Learn Forex Trading | forex candlestick pattern

Learn Forex Trading | forex candlestick pattern

Sometimes a trader can get overwhelmed with technical talk. The market just starts to look too complicated and you want to throw up your hands and walk away. The best thing a Forex trader can do at these times is to step back and simply take a wider perspective.

Turn off those 5 minute, 10 minute, and one hour! Take a look at the daily chart and narrow it all down to the last three days. Once you have shut out the rest of the noise, you will be able to see what is really going on and make a good decision about how to make your next trade.

The entry rules for buying or going long on this trading strategy will only require 3 conditions to be met. The first condition is that the body of the latest Daily candle must be greater than the body of the previous two daily candles. In other words, the price has already started to go up considerably and will likely continue in the coming days. The second condition that must be met is that the second daily candle on your three candle perspective must be bearish. In other words, things appeared to be going down a couple days ago but they have proven themselves to be going back up.

This brings us to the third and final condition on your long entry. If you think you are ready to buy or go long, the closing price of the most recent daily candle should always be more than the close of the Second Daily candle. Sometimes the body of the latest candle is greater than the second candle but the closing price wasnt actually higher than the close of the second day. Make sure that all three of these conditions are met and the chances that the price will go up again are pretty darn good!

As with most trading strategies, the conditions for a long position can usually be applied in a similar way to a short entry. For selling or going short, the same three conditions must be met but they must be applied in an opposite manner. First, the body of the latest daily candle must be greater than body of the previous two daily candles, just as before. Then, the second daily candle must be bullish. The price has been going down instead of up. Finally, the closing price of the most recent daily candle must be lower than the close of the second daily candle.

In both cases, you can take profit on the next Daily candle at the psychological levels of 50 and 00 but many traders have their own ways of establishing exit rules. This strategy is mainly intended for a clear entry and not for those who want elaborate technical rules to follow. This chart: http://ifxprofits.com/article11.jpg will show you how the profits extended in each case beyond the psychological levels. The circle at the left indicates a sell trade setup. The circle at the right indicates a buy trade setup. Happy trading!

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