The 123 Forex Swing Trading Strategy
This is a very simple method and works by identifying areas of support and resistance that forms as the market make a trend will be taken on the break of the support or resistance levels.
This is effective on a 1-hour timeframe or higher. You can use MACD as a filter indicator. this system is applicable to any currency pairs.
Short Entry Rules:
- Place a sell stop order 1-5 pips below point 2.
- Place stop loss 1-5 pips above point 3.
- Your profit target should be placed at 3 times the stop loss distance.
Long Entry Rules:
- Place a buy stop order 1-5 pips above point 2.
- Place stop loss 1-5 pips below point 3.
- Profit Target is 3 times the stop loss distance.
Trade Management:
- Move stop loss to break even if your trade is in profit by amount risked.
- If it is 2 times the amount risked, move the stop loss to lock in profit equal to the amount risked initially.
Advantages:
- The use of the resistance and support which is on of the basics of trading and used by beginners.
- There will be a huge price movement when the support or resistance levels are broken in a trending market at the beginning of the trend.
- Price action is used or 1 t0 2 indicators.
Disadvantages:
- Stop loss are large and lot sizes need to be calculated to manage the risk.
- It performs poorly on a ranging or sideway market.
Use AUDUSD for template purposes.
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