The chart below shows how to trade forex successfully paying attention to natural square numbers. For those unfamiliar with natural square numbers read more here.
The above chart shows the GBP/USD 3hr chart. By paying attention to
the natural square level of 1.6000 we can 'sell short' the British Pound
AFTER the double top has formed. We have a high level of confidence
that price will fall from this point. But where can we place our 'buy
order' to close our short position?
To find a good profit
target we should look for a natural square level that is above a prior
low. In the chart above we notice that this level is at 1.5850.
Or we could exit the position in any of these alternative ways;
1. We could wait for a double bottom to form before exiting the position. Or
2. We could wait for a swing high to be broken. Or
3. We could wait for price to close above the 7 period exponential moving average. Or
4. We could wait for price to close above the 7 period exponential moving average based on the 1 hour chart. Or
Follow with a trailing stop loss above the prior bar high.(In this case
it will be above the prior 3 hr period as the example is shown on the 3
hour chart. Or
6. Follow with a trailing stop loss above the prior hour high. Or
7. Follow with a trailing stop loss above the prior 15 minute high. See how it works in this example.
Which exit strategy works best out of those listed above?
This will depend if you are manually day trading or if you have a EA (expert advisor) set up to trade for you automatically.
different exit strategies will also produce different results depending
on what the market is doing. Is the market trending or is the market
I have not compared all the exits to see
which one produces the best results in different market conditions. This
is a project I will do in the future.
What I can say is that
all the above exit strategies work as I have manually day traded all of
them at different times with success.
For another example on how to trade forex using natural square numbers take a look here.