Chandelier Discount Forex Trading Strategy

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Many traders are divided when it comes to trading with technical indicators versus using price action. On one end are the price action purists. These traders advocate the use of price action alone. They would avoid using any technical indicator and would trade on naked charts. While this method could be effective, it could also be very difficult and is often subjective. On the other end of the spectrum are those who trade with technical indicators as if the indicator was the Holy Grail. There are many traders who have found success using technical indicators. However, blindly following a technical indicator is often counter-productive to a traders account growth.

Trading with price action and trading with technical indicators are two very different methods of trading. However, it does not necessarily mean that the two methods can’t go together. Both have advantages that could offset the disadvantages of the other.

Price action trading on naked charts could be very effective yet difficult to implement because naked charts often makes no sense. Traders would often find it difficult to identify trend direction or trend bias just by looking at naked charts. However, it also allows traders to be very responsive to price movements because it does not depend on technical indicators to provide the signal.

On the other hand, trading with technical indicators as signals could sometimes be very lagging and could cause traders to miss out on trades. Its advantage is that it simplifies the method in which traders can identify trend direction bias.

Chandelier Discount Forex Trading Strategy is putting the two concepts together would allow traders to trade with less lag using price action as a basis for trade setups, while at the same time make it easier for traders to identify the trend bias.

Chandelier Stops

Chandelier Stops is a trend following technical indicator which is based on the Average True Range (ATR).

Many traders identify trend direction based on whether price would reverse against the current trend by more than 2 or 3 times the current ATR. For example, if the trend is an uptrend and price reverses down by more than 3 times the current ATR, the trend is considered to have reversed to the bearish side, and vice versa.

Chandelier Stops is based on the same concept. It identifies the trend bias and plots a line opposite the direction of the trend. This line is based on the distance of price action and ATR. Traders can also opt to adjust the length of the ATR as well as the multiplier.

If price action breaches the line, the line would shift to the opposite side of the trend indicating a trend reversal.

The color of the line also changes depending on the direction of the trend. A blue line below price action indicates a bullish trend. On the other hand, a red line above price action indicates a bearish trend.

Traders can use this indicator as a trend bias indicator, a trend reversal signal, or a stop loss placement basis.

Gann HiLo Activator Bars

The Gann HiLo Activator Bars is a momentum technical indicator which helps traders identify the current short-term trend direction.

The Gann HiLo Activator Bars detect the short-term trend or momentum based on the average movement of price compared to recent historical prices. The indicator then overlays bars on the price candles to indicate trend or momentum direction. Blue bars indicate a bullish momentum while red bars indicate a bearish momentum.

Since the Gann HiLo Activator Bars indicator produces short-term trend signals, this indicator is best used as a trade entry signal indicator. Traders can confirm a trade entry based on the changing of the color of the bars. It is also best used when in confluence with other technical indicators while being aligned with a mid- or long-term trend.

Trading Strategy

Chandelier Discount Forex Trading Strategy is a trend following strategy which combines both price action and technical indicators to produce high probability trade setups.

The Chandelier Stops indicator is used to identify the general trend direction or trend bias. This is simply based on the location of price action in relation to the Chandelier Stops line as well as the color of the Chandelier Stops line.

Then, after we identify the trend direction, we should then look for price patterns or candlestick patterns that would confirm either a reversal of a short-term retracement or a trend continuation price pattern.

Breakouts from the pattern are then confirmed based on the Gann HiLo Activator Bars. Breakouts should be in confluence with the changing of the color of the Gann HiLo Activator Bars confirming the direction of the trend.

Indicators:

  • ChandelierStops_v1
  • Gann HiLo activator bars

Preferred Time Frames: 1-hour, 4-hour and daily charts

Currency Pairs: FX majors, minors and crosses

Trading Sessions: Tokyo, London and New York sessions

Buy Trade Setup

Entry

  • The Chandelier Stops line should be blue and price action should be above the line.
  • A bullish price pattern or candlestick pattern should be observed.
  • The Gann HiLo Activator Bars should change to blue.
  • Enter a buy order on the confluence of these signals.

Stop Loss

  • Set the stop loss on the support below the entry candle.

Exit

  • Close the trade as soon as the Gann HiLo Activator Bars change to red.

Chandelier Discount Forex Trading StrategyChandelier Discount Forex Trading Strategy 2

Sell Trade Setup

Entry

  • The Chandelier Stops line should be red and price action should be below the line.
  • A bearish price pattern or candlestick pattern should be observed.
  • The Gann HiLo Activator Bars should change to red.
  • Enter a sell order on the confluence of these signals.

Stop Loss

  • Set the stop loss on the resistance above the entry candle.

Exit

  • Close the trade as soon as the Gann HiLo Activator Bars change to blue.

Chandelier Discount Forex Trading Strategy 3

Chandelier Discount Forex Trading Strategy 4

Conclusion

This trading strategy is a working trading strategy. Price action trading using price continuation patterns have been a working trading strategy for many traders. In fact, many traders have more than doubled their accounts using just this type of trading strategy.

The key to trading price patterns successfully is in identifying the right patterns and aligning it with a longer-term trend. Traders who can do this repeatedly could consistently profit from the forex market over the long-term.

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