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The Third Strike Forex Trading Strategy-A Price Action Forex Trading Strategy That Can Make 100 Pips Easy

The Third Strike Forex Trading Strategy is based on this reversal chart pattern where:

In a downtrend, the price will be making those decreasing swing lows and then on the third swing low, it makes a drastic move upwards.
similarly, in an uptrend, the price will be making peaks of increasing heights and then on the third peak, it tends to make a drastic move downwards.
The key to finding out where this 3rd swing low or peak would be is to use a trendline.

TRADING RULES
Here are the trading rules of this forex strategy:

Buy Setup:

the market will be in a downtrend
lower swing lows will form
when two lower swing lows form, you connect them with a trendline and wait to see if the price comes to touch that trendline on the 3rd point, if it does so go to step 4.
Buy immediately at market price as soon as trendline is touched or you can wait until the candlestick that touch point 3 has closed before using a buy stop order.
Place your stop loss at least 10-20 pips under the low of the candlestick if you used the market order or if you use the sell stop order then place it at least 5-10 pips under the low of that candlestick.
your take profit target options would be the previous peaks or swing highs that the price made.

Sell Setup:

the market will be in an uptrend
higher swing highs (increasing peaks) will form
when two peaks form, you connect them with a trendline and wait to see if the price comes to touch that trendline on the 3rd point, if it does so go to step 4.
Sell immediately at market price as soon as trendline is touched or you can wait until the candlestick that touch point 3 has closed before using a sell stop order.
Place your stop loss at least 10-20 pips above the high of the candlestick if you used the market order or if you use the buy stop order then place it at least 5-10 pips above the high of that candlestick.
your take profit target options would be the previous swing lows that the price made.
See chart below for clarity on the trading rules and the reversal pattern I’m talking about here:

The Third Strike Forex Trading Strategy-price action trading strategy

ADVANTAGES OF THE THIRD STRIKE FOREX TRADING STRATEGY
the risk-reward of this forex trading strategy is really good when a trade goes as planned. Even if you lose, your loss will be small because your stop loss is tight.
can easily bag hundreds of pips easily in an hour in a market that is strongly trending.

DISADVANTAGES OF THE THIRD STRIKE FOREX TRADING STRATEGY
as usual, there will be false signals and you can get stopped out with a loss and hopefully, your loss is manageable if you trade with money management in mind.

Source

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07 Jan 2019 4:13 pm Posted by tamilforex

 
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