This is the main strategy I use almost every day and I personally have found this to be very profitable.
It could quite easily be the most common of all strategies out there as it works.
All we are going to do is look at any chart and draw trend lines. When we see one broken then our signal has been created. Yes this sounds too simple but once we set a few rules up then we can make this more and more profitable.
Remember, this in no way is a statement to say “This will make you thousands of dollars” or “You can’t lose using the system” because as you may already be aware, Forex is so unpredictable.
Ok lets get down to it. I will be showing you a lot of image examples as this system and its profitability comes down to your own ability to read a chart and see a trend. Get this wrong and you WILL lose money. The great thing about this strategy is that it is a “bare bones” system. Meaning it is at its simplest and you are more than welcome to add to it to help you increase your pips.
The first 3 charts I looked at this morning all have quite visible trends (All charts do really) and I will show you an image of each. Each one I have drawn my own trend lines on them and have placed information on these images to show you what I would be looking for in the next week of trading. The more you look for your own trends and draw them the better you will get at it.
As you can see from the above images, drawing the trend lines isn’t too hard though sometimes it can be dificult to see just when a new trend line is formed. If in doubt DO NOTHING. don’t try to second guess it.
The more times a trend line is touched and then bounces back off of it the stronger that line becomes. The stronger the line, the stronger the signal when a candle breaks it.
A signal is formed ONLY when a candle has completed and has broken the trend line. NOT as soon as the candle breaks it. It must of completed and a new one started before confirming.
I only use higher timeframes. H1 minimum.
Take profit and stop losses are the hardest part of this strategy. To me, it depends on the currency pair and how much the market is trending at the time. I often will use a 50pip SL and a 100pip TP. Alot of times I will actually use a Trailing stop if the market is moving large amounts to hopefully catch more than 100 pips.
You can get false breakouts. If you are in a trade, the market keeps going the wrong way and a candle completes back above the trend line (if you were in a sell) or back below the trend line (if you were in a buy) your signal came from I will often close the trade and cut my loses. I will just walk away and let the market run its course until a new trend is formed or the original trend is followed.
Like I said, the TP and SL are the hardest part and getting this right is very important. I have found no single idea here works. You should try this on demo and maybe only on a couple of pairs. Don’t spread yourself too thin across many pairs.