Updated candle color strategy
Today I want to introduce you to a strategy that I have been using for some time. We will not use indicators. You only need a pair of keen eyes to see the candles up and down. Blog candle color strategy.
The idea behind the revised candle color strategy
Opening price. Red means the closing price is lower than the opening price, and green means the closing price is higher than the opening price. Take a look at the EURUSD chart below. In fact, you can view any other chart to understand that a candlestick sequence of the same color will not last forever. Prices will not rise or fall continuously. Even if there is a strong upward trend, a red downward candle will appear. There will be multiple bullish candles in a strong downtrend. This phenomenon is used in today’s strategy. After a series of green candles, open a position for the downward movement of the next candle. After a series of black candles, an upward movement appears. Open a position at the next candle. We use a 5-minute chart. The best trading tools are popular currency pairs, such as EURUSD, GBPUSD, AUDUSD, NZDUSD, USDJPY, USDCAD. We will conduct a 5-minute fixed transaction to include a complete 5-minute candlestick in the transaction.
In order to increase the price, I marked the novellas series with colors. For n, we take 4. When testing the strategy, you can use a long series of 5 or 6 candles of the same color. We look at the chart and wait. So 4 candles (red) appeared below. Once the fourth candle is closed and the fifth candle is opened, we establish an upward movement position. If the fifth candle also falls, we will be at a loss. With the loss of the sixth candlestick, we return to the bullish position. However, this time, we increased the position size according to the table, allowing up to 6 transactions.82.
Instructions for opening a position to lower the price
First, we need to identify a series of 4 bullish candles. When this happens, we will open a short position on the fifth candle. If the position ends in a loss, we will increase the size of the position. Follow the form and continue to trade with the next candle. This continues until the upward candle appears, bringing us a profit on the position (or until the maximum number of trades in the series is exhausted). You can view the chart on the Olympus trading page. At the fifth candle, we were short, unfortunately, this resulted in a loss of 1, so we opened another short position of 3.There is one more loss. We opened the third with a loss of 9 and another loss. The fourth-place also ended in failure. In total, we have lost $40 in these four positions. Fortunately, the fifth transaction offset the above situation. loss. The net profit of this series of transactions will be 26.42.
More about filters and martingale risks
With this strategy, it is very important to practice this on a demo account. This strategy has great potential, but there is always the risk of losing large amounts of capital in capital management that uses loss compensation. Remember, you can open a position after fixing a row of candles of the same color (not necessarily 4). In addition, additional filters can be introduced to increase efficiency. For example, such a filter could be EMA200. If the price is higher than that price, look for long opportunities. If the price is lower than EMA200, look for opportunities to go short. Training and testing. Also, keep in mind that the best time to trade currencies is during European and American trading hours.
Thanks for reading till the end. Please let us know about your feedback and queries in the comment section below. Wishing you successful trading!