This simple and amazingly effective strategy, as one of the few, uses Volumes forex indicator, to measure real price momentum – activity of bulls and bears on forex candle. This activity cannot be hidden and is manifested as its result price candle ! Bollinger bands forex indicator is also used. But it is applies on volumes data to filter out average trading activity. We enter only on extreme volume, which signalizes that price is interesting also for smart money traders.
Used forex indicators:
Volumes (standard settings)
Bollinger bands (Apply on first indicaors data, in the window of volumes) with default settings.
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Forex strategy rules
We look for volumes indicator to rise above upper Bollinger band. Signalising us, above average volume on candle (above average interest in price level).
Then we look at price candle. Namely, body of candle and its direction. Body needs to be full, and clearly closed up or down direction. It musts to be clear bullish or bearish candle.
Candles with flat bodies are indecisive and we will not entry on them. (read more on forex candle formations)
We enter the trade immediately on new candle open. We open the trade in the direction of signal candle.
We go bullish on bullish candle and bearish on bearish candle.
We place stop loss at the opposite end of the candle (including the wick).
We use same distance as between entry and stop loss to place our take profit.
Once the profitable position reaches 50 percent of target profit we move our stop loss to break even.
Take profit and stop loss are equal. Therefore, in absolutely random market we lose just commission and spread (as a coin toss).
However, this forex strategy can give us as much as three time more positive (winning trades).
Enjoy !!!!
