.
It is after the signal one to be sure in the trend direction. However, a good entry point would have been missed. It is up to you whether to risk or not. These parameters will hardly work for hourly timeframes. Well, you are familiar with the theory now. I want to briefly describe how to launch these strategies in real trading. Are you ready? From theory to practice Step 1. Open a demo account. It is free, you do not have to top up the deposit.
On the website home page, there is the Registration button. Click on it and follow the instructions. You can also open an account in other menus. For example, in the upper menu, trading conditions for an account, and so on. Step 2. Study the functions of the trader profile.
It has a user-friendly, intuitive interface. You need to study the instruments on the platform and find out how to make a trade. The trader profile is described in this overview. Step 3.

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