Trend Reversal forex trading strategy
Trend Reverse Strategy is a type of indicator-free weekly trading system. With its ease of use, it has a number of advantages and features.
It is suitable for the vast majority of major, cross and "exotic" currency pairs;
Excludes the use of myforex mathematical indicators, which in turn means that there is no need to devote time to setting them up and reconfiguring them;
Operates on the D1 timeframe;
Suitable for instruments with different volatility;
It uses punch-type warrants.
Trend Reverse 's strategy is similar to some trade systems of the breakdown type, but it also has its differences. The essence of this forex trading strategy is as follows. Deferred sample warrants are displayed based on the view of the daytime Japanese candle.
Working on this system, we never trade on myforex main daily trend. We expect a strong momentum that could happen the next day and entail a market reversal.
For example, if during the trading day the market closed with a bull candle, the next day we place only Sell Stop. It is placed just below the lower boundary of yesterday 's formed candle. And, on the contrary, if a bear candle is formed during the trading day, according to Trend Reversal strategy, we set Buy Stop just above the upper limit of yesterday 's candle.
The weekly trading system has the following conditions and features, which we will consider in the example of working on the currency pair EUR/USD.
We waited for the day candle bar to close. Next, we check the basic terms and conditions. The size of the candle, taking into account the lower and upper shadows, should be more than 40 points. The size of the candle body itself must be different from zero. For more volatile pairs, these values are higher.
When all the conditions for entering the transaction are met, we do the following. If we have a bear candle, we set up a Buy Stop break order. Similarly, if a bull candle is formed, a Sell Stop warrant is set. Of course, we remember that, according to Trend Reversal 's strategy, warrant data should be displayed slightly above or below the boundary of the previous day candle. This indentation depends on market conditions. At the same time, the average optimal indentation is 5 points for low-voltage pairs, and from 10 points for trading instruments with high volatility.
Then we establish a stop loss protective warrant based on risk/profit - 1 to 1. Logically, we understand that such a ratio is mathematically unfavourable. But, the author of the strategy claims that his weekly trading system and the filters used in it, allow open warrants to close in a profit twice as often as on a stop loss. Working on Trend Reverse strategy, the trader can independently vary the size of the teak profit and stop loss, respectively. However, their recommended size for low-volatility couples is 20 points. If the deferred warrant does not work at the end of the trading day, it should be cancelled. In case the opened delayed warrant did not close, during the trading day not by teak profit, not by stop loss, it should be left in the market the next day. Installing new Forex warrants, by an instrument that is already open in the market is prohibited.
A significant advantage of this trading system is that the size of the teak profit can be set independently, based on the style of trade, your risk management, the nature of the movement of the working instrument you use, and other market factors.