The GBP/USD is one of the most pair in the Spot Forex market definitely…
( If You have been trading for awhile…You would agree too on that ! )
This is because London exchange is one of the largest financial market and wild price swing of 200 - 300 pips on the GBP pairs are very common..
That is why I simply love trading the London market !
….As it is very prone to ” Massive Breakouts” - Where I can grab some good pips in just a short period.
For this strategy in this post….all You need is to plot a simple Trendline on the required pivot points ….( such as resistance / support )
And just to wait for the price to enter into what I called the ” Money Zone “….
When that happens….You can most probably see a good “High Probability Set-up ” ..
You can then enter and ride on the trend for some valuable pips…
More details on this forex trading strategy later…
Let me first share some recent updates of my life as I have not been posting for awhile and many fellow traders have wrote in asking ” why ! “..
( They simply want to know more strategies on Price Actions… * smile *)
Yes…I have not been updating any trading strategies for awhile..
That’s because I am rather pre-occupied with some important things which need to be attended to…
I actually went away to Japan …. ( to be exact it is Kyoto.)
A rather close friend of mine is getting married and actually invited me to attend…
Such a rare chance to attend a wedding ceremony of a Japanese couple…..
Why wouldn’t I go right ?
Of course there are no reason for me to say No at all…. ( Can’t wait for such opportunity in fact…..LOL !)
I was there for about a month this time round…
….and besides having an eye opening experience witnessing the way they conduct the entire wedding ceremony in a ” Japanese ” traditional way…
I also tour around Kyoto of course - Enjoying all the nice delicacies as I am definitely a Japanese food lover !
( Especially the raw Sashimis which only been out from the sea for just a few hours ! How shiok right ! )
Just look at this plate of SALMON…and You will know what I mean *drool even till now * !
And here’s one of the wedding ceremony pic to share :
Looks ” rather ” interesting isn’t it ?
Especially with the BOLD White & Red combination…
As an Asian…I can easily mistaken it for……erm……some other ceremony !
But it is really very impressive and eye opener for me and my wife ( our baby too ) !
( Have You witness such ceremony before ? If You have not….then consider making a trip to Japan sometime after You earn enough from Forex market as it is truly an unique occasion one must experience ! No Joke.. )
Here’s one of the Shrine called Kinkaguji that’s SO MAJESTIC looking :
A very Majestic looking Shrine resting on calm water…….nice …
Simply can’t get enough of Kyoto as there are so many things to explore..
Mostly the historical architects which reflect typical Japanese culture & their unique traditions..
That is why my wife and baby came back to Singapore after 2 weeks as baby needs to go to the kiddie school..
But I continue to stay there for another 2 weeks as my friend insisted that I stay for awhile more..
I can in fact go on and on with my Japan holiday …..as there are so many ” exciting ” things to share …
I know this is NOT what You came into my Forex Trading Empire for …..right ?
I knew it of course….I haven’t forget about it..
Alright….without much ado…
Let me share the main meat about this posts..
- A ” Proven Trendline ” Forex trading strategy which I profited a nice 80 Pips trading the GBPUSD…
( Which took me less than 10 minutes to spot the set-up just before sending my wife and baby out for breakfast & to school ! )
If You have been reading the trading strategies in my blog…
You would know by now that I am a strong believer of Price Action strategies and I do not rely on the so called ” technical indicators ” at all..
They are simply too lagging and not accurate to enter into a position or exit early enough before the trend reverse…
( at least to me….)
This ” Trendline ” forex trading strategy is very simple to implement once You know how I did it….
Just wait for the ” Set -Up “ to enter what I called the ” Money or Profit Zone “….
Then all You have to do is ” Enter ” into position if the Reward/Risk ratio is good…
That’s it !
Don’t understand at this point of time …?
Not to worry…..as I am sharing the step-by-step details on this forex trading strategy below to help You understand further !
( read on….)
Step #1 :
- Detecting the ” right ” set-up and drawing the Trendline on appropriate pivot points ( Resistance/Support )
- And then wait for the Price to enter the Money Zone…
Like this :
This diagram above is showing the ” Anticipation ” mood…
…You would be waiting for the Price to either :
1) Cross above the Trendline ( violation )…
2) Or…..Bounce Off again to the Down-Side..
