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Big Candles = Big Momentum

 
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ajdecredico

Big Candles = Big Momentum

Hi Fellow Bees:

I've come accross a very profitable longer term trading strategy that seems to work. The strategy I have been using is as follows:

Timeframe: H4 or Daily. Do not use on anything less
Objective: Triple digit pips
Typical length of trade: Days

Pairs: EURUSD, GBPUSD, JPYUSD, AUSUSD (have not tried others)

Rules:

Look at the H4 or Daily Chart for a "Big Cande" A big candle is one that stands out from the rest and is typically 50 pips or more in length.

Long entry:

1) Identify big candle (50 pips or more in length)
2) Close of candle needs to be very close to the close (small candle wicks)
3) Place order just above the high of the big candle
4) Place SL just below the low of the candle (since these are longer timeframe trades you need a bigger SL)

Once the trade is executed move your SL to Break Even when you have achieved 20% of the price, continue trailing your stop to gain maximum pips. 

Short entry:

1) Identify big candle (50 pips or more in length)
2) Close of candle needs to be very close to the close (small candle wicks)
3) Place order just below the low of the big candle
4) Place SL just above the high of the candle (since these are longer timeframe trades you need a bigger SL)

Once the trade is executed move your SL to Break Even when you have achieved 20% of the price, continue trailing your stop to gain maximum pips.

Practice with GBPUSD and EURUSD 

Let me know how you like it

Tony D

 

Thu, 08/31/2017 - 8:30am
 
3mshapiro

Hey Tony! This looks interesting. I will try it. When I have been trading overnight, I learned that the stop losses must be much wider. Have been clipped many times now where I should have had gains, but ended up with losses, even though I had the right strategy. I guess it is like Thomas Edison. He discovered 9,999 ways the light bulb would not work, before he found the 10,000 th way that it did work! Thanks for sharing....
Bruce S.

 
3mshapiro

Do you have time to look at a chart now?

 
ajdecredico

Hey Bruce:

Look at GBPCAD and USDCAD. I placed an order below the low. Not sure if it will take but you never know

T

 
Erik

Hello adjecredico thank you for sharing this great strategy!
For the best entry I will wait for confirmation from the currencystrength meter.

 
hakchinoy

adj: FYI your "big candle" and its prior candle is a well-know 2-candlestick pattern: it's called an engulfing pattern. It's one of my favorite candlestick patterns too. ;)

Here's another tweak that will give it more juice: engulfing patterns that pierce or slam into a R/S zone, form a major (using Jeff's parlance) pivot H/L, and form in an area without any other pivots in close proximity of that H/L for at least +/-15 candles.

Here's a 2nd tweak that also will give it some more juice: the short-term (and possibly the intermediate-term) trend on the next higher TF is in the same direction of the trend that you're trading on your current TF.