Second Example:
Third Example:
The Rules:
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.