All you need to profit in forex really, is a discipline and ability to recognize the trend. Basically swings in the direction of trend are longer because price moves in the direction of trend.
Predominant movement in one direction is what characterize trend.
Swing in price structure can be used as a tool of determining trend direction and momentum. However, when it comes to testing swing trading based on wave structure, it gets more difficult as it is based on subjective factors. Perception of the market shifts rapidly once the capital is in stake.
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This fores strategy uses zigzag forex indicator to simplify wave structure. This simple tool makes it easy to read the swings in the trend and act upon it.
Used forex indicators
ZigZag forex indicator with default settings. We will be looking for strong swings in either direction. Strong swing – price moving fast, without major correction in one direction signalizes only one thing. Trend occurs on lower timeframes. Our swing can (but do not have to) be a part of major trend in our timeframe. We can at least expect that the swing momentum will continue after the correction.
Forex strategy rules
We identify above average sized ZigZag swing. Swing longer than of previous 6 closed swings.
Signal Swing is closed once the following Zigzag line in the opposite direction is also closed.
At this point we place pending order in the direction of signal swing at its closing point. Distance reached in following swing be used both for profit target and take profit.
Take profit equals stop loss. Signal accuracy provides more frequent winning trade. Those add up for nice profit. It is possible to use higher than standard leverage, due to strategy ability to survive unfavorable market conditions.