Why does the strategy work? I continue to present my own original trading strategies that I use when trading Forex. We have already seen a strategy based on the Japanese candlestick pattern, also a strategy based on probability. Today, I will talk about a simple Forex strategy based on a chart pattern. At its core, this strategy is based on the “expanding formation” price chart pattern. A pattern is a geometric figure that looks like a triangle. A triangle that does not contract, but rather expands. This pattern can appear on any time frame, so you can trade this strategy on five-minute timeframes or weekly periods. LiteFinance: Effective trading strategy for any “4-5 and quit” timeframe. | Litefinance In the chart above, I marked several of these patterns in the GBPUSD currency pair . This is just a random period.
Exactly the same will happen in any other currency Mexico Mobile Number List pair. As you can see, it is best to identify the pattern on a line chart and frame it with trend lines. How the strategy works First I would like to explain why the strategy is called "4-5 and out!". I have never tried to come up with a name for the strategy, but whenever I explain this strategy to my students, I always tell them: “take waves 4 and 5 and go!” In itself, the essence of the strategy is to trade only certain movements within a pattern. Price movements from one line to another within patterns are called a pattern wave. Now, according to this strategy, you trade only waves 4 and 5 of the pattern, then you close the trade and forget the pattern. I will explain why later.
Let's take one of the patterns on the chart above as an example: LiteFinance: Effective trading strategy for any 4-5 and quit” timeframe. | Litefinance 1. In the chart above, the pattern has already formed and we know the result. Now let's look at the time when the pattern did not yet exist, when it was just beginning to form. LiteFinance: Effective trading strategy for any “4-5 and quit” timeframe. | Litefinance 2. So, it is possible to identify the pattern only when the first three waves (1,2,3) or at the four points (A, B, C, D) have been completed. 3. It is for this reason that you should trade starting from wave 4. Before that, you will not be able to detect the pattern itself. 4. When there are 4 points, we draw trend lines through the points and if the range between the lines expands (not parallel or contracts), the pattern can be traded.