Part-time Trading - Part 4.4

How to place the Trade?


Let me explain it with an example.

In the above picture, you can see AUD/USD on daily time frame. you can see that I have drawn a resistance line and the price touched there forming an inverted hammer.
Here as soon as the candle closed,what I do is I will place an entry trade for say 2 lots. I place the entry trade to sell AUD/USD 5 pips below the low of the previous candle (Inverted Hammer) and the stop loss will be 5 pips above the 50% of that candle. That is a conservative trade set up.
An aggressive trade up will be I will take trade immediately after the closing of the candle a sell trade and the stop loss will be 5 pips above the high of the candle.
To close the trade, we wait for the new candle to close (that is next day) and close 1 lot out of 2 lots (50% trade) and the rest 50% trade we will close on the end of  next candle AND here we are going to make a small change in the stop loss, i.e, we will change the stop loss to break even.

Let's take another example.

In the above picture, we see EUR/CAD on daily time frame. You can see a nice red inverted hammer on the resistance line. We do the same thing. If we want to trade conservative set up, then we place a sell order on EUR/CAD 5 pips below the low of the inverted hammer and stop loss will be at 50% length of the candle. If we want an aggressive trade then we place a sell trade immediately after the end of the inverted hammer and our stop loss will be 5 pips above the high of the candle. we close our 50% trade at the end of the present candle and remaining 50% at the end of the second candle.

Please note that the trading set up will be same on any time frame on any currency pair. But it is up to you whether to take conservative trade or an aggressive trade.

Let us see an example of outside bar candlestick pattern:

In the above picture you can see CAD/JPY on daily time frame. You can see that outside bars forming at the support line. If we took a long trade, it was very good winning trade. You can see two consecutive green long candles.

Let me just show you how railway tracks look on a real chart:

In the above chart I have marked two circles in Gray where you can see nice railway tracks. Eventhough there were no trade set ups, I thought it was good for the future reference

That's all for now, Have a great day.