Forex Three Candles Strategy - Something Very Simple
Hello, dear visitors tradelikeapro.ru! Today we will talk about a very simple, but effective trading system. It is called "Three Candles" and it is based on the pattern of the same name (maybe you know it under a different name). We will supplement this setup with just one indicator and see how to put the strategy into practice.
Three Candlestick Strategy Features
Platform: Metatrader 4
Currency pairs: Any trending
Trading time: European and American trading sessions (for intraday trading)
Recommended DC: Alpari, RoboForex
3rd candle pattern
The heart of the strategy is the “Third Candle” pattern. It is also sometimes called a reversal bar, there may be other names. The point is not in the name, but in the figure itself.
The first candle we will have is the High or Low Point candle which is the highest or lowest in comparison with the candles surrounding it. The right bar from the first candle will be the second candle. It is confirming, and as soon as it closes, we can say that the pattern is formed. Well, the third candle is our profit.
The logical basis of the setup is a short-term change of mood in the market, giving us the opportunity to enter the direction of momentum and take a small profit.
- We enter the market at the beginning of the third candle, after the close of the second.
- If the direction of the stochastic lines (5,3,3) contradicts the deal, we skip the signal.
- If candles 1 and 2 are visually small, we don’t enter.
- If the second candlestick is very large (it stands out on the chart), skip the signal.
Stop Loss and Take Profit
- Stop Loss is set above / below the high / low point of the first candle.
- Take profit is fixed (depending on the time frame and the pair), at the discretion of the trader. Or we leave after the first profitable candle.
- If the price does not move almost 5 candles after the entry, we exit the position.
- We do not trade 30 minutes before and after the release of important news (when trading intraday). How and where to watch the news release time read in this article.
Recommended Risk Level
It is not advisable to risk more than 2-3% of the deposit in 1 transaction. It is convenient to calculate the lot using a special indicator.
Like the Ruler trading system, the Three Candles strategy is a simplified version of Price Action trading. However, I would still advise you to download our free PA video course and study at least setups. This will not take much time, and will significantly improve the results of your trading both in this strategy and in general.