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Trend Trading, Made, Simple, strategy, based, definition of the trend, Technical Analysis, fx trader, forex sell signalChart 4.

It is very important to practice writing on charts so that in time it will become easy to spot these reversal patterns.

Find a Good Exit Point

This strategy is very simple to apply, but incomplete at this point. For a good strategy to become even better we would need to find good exit points. These points should always take into consideration your own investment risk and money management system.

For example: if your money management system says to have a risk of 1 and a profit target of 3 and the strategy, exit points offers only a risk of 1 and a profit target of 2, you shouldn’t enter this position. This is a theoretical example. The money management system should be established after testing the strategy and optimizing the parameters based on the traded instrument, time frame and risk appetite.

Let us get back to the exit points. After the confirmation of the setup and entering the trade a good Stop Loss can be set under the last higher low. A break below this one would increase the probability of a reversal.

From my experience with this strategy, a good take profit would be the 127 extension of the last impulse – if the correction did not go below 50% of the last impulse. Depending on the time frame, I would suggest to set the take profit around 5 pips lower than the maximum target. This way it will increase the probability for the price to hit your level.

Trend Trading, Made, Simple, strategy, based, definition of the trend, Technical Analysis, fx trader, forex trade exampleChart 5.

This is one of the easiest strategy I ever tested, but also one of the most effective. Using the basics of technical analysis, combined with price projections for getting out of the trades, proved to bring me very good results in the past years.

If you would like to try this strategy, my recommendation would be to test it before you trade real money. One strategy can bring different results from one trader to another. The strategy works with probabilities, but it doesn’t include one of the most important variables – human emotions. Try this strategy on demo accounts, optimize it for your own personality and after that make the next step.

Razvan Mihai

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