Forex Strategy "Three Candles" - Something Very Simple
Hello, dear visitors of 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 (you may know it under another name). We will add just one indicator to this setup and see how to apply the strategy in practice.
Characteristics of the "Three Candles" Strategy
Platform: Metatrader 4 Currency pairs: Any trending pairs Timeframe: Any Trading time: European and American trading sessions (for intraday trading) Recommended brokers: Alpari, RoboForexThe "3rd Candle" Pattern
The heart of the strategy is the "Third Candle" pattern. It is also sometimes called a reversal bar; perhaps there are other names as well. The point is not the name, but the pattern itself.
Our first candle will be the candle whose High or Low point is the highest or lowest compared to the surrounding candles. The bar to the right of the first candle will be our second candle. It is the confirming one, and as soon as it closes, we can say that the pattern has formed. And the third candle is our profit.
The logical basis of the setup is a short-term shift in market sentiment that gives us an opportunity to enter in the direction of the impulse and take a small profit.
Entry Rules
- We enter the market at the beginning of the third candle, after the second one closes.
- If the direction of the stochastic lines (5,3,3) contradicts the trade, we skip the signal.
- If candles 1 and 2 are visually small, we do not enter.
- If the second candle is very large in size (stands out on the chart), we skip the signal.
Stop-Loss and Take-Profit
- We place the Stop-Loss above / below the high / low point of the first candle.
- The take-profit is fixed (depends on the timeframe and pair), at the trader's discretion. Or we exit after the first profitable candle.
Additionally
- If within 5 candles after entry the price hardly moves, we exit the position.
- We do not trade 30 minutes before and after the release of important news (for intraday trading). Read about how and where to check the news release time in this article.
Recommended Risk Level
It is not advisable to risk more than 2-3% of the deposit in 1 trade. It is convenient to calculate the lot using a special indicator.
Conclusion
Like the Ruler trading system, the "Three Candles" strategy is a simplified variety of Price Action trading. However, I would still advise you to download our free PA video course and study at least the setups. It will not take much time, and it will significantly improve the results of your trading both with this strategy and in general.
Download the "Three Candles" Strategy Template
Important! Nuances of installation in new Metatrader 4 builds
Today we will talk about a very simple but effective trading system called "Three Candles."