Railroad Tracks Forex Trading Strategy

This forex trading strategy is very simple and easy to understand and execute.

What you are looking for are two candlesticks with the almost the same lengths. They look like parallel  railway tracks.(See forex chart below with the 2 candlesticks highlighted in blue)

• If the first candlestick is bearish (red) then the 2nd candlestick must be green or vice versa.
• A bullish Railroad Track Pattern has a red candlestick in front and a green candlestick after it.
• A bearish Railroad Track Pattern has a green candlestick in front and a red candlestick after it.

PSYCHOLOGY BEHIND THE RAILWAY TRACKS CANDLESTICK PATTERN

If you are in a downtrend, you will see the forming of a long bearish candle and immediately a long bullish candle will be formed.

Why do you think caused this to happen?

Here’s why…

What happen here was that those traders who enter SHORT forming the long bearish candle realized that they are in the wrong side of the market and they immediately exit their trades and then get into the opposite side of the market causing the formation of the long bullish candle.

If you are in an uptrend, the situation will be opposite to what you is happening above.

HOW TO TRADE THE RAILWAY TRACKS PATTERN

Here are few important tips on trading the railway tracks pattern:

• The railway track is only applicable when you are in a trend as it is a reversal pattern.
• If you see this formation when the market is moving sideways, you should ignore it as it does not have any value.

Timeframes: 1hr and larger

Forex Indicators: Nil

TRADING RULES

(Refer to the chart above).

For buying:

1. After a bullish railroad track pattern forms, place a buy stop anywhere from 2-5 pips above the high of the pattern.
2. Place your stop loss anywhere from 2-5 pips below the low of the pattern.
3. Set your take profit to 3 times what you risked (if you risked 20pips then you should aim for 60pips profit target). Or another option is to trail stop your trades.

For Selling:

1. After a bearish railroad track candlestick pattern forms, place a sell stop order anywhere from 2-5 pips below the low of the the pattern.
2. Place your stop loss anywhere from 2-5 pips above the high of the pattern.
3. Set your take profit target to 3 times what you risked or you can also you trailing stop to lock in profits as trades move into profit.

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