Forex trading strategy #12 (Trend line tunnel)
Creating a support/resistance tunnel on the price congestion and trading on the break of this tunnel is a milestone of Forex trading discoveries.
This trading system/approach needs no indicators and can be applied to any currency and traded in any time frame where coiling in a tight range is spotted.
Entry rules: Find consolidation on the chart and draw two horizontal trend lines – support and resistance. Once the price breaks trough one of the trend lines and a current price bar closes outside the tunnel – buy/sell in the direction of the breakout. (If price pierces the trend line, but did not close outside the tunnel, cancel the previous trend line and draw another one according to the new conditions).
Note: also very often happens that once the price makes it through support or resistance it rocks down/up very quickly and so, more aggressive entry can also be adopted – without waiting for the current price bar to close.
Exit rules: not set, however, it is believed, that the price after breaking the tunnel will travel the distance equal to the width of that tunnel.
Advantages: very simple and extremely effective. It can provide 100% profitable entries if short profits are taken - usually with the close of the first candle right after the entry.
Disadvantages: very accurate and well thought entry point should be picked. Orders placed very close to the tunnel can be triggered by sudden whipsaw early before real breakthrough occur.
http://forex-strategies-revealed.com/
2 comments:
Let me explain the basic principle how most Forex systems work. They are tuned up
to work in a specific market condition. They often make money in a trending
market, but loose money in a choppy market. It is not a problem as long as the
market is trending and the system is making more money than it loses. Such a
system can be profitable for several months and you would be happy with it.
BUT...
PREPARE FOR THE WORST...
Market change over time. A well designed system starts with trend analysis to
stay away from potentially losing trades. There are two problems of how a Forex
system recognizes the trend.
PROBLEM: FALSE "STRONG TREND" INDICATION.
The system responds only to immediate price action. An explosive price movement
that is usually the result of news release is tempting people to jump in and make
a profit. It looks like a "strong trend", but what usually happens next is a hard
fall.
To avoid falling into this trap, check for the SOLUTION to find a REAL trend:
==> http://www.forextrendy.com?nsjjd92834
SECOND PROBLEM: TREND RELIABILITY
Most systems use various indicators to determine the trend. Actually, there is
nothing bad about using indicators. One Simply Moving Average can do the job. The
problem comes with the question: "Is the market trending NOW?" Whether the market
is trending or not trending is not like black and white. The correct question is:
"How well the market is trending?"
And here we have something called TREND RELIABILITY.
Trends exist and they can be traded up and down for a profit. You have to focus
only on the most reliable market trends. "Forex Trendy" is a software solution to
find the BEST trending currency pairs, time frames and compute the trend
reliability for each Forex chart:
==> http://www.forextrendy.com?nsjjd92834
Thank you for sharing such informative, useful and helpful knowledge! This gave me some insights to do better. I would really love to see more updates from you.
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