Welcome folks to The Concluding Series on “Advance Forex Strategy – The 4Hour Break Out Method”[PART 3]….
Before you go ahead reading this concluding series of this tutorial …Please take your time and read:
The chart above Is a trade spotted on the daily chart with a strong trend line. However I initiated the trade from the 4H chart as usual, see how price kept banging against the trend line on the retrace?
Normally I would have been stopped out on this trade at break even because after the initial retrace price came back to test the trend line again but I knew this trade may need a little room to breath as the trend line was from the daily chart.
Ok so we have seen a few good trades lets see some that we couldn’t take because price wasn’t cooperating.
Above there is a perfect consolidation forming above the 30ema with a trend line. Price broke out and I had my buy order ready at the trend line but unfortunately price left without me on board. This will happen sometimes and It’s a fact of trading you cant win them all. Be patient because like buses there will always be another one coming along soon.
Above is yet another example of this setup in action, this is a 1H chart which I spotted and entered the trade. I moved my position to break even very quickly as this trade looked like it had no volume and moving sideways. Not long after I moved the stop to break even the trade fell out of the sky making my trading account happy again
You may be wondering what the other moving averages are for?
Well they are not essential to the main system and setup but they are very useful as targets when price is passing through them.The 150,200 and 365 ema’s are watch by traders and institutions all over the world and therefore price reacts to them as it approaches.
I highly recommend you use them during the planning of placing stops and taking profits.
For example if the 365ema was below you and you were planning on taking a sell trade from a break of a double bottom it would be wise to wait until the 365 is broken or miss the trade altogether.
Lets have a look at a chart so you can see exactly what I’m talking about.
On the chart above I have marked with a white arrow every point that price has bounced off of one of the ema’s. As you can see they act as a pivot point to price, usually stopping it dead in its tracks. Generally the 365ema has more importance than the 200 and the 200ema has more importance than the 150.
TIP: If you see all the moving average come together be ready for a large move, this doesn’t happen very often.
Step By Step Live Trade:
I wanted to show you the process of taking a trade with this system from start to finish so I decided to take 4 screen shots of a live trade I recently took as it was happening, each screen shot is a different stage of the trade.
The screen shot below is just after I entered the trade, NZDUSD created a lovely double top in an up trend. The double top was broken with a volume candle and then retraced back to the support line triggering my order. I placed a 50 pip trailing stop to lock in profits and a profit target chosen from the daily chart if it gets that far.
A hour later we are in profit by 50 pips which means the trailing stop has moved to break even, this trade is now a free ride!
I have nothing to do now but collect whatever profits the market makes available to me, the trailing stop will make all the calls from now on eliminating the need for human interference which will only cause us to lose profits due to fear and greed.
The last 4 hour candle has closed as a very large bullish candle indicating volume, we are currently around 100 pips in profit and the trailing stop has locked in 50 pips for us, lets see how far this move will go, will it get to our profit target of the strong resistance on the daily chart?
12 hours after the trade was initiated we hit our profit target of 132 pips my weeks trading is over! This trade never went negative on me by more than 5 pips.
As you can see using this method of entry is very profitable and gives plenty of good trades every month. I would like to point out that you should not ever follow a trading system blindly, as you gain experience with a trading system you will begin to get a feel for the good trades and bad ones alike.
Once you get the hang of trading these setups I highly recommend that you study candlestick formations to use as your entries,I will create a post on that any time soon..
The 4Hour Break out Strategy will slowly but surely build your trading account.All you need to do is keep your discipline under control and don’t try to trade too many pairs at once.
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