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Dear friends, today we will look at the «It’s All Simple» forex strategy. It can be used as a stand-alone trading system or as an extra tool for finding entry points with other strategies. It is quite simple, and that is exactly its advantage!
The strategy is based on the classic rules of trading from support and resistance levels, with some additions that help identify the most important levels on the chart. The high timeframe (D1) means you spend very little time on trading, while the set of currency pairs still gives enough trade signals.
In 2015, all the listed currency pairs together (AUD/USD, NZD/USD, GBP/USD, EUR/USD, USD/CAD, USD/CHF, USD/JPY) made slightly more than +2000 pips (4-digit quotes). With the recommended risk of 5% per trade (50-pip stop loss), the annual profit was about 200%.
- Timeframe: daily (D1).
- Currency pairs: AUD/USD, NZD/USD, GBP/USD, EUR/USD, USD/CAD, USD/CHF, USD/JPY.
- No indicators are used in this strategy.
BUY entry rules of the «It’s All Simple» forex strategy:
1) The price forms a high whose top is made by a candle with a long upper wick and a small body (the body color doesn’t matter).
2) Draw a horizontal line through the high of this reversal candle.
3) As soon as a following candle breaks this line (the breakout must be clear — not one or two pips, better more than 10) and closes above it, place a Buy Limit pending order 5-6 pips above the line.
4) Stop loss: 50 pips.
5) Take profit: 100 pips.
6) If within three days after entry the price has not reached the target, move the trade to breakeven.
Sometimes it is hard to identify the right extreme, so we recommend these filters:
1. After the rejection candle forms, at least one candle must stay below the middle of the reversal candle’s whole range.
2. We don’t look for entries in sideways markets.
3. The level stays valid until another level that meets the conditions above forms below it.
SELL entry rules — «It’s All Simple»:
1) On the chart of any of the listed pairs the price forms a low; the bottom of this low must be made by a candle with a long lower wick and a small body (the body color doesn’t matter).
2) Draw a horizontal line through the low of this reversal candle.
3) As soon as a following D1 candle breaks this line (the breakout must be clear — not 1-2 pips, ideally more than 10 pips) and closes below it, place a Sell Limit pending order 5-6 pips below the horizontal line.
4) The protective stop loss is set 50 pips from the entry point, in this case from the pending order.
5) The take profit order is set 100 pips away.
6) If within three days after entry the price has not reached the profit target, move the open trade to breakeven.
Sometimes traders find it hard to identify the right extreme, so we recommend these filters:
1. After the rejection candle forms, at least one daily candle must stay above the middle of the reversal candle’s whole range.
2. We definitely don’t look for entries in sideways markets!
3. The level for the pending order stays valid until another level that meets the conditions above forms above it.
Video of the «It’s All Simple» forex trading strategy:
There are no indicators, so I don’t attach an MT4 template!