Envelopes are simply moving averages applied separately on price high and low, creating a tunnel that can be used for breakout trading. With this forex scalping strategy, we will be looking to take a single candle of profit or loss.
Edge:Average profit and loss is almost equal with winning trades being about twice that frequent.
Rules of the forex strategy
Used indicator – envelopes, default settings.
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Buy:
Long: Bullish candle closing above (blue) envelopes line.
Take profit: We wait for first bullish candle to close in profit to exit the trade.
Stop loss: We place protective stop loss one pip below the low of signal candle.
Sell.
Short: Bearish candle closing below (red) envelopes line.
Take profit: We wait for first bearish candle to close in profit to exit the trade.
Stop loss: We place protective stop loss one pip above the high of signal candle.
Reset.
New position can be entered only after price returned between envelopes line. Closing at least on candle.
This simple forex strategy works amazingly well in any market conditions.
Avoid trading on extremely tall candles !!!!
This is also 50/50 strategy, asking only for what you are risking on each position. When it gets random, you will lose only spread and commission on the long run.
