The Forex trading strategy of 20 pips daily candlestick breakout trading strategy is a price action trading method in which you just need to trade once a day utilizing the daily candlestick and your profit objective is set at 20 pips.
The concept behind this trading method is as follows: daily candlesticks may travel hundreds of pips every day, so why not capture only a daily fraction of this daily movement?
To do so, just trade the breakout of the daily candlestick's high or low.
Currency pair: EURUSD, GBPUSD, GBPJPY, GBPAUD, NZDUSD, GBPCAD, AUDSUD, GBPNZD, EURGBP.
Daily Forex Indicators: You do not need any.
Before getting into the trading regulations
It is not recommended that you trade if the daily candlestick breakout occurs during the Asian forex trading session. Why? Because it often has low trading volume and lacks the momentum necessary to drive price change.
However, if the daily candlestick breakout occurs during the London forex session, there is a good likelihood that the breakout direction price takes will be the direction it takes for the rest of the day.
Also Read: 5 and 10 Simple Moving Average Trading Strategies
Purchasing Guidelines:
Place a buy stop pending order 2-3 pips above the daily candlestick's high.
Place your stop loss at 20 pips.
Place your take profit aim at 20 pips.
The next day, repeat the process.
Selling Guidelines:
Place a pending sell stop order 2-3 pips below the daily candlestick's low, and place your stop loss at 20 pips.
Place your take profit objective to 20 pips and repeat the process the next day.
THE BENEFITS OF THIS FOREX STRATEGY
This forex strategy would suit a housewife forex trader who stays at home and looks after children because it requires less time and effort because it is a set and forget trading system, or it would suit a trader who has a day job and does not have time to watch the charts so before you go to work, simply place your pending orders and go to work. Check back the following day to see what happened...
Many traders trade the breakouts of the highs and lows of daily candlesticks, thus if a high/low breakout occurs, your profit objective is likely to be quickly met since it is just 20 pips.
THE BENEFITS OF THIS DAILY BREAKOUT TRADING STRATEGY FOR FOREX
During a low volume/volatility phase (which usually occurs during the Asian trading session but may also occur during the London and New York trading sessions), you may have a breakout that will trigger your pending order, but then price will reverse and you will be stopped out.
Risk: reward ratio of 1:1 I dislike trading methods that have a risk-reward ratio of one to one. This implies that for every $100 you risk trading, you gain $100. (if you win).
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