Risking 20 dollars to get 200 is a great idea most of the time. Especially if you have a nice chance of winning. This swing forex strategy can provide a risk reward ratio of 1:10 upwards to 1:20. With extremely tight stop loss (10 – 40) pips you can enter the new trend at its beginning and ride it until its very end.
Relatively conservative forex strategy with infrequent entry using only single indicator CCI. CCI shares the feature of most oscillators. When it enters the overbought/ oversold zone, it often times signalize that winning group of traders in taking over and new trend will be established.
This is not always the case. Here comes tight stop loss to allow us not to be correct in our prediction.
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Used forex indicators:
CCI (commodity channel index) with high calculation period of 31.
Forex strategy rules
We plot CCI indicator on any currency pair, in timeframes starting from 30 minutes upwards. Strategy enters infrequent trades, therefore spread is not an issue.
SELL:
CCI indicators falls under – 100 line, indicating oversold conditions and possible beginning of new downtrend.
We enter the trade short on bearish candle that caused CCI to fall into the oversold zone. We enter on its close, placing stop loss one pip above its high.
After price moves into the profit that equals signal candle range we place our stop loss into a break even.
Take profit: We exit the trade with profit once CCI rises above +100 (entering the overbought zone).
We liquidate sell position to enter the long trade.
BUY:
CCI indicators rises above + 100 line, indicating overbought conditions and possible beginning of new uptrend.
We enter the trade long on bullish candle that caused CCI to rise into the overbought zone. We enter on its close, placing stop loss one pip below its low.
After price moves into the profit that equals signal candle range we place our stop loss into a break even.
Take profit: We exit the trade with profit once CCI falls below -100 (entering the oversold zone).
We liquidate buy position to enter the short trade.
Notes:
Do not enter the trade on extremely narrow candle. It might seem like a good entry at first glance but unfortunately stop loss gets triggered too often on such a signal. Instead, wait for next clearly bullish/bearish candle.
You can try to enter the trade two more times if first attempt fails.
