3rd Strike Forex Trading Strategy

There is a price action trading behavior that I continue to see on the charts and I really don’t know what to call it or what the right name for it would be…

If you know what this pattern is then let me know so I can change it.

Because I don’t know what this  chart pattern is,  I am going to give it a name: 3rd Strike Forex Pattern

3RD STRIKE FOREX PATTERN-WHAT IS IT?

There will be times when the forex market may be trending:

• either upward
• or downward and these 3 things will happen in order:

1. A low will be made
2. then another low will be made which will be lower the the first low (1)
3. then another low (3rd low) will be made which will be lower the than the 2nd low (2).

See chart below the fully understand what I mean:

TRADING RULES

Before I tell you the trading rules here are some very important points you need to know about the 3rd strike forex system:

• You must know how to draw trendlines
• The trendline is always drawn downwards connecting the first two points (1&2).
• The third point (what I call the 3rd strike) is when price comes back down and touches the trendline that was drawn.
• This forex trading system is strictly for buying (going long)…NOT selling.
• So when you see the forex pattern, you buy, not sell.
• you can see the pattern form in a downtrend
• and you can also see this forex chart pattern form in an uptrend (this happens when price pretends to move down during a major uptrend move only to form this chart pattern and continue to move back up higher…see chart above to see what I mean)
• The spacing between 1,2 &3 should be even, or almost close to even and must not be too close to each other. Which means the spacing must not be too close that makes it insignificant or too far apart that nobody notices. This is one of the most important point in determining the best 3rd strike forex pattern.

NOW THE TRADING RULES

1.  Once you’ve drawn the downward trendline connecting the two first lows you sit and wait to see if price will come and touch it on the 3rd point.
2. When price hits it on the 3rd point, as soon as the trendline is touched, you initiate a buy order immediately at market. Do not wait, buy immediately.
3. Do not place a stop loss until that candlestick that touched the trendline closes and then you place your stop loss at least 5-15 pips below the low of that candlestick.
4. Set your take profit target limits on previous highs (peaks) of prices.
5. Trail stop your profitable trades by moving stop your initial loss and placing it under each subsequent higher lows that forms as price continues to move up.

WHAT ARE THE BEST CURRENCIES TO TRADE?

You can use this forex strategy to trade the major forex pairs as well as others. It really does not matter, this forex chart pattern forms in all of them.

WHAT TIMEFRAMES TO TRADE?

Honestly, this forex chart pattern forms in the 1minute up to the monthly charts . If you are a forex scalper you can use the 3rd strike forex chart pattern to scalp trade.

If you are a day trader or swing trader, anything from 15minute up to the daily charts its all up to you to choose which timeframe best fits you.

SUMMARY OF THE 3RD STRIKE FOREX TRADING STRATEGY

• this is very a powerful forex trading strategy.
• from my experience, as soon as price hits the 3rd point, there is usually an explosive move upwards, that’s why I said you need to buy immediately as soon as a candlestick touches the trendline.
• if you want to bag 100s of pips, trade in the 1hr, 4hr and daily timeframes.
• the 4hr and daily timeframes may not bring you a lot of trades in a week (sometimes maybe none at all if you are following only a few currency pairs) but whatever few trades you take have great chance of being extremely profitable.
• you will win some and you will lose some… so remember to keep your loses small with proper trading risk management. Its not the system that will fail you, its your money management that will kill your trading account.