If any of these scenarios occur….
…You can then go in to trade on ” the hint “ the market has given You and grab some nice pips…* smile *
( Provided the Reward/Risk ratio is GOOD ! …..read on )
One point to note here is ….like I said just now….this is an ” Anticipation ” mood…
But for my actual trade….I detect this set - up much earlier & as soon after that ….I turn in to bed for the day..
Because that’s already past midnight in ASIA ( Singapore )….
So the actual Set-Up which I use to get into this GBP/USD trade happens about 2300 GMT….( about 7 am in my country )..
( This is when I wake up to get ready to send baby to the kiddie school……*grin * )
Here’s the Set-Up I got into the trade :
( AND also the Set-Up You Must Know for this Trendline Forex Trading Strategy to work ! )
Step #2 :
Getting into a BUY/SELL position when the market gives You ” The Hint ! “
As You can see from the chart above…
The Price Bounce Off Nicely off the Trendline…..which gives a very ” Nice Hint “ for a SELL trade..
( Which happens at about 7am in my country….I woke up getting ready to send baby to school and fetch wife to market …nice timing )
What would You do if You see such set-up ? Any idea ?
I would definitely enter to SELL since it is a ” hint “ from the market itself - The best decision making tool ONE can get …* smile *
As I said before…..
Only the market tells You what to do…..We DON”T fight the market or ” Presume ” anything…..
After calculating the Reward/Risk ratio….it is worth while to get in for a SELL trade definitely…
So I enter to Sell at Price : 1.6443
Set the Stop-Loss at Price : 1.6476 ( for a rather small 33 Pips only )
Aiming for a Take-Profits of 80 Pips ( which is at Price 1.6363 )
This would give me a very good Reward/ Risk ratio of more than 2 : 1 ….
Do You think such ratio is good ?
I would think it is…..definitely * smile *
Alright at this point….before I proceed for the conclusion of this Trendline trading strategy…
I shall share with You something which is very ” Critical ” for Your long term success trading forex..
This is the question YOU have to ask Yourself each time You enter into any position..
The Question is none other than this :
“…..What if You are WRONG about this trade…..and Your Stop-Loss got HIT ? “
Do You have a ” solution ” in mind to counter this negative situation to Your advantage ?
If You don’t…..then most likely the forex trading strategy You are using is Not good….Not proven enough..
…..and the success rate might not be Consistent even….
If You don’t know this yet….
Each time You enter into a Position…You need to ask Yourself :
” What if You are wrong and lose this time round …? “
“…If the true ” Trend ” happens…..can You still get in and capture a 2nd winning trade to recover Your loss earlier ? ”
I definitely can answer this question each and every time I trade…
That’s is why I can trade with Confident and WITHOUT FEAR……..
I do not trade on emotions or feelings or wild guesses or …..listening to what others say so…
Just like for this example…
If I am wrong…..about this SELL trade….
Since my Stop - Loss is ONLY 33 Pips……
And I am aiming a Take - Profits of 80 Pips ( which is more than 2 times )
I can aim for this profit target for this GBPUSD pair as it is within their Daily Pips Range of 150 - 180 Pips…
So it is ” realistic “….
When I aim realistically….I do not get false hope from the market…
I do not have to HOPE that the market would show some miracle and hit my Profit Target..
I only aim for the Price Range that is always ” happening ” daily…
In this way….I am not trading on HOPE….
Hence…I would not feel stress about it or Fearful….
The best thing is that I am entering on a Good Reward/Risk ratio…
With a rather tight stop-loss of 33 pips…
If I am wrong about the SELL….and the direction turn BULLISH…
I can still enter again and aiming for the same Reward/Risk ratio….
End of the day…I would STILL ” WIN “ though I am wrong earlier…
So now I am sure You know the importance of entering with a GOOD Reward/Risk ratio…
If You are not doing that yet…….then IT”S TIME YOU DO SO ! * smile *
Alright..so much for the importance of Reward/Risk ratio…
Let’s get into the trade and see how it progress….
