Price action is always considered the most basic knowledge that every person willing to enter the trading industry must know. In fact, the most professional traders even don’t need to use any indicator but price action to profit substantially from Forex and other financial markets. Why? Because it’s very close to human nature which appears in every candlestick. Today, we want to introduce to you a simple but effective system, based on the principles of price action. The strategy is named “Everything is simple”.
This strategy is based on the classic foundation of trading and doesn’t necessitate any indicator to be combined with. All you have to do is to watch candlestick’s performance and use support & resistance lines to determine entry points. The signals defined by this technique are high-quality, however, in case you want a better filter, you can combine the system with proficient leading beacons like Relative Strength Index (RSI) or Moving Average Convergence Divergence (MACD) to be more flexible with market changes.
The key of the “Everything is simple” strategy is that it allows us to follow the currently strong momentum. As we already know, Forex market is notably effervescent, and only trend-following traders are able to make profits in the long run. This technique helps us stick to the steps of market drivers – banks, investment funds, which are usually called “sharks”.
Having been tested carefully by us, this strategy has generated more than 2000 pips with a win-rate of about 85% for the last 12 months.
How to use the “Everything is simple” system to trade Forex
This strategy works best on large time frames like 1-day or 1-week and is suitable for all currency pairs.
The steps to define a bullish opportunity are as follows:
Spot a candlestick which has a long wick on top and a small body.
Draw a horizontal resistance line at the highest point of the candlestick.
Once prices pierce above the resistance level with a strong-looking bullish momentum, a bullish occasion is present. Enter a buy limit position which distances 5 pips above the horizontal line.
Meanwhile, the steps to determine a bearish opportunity are as follows:
Identify a candlestick which has a long wick below and a small body.
Draw a horizontal support line at the lowest point of the candlestick.
Once prices break below the support level with a strong-looking bearish momentum, a selling signal is defined. Open a sell limit order which distances 5 pips below the horizontal line.
There are some important notes when trading with this strategy as follows:
Only enter the market when the candlestick breaking through the line is fully closed.
The stop-loss should be set of 50 pips, while the take-profit could be up to 100 pips.
If the target isn’t hit within 3 days, the stop-loss level should be transfered to the breakeven point.
Pros and cons of the strategy
Engendering highly accurate signals by the strict checking requirement.
Allowing traders to profit from various market conditions.
No additional indicator required.
Necessitating traders to continually observe charts.
Requiring a high level of patience.
The “Everything Is Simple” has shown itself as an elementary but effective strategy which is completely suitable for swing Forex traders who tend to trade on mid-term or long-term charts. Given sticking to its strict checking rules along with risk controlling and psychological managing methods, trading lovers may find the tool a good friend generating stable returns.
FinmaxFX is one of NAFD (National Association of Forex Dealers) initiators.
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