3 Top Forex Trading Chart Patterns
Forex trading is becoming more and more popular recently. After all, everyone likes the idea of doing seemingly simple online trading and making a large profit from it. The only problem is that not everyone gets profit from it. Forex trading can be a huge gamble, especially when you are new to it or don’t know what you are doing.
You see, there are many different Forex trading set-ups. A lot of them look like they could help you to make a profit, but looks can be deceiving. Many of them will actually cause you to lose a lot of money.
On the other hand, there are some Forex trading set-ups that work fairly well. In fact, many of them are so successful that they are commonly used all the time. Here are three of the top trading set-ups for you to consider.
The Channel Pattern:
The channel pattern is an easy set-up to follow, even if you are new to Forex trading. Basically, there are two trend lines that are governing a trend lines that control the trend. The object is to enter trades when the price hits one of the trend lines and to set the other trend line as the profit target, staying between the “channel” created by the trend lines. On occasion, however, it may become necessary to trade breakouts, if the trend doesn’t stay within the channel.
Channel pattern trading works well and is highly profitable, if you want to trade in stocks and commodities. So, it is a common “starter” trading set-up for those who are new to the trading world.
The Double Top Pattern:
When a stock is unable to break a resistance level after two attempts, it’s called a double top. At that point, it begins to break in a downward pattern, or move in a bearish way. The object at that point is to wait until the neckline breaks and then join the trend at the pull back of the neckline break. Essentially, if done correctly, double top trading has a 73% win rate. That means that you can get a high, consistent return on your investment.
The Asymmetric Triangle Pattern:
The asymmetric triangle pattern can be identified very easily. It has one horizontal level and one trend line. The price will break through that horizontal level at some point in time. The object is to wait until the price pulls back below that level and then trade. However, you should only do that if the risk:reward ratio is 1.5:1 or better and there is a tight stop loss.
The nice thing about asymmetric triangle pattern trading is that it has a high profit margin. The earning potential is incredible. In fact, if you do it correctly, you can have a win rate as high as about 76%.
The best thing about those three Forex trading set-ups is that they are all easy to learn and extremely accurate. That means that they are profitable with any Forex pairs, if you use the strategies wisely and properly.
* * *
This is a guest post by Tim Anderson