Step #3 :
- Watching the PRICE ACTION to see if You need to cut loss early if there are ” Unfavorable ” set-ups against You ( optional )
What I mean by this step is to basically watch the Price Action and Patterns Formation to see if there are any ( Bullish ) set-ups formed against Your trade…
Since I am always trading on the 1 hour time frame…
I only need to spend about 1 -2 minute every hour to keep track… ( or maybe ADD MORE LOTS too if market is good ! )
However….since the Stop-Loss for this trade is only 33 Pips…
Then it is really ” Optional ” to do this step…
I am just including it so that You can learn something applicable when You are aiming for bigger TP…
( Which also needs a much bigger Stop-Loss too….)
Let me show You how I watch the Price Action for this GBPUSD trade then…
Here’s an illustration :
As You can also see from the chart above :
The price plummeted for more than 80 Pips…
And as such…it hits our Take-Profit target of 80 Pips ( at Price 1.6363 ) for this SELL trade on GBP/USD.
Aiming for a Take-Profit target which is within the ” Daily Pips Range ” of the currency pair You are trading is a good way to trade..
However…..there is also another way which You can gauge ” whether ” would the price continue to move in the direction You Want or not..
It is by analyzing Price Action of course…
Let me show You some examples on How I did it to help You understand better :
- As You can see there’s a ” rather strong support ” formed on the illustration above..
- This could be a significant level where the price might bounce and climb back up……( which means turning against Your SELL trade )
- So if there’s a ” sign ” that the price indeed Bounce and climb….then either You cut loss….or allow the small stop-loss to be hit.
- And get in again when there’s a good set - up in the ” other ” direction..
- Also You might see that there’s an ” area of consolidation ” before the Price plunge further ( refer illustrations )
- This ” area of consolidation ” is very important …If You Know How To Watch The Price Action…
( Because it could give You ” impeding ” sign of the next market movements …such as breakout to the other direction )
- The price broke below the ” area of consolidation ” and plummet further down and hitting my Take-Profits.
Note : Once the support is broken….” Normally ” the price would continue to move further and so we can aim for just a bit more Pips…
But when I check how this trades progress..
The ” Take- Profit ” already hit…..
And all I saw was Profits of USD $2,381.73 in the trading account…
Not too bad considering it only took me about 3 minutes to identify the ” Trendline Bounce ” ….
…and then entering the ” Sell Order “, ” Take-Profit ” & ” Stop-Loss “…* smile *
Here’s an actual earnings screen-shot to share :
Summary for this GBPUSD trade :
Our ” SELL “ order at Price : 1.6443
Stop-Loss at Price : 1.6476
Take-Profits at Price : 1.6363 ( 80 Pips )
Total Profits netted = USD $2,381.73
( Minus spreads & swap rates )
This forex trading strategy using just ” Trendline ” and waiting it to enter our so called Money or Profits Zone can be considered one of the simplest one in my strategies basket.
As You can see….You do not need to use any complicated technical analysis at all..
But just draw the trendline on a series of ” Pivot ” points formed…
If You need to…..read once more from the start of this post to recap what this ” Trendline ” forex trading strategy is all about.
It is worth mastering it as ” most of the time ” in the forex market..
The Price ” Violation or Bounce Off ” from this kind of Trendline does give You a very good ” Hint ” about what is is going to happen next…
So all You have to do is of course to get that ” hint “….and act accordingly for some good PIPS ( just like I did ! )
Alright…so much for this forex trading strategy using just ” Trendline “…
I hope You do learn another proven strategy once again today…..
And to be exact….it is one strategy that can withstand any market conditions and truly works !
Oh ya….one more thing before I sign off..
Maybe 80 Pips is just not enough for You…
What can You do to grab MORE PIPS then….?
Just use master this forex strategy….and apply it across 2 , 3 or even 4 currency pairs…
You can do the simple math here do You ?
Add up those Pips…..and You would be laughing just like I do….every week….* smile *
Thanks for reading this far….
Cheers and Happy ” Trendline ” Drawing & Grabbing Those Pips !
To Your Forex Success,
- Aaron Tan ( your trading friend )