Forex Cash Cow strategy is designed to trade on the currency pair GBPUSD and is based on the rule that if the price was held during the trading day in the same direction at least 140 points.
Then this movement can be called the «explosion» and this trend in the market tends to continue even during the next trading day or 2 days.
Conditions for trading according to the strategy:
And so 140 points in one direction — the most important rule of this strategy!
If the number of points less than in the past, this movement is the usual intraday price fluctuations, which is not in itself the necessary attributes of a strong trend movements in the market. Not every day, the currency pair GBPUSD is in one direction at least 140 points for 24 hours. Such movements occur approximately 6-7 times within a month. And these movements fully correspond to one of the known rules of trading: «What is less common in the market that any other price pattern, the greater the likelihood that it will be profitable.»
Once we found the «explosion of prices» on the market, go to step number 2. On the next trading day, we need to await the moment when the price will be at least 70 points in the direction of our «price explosion», and only after the fulfillment of this condition will open trading position!
Immediately after entering the market, we place a safety stop-loss at 60 pips from entry into the market. Leaving the market to take-profit of 100 points, or time — 11:30 GMT on the next trading day. Also for more confidence at the opening of trading positions can be set trailing stop at a distance of at least 40-50 points.
Example:
We find on the daily chart the day on which the movement occurred at least 140 points. In Figure 2, you can see a more detailed, 5-minute price chart the same movement in the market.
Now a necessary condition number 2 — on the next trading day, the market should take another 70 points in the same direction «price explosion». And the picture number 3, we observe what happened on the next trading day.
The condition is satisfied, and we open trading position on the sale and immediately place a safety net stop-loss at 1.7502 (60 pips from the entrance), the purpose of the desired profit is located at 1.7432 (100 pips from the entrance to the market).
As we can see the price reach our goal of profit in the same trading day.
Risk — management:
when trading forex ALWAYS be followed very important rules of trading — we should never take risks when making transactions of more than 2-4% of the size of the deposit. Maximum 5% — if you are confident in the trading position and it is confirmed by numerous trade signals.
Only in this case, you can stay on the forex market for a long time and constantly earn either through advisers or when trading in the manual!
