We compare previous four candles looking for a specific price formation. The formation consists of four consecutively growing candle bodies, each closing in the direction of price movement (formation). We enter our trade on the fifth formation candle open. The strategy offers very good risk reward ratio, profit factor and draw down. It is relatively simple and not too time consuming.
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Used forex tools and indicators
Candle formation: four growing candles, each candle body larger than previous one. Each candle closing in the direction of formation momentum. Trade is entered on fifth formations candle.
Signal candle (40 – 150 pips): Four Candle with defined size range. It helps to filter out the size threshold for the rest of the formation. We define minimum and maximum range of signal candle.
Forex strategy rules
Four candles. Each consecutive candle body is larger than the body of previous candle. Each candle closing below the close of previous candle. We enter the trade short on formation close (fifth candle open). We use firmly set stop loss and take profit.
TP: 90 pips
SL: 60 pips
Four candles. Each consecutive candle body is larger than the body of previous candle. Each candle closing above the close of previous candle. We enter the trade long on formation close (fifth candle open). We use firmly set stop loss and take profit.
TP: 90 pips
SL: 60 pips
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Five growing candles. MT4 Expert advisor by TheForexKings
Disclaimer: Expert advisor was tested for profitability on historical data. All screen shots provided are displaying real results of the test. However past data will never guarantee future success. Every expert advisor needs to be tested properly on demo account. LIVE use only on your own risk. Read full disclaimer. TheForexKings Team does not give any financial advice. TheForexKings does not take any responsibility for any user’s investments and investment decisions. All rights reserved. Strictly for personal use.