Some forex strategies are neat and clean. They let you relax and be lazy. Enter the trade couple of times a week and feel good about it.
However, there are some forex strategies that create war and chaos. As this one. Using aggressive pyramiding and frequent position entry.
Pyramiding, used as a method of aggressive money management, allows increasing the size of your winning position, often times without risking any additional loss. With each entry, risk is limited while in suitable market conditions possible upside becomes tremendous.
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For example, position opened with one micro lot (0,001) can grow to 0,2 lot position, with stop loss already protecting the bulk of the profit. Such positions are some of the most profitable ventures a forex trader can experience.
Sound simple in theory, but its harder to do in real life. It requires mastery of understanding market volatility and wave structure. Tight money management is necessary to be able to move stop loss together with new positions and be able to protect your profits.
This forex strategy, offers a simple effective and complete solution to pyramiding (adding to the winner) in forex.
Forex indicators used in the strategy
MACD with slow period (24,52,18) will be used to identify a trend. This is not a perfect method but will provide sufficient edge without requiring too much attention and analysis. With this forex strategy our main focus must remain money management.
Envelopes forex indicator (10 period) : These indicators will draw us a tunnel of which breakout will provide a signal for entry.
Forex strategy rules
We plot of the indicators 15 minutes timeframe of either EURUSD or USDJPY currency pair.
BUY:
MACD histogram closing above zero. Red MACD line closing below the histogram close (inside the bar).
Signal: Bullish candle closing above blue (upper) envelopes line. We enter the trade on candle close placing stop loss at red envelopes line (at the moment of entry).
Two candles need to be fully formed (opened and closed) within tunnel boundaries, for us to enter a next trade.
Stop loss management: Stop loss for all opened positions is always placed at red envelopes line under our latest entry. It is crucial to move our stop loss with each following entry.
Take profit: Is triggered by stop loss of our latest position. We will not limit our profit by placing any predetermined take profits.
SELL:
MACD histogram closing below zero. Red MACD line closing above the histogram close (inside the bar).
Signal: Bearish candle closing below red (bottom) envelopes line. We enter the trade on candle close placing stop loss at blue envelopes line (at the moment of entry).
Two candles need to be fully formed (opened and closed) within tunnel boundaries, for us to enter a next trade.
Stop loss management: Stop loss for all opened positions is always placed at blue envelopes line under our latest entry. It is crucial to move our stop loss with each following entry.
Take profit: Is triggered by stop loss of our latest position. We will not limit our profit by placing any predetermined take profits.
Notes to forex strategy: Strategy is simple and clear enough, for trader to focus on money management. Strategy offers method of stop loss placement that is most crucial for any strategy using adding to winner (pyramiding) in forex. Stop loss needs to be tight enough to protect the most of the profits, but at the same time benevolent enough, to not stop you out at any correction.
The goal with this adding to winner strategy, is to ride the trend for as long as possible, while increasing the position size. When trading this forex strategy, all you really need is one good trading series.
