This forex strategy uses candle in the direction of trend as momentum indicator. Even though take profit is often times smaller than possible loss, winning trades are more frequent. Rules of the strategy are simple and they leave very little space for hesitation. With this system, you will be not looking for only best trades, but simply trade at every opportunity relying on slight statistical edge.
The edge: In trend, it is more likely that strong trend following candle will be followed by another trend following candle.
16 wins to 11 losses, this is how edge looks like on random market situation and with trend change. Considering the average candle size of 40 pips. 16/40(-1) equals 624 pips in profit, vs. 11 x 40(+1) equals 451 pips of loss, leaving us total of 173 pips of profit in just about 48 hours.
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Forex indicators used in the strategy
Alligator (26,16,10)
Forex strategy rules
Trade on 1 H and above, recommeded only major currency pairs.
Buy:
We identify uptrend by observing alligator indicator.
Lines are clearly separated and lined from top to bottom: green, red, blue.
Bullish candle clearly surpassed high of the previous candle.
We enter long. Placing protective stop loss below the low of signal candle.
Take profit: we wait for first subsequent bullish candle to close in profit.
Sell:
We identify downtrend by observing alligator indicator.
Lines are clearly separated and lined from top to bottom: blue, red, green
Bearish candle clearly surpassed low of the previous candle.
We enter short. Placing protective stop loss above the high of signal candle.
Take profit: we wait for first subsequent bearish candle to close in profit.
