One of the best ways to make money out of forex trading is by learning how to catch those big trending moves. Sure, you might make some mistakes here and there but if you know how to take trades that has a potential to earn big, then you could easily cover for those small mistakes and earn huge profits in the end. This is what forex trading is all about, risking a little for the chance of winning it big.
But how do seasoned traders trade in order to catch big trades? For the most part, seasoned traders apply a systematic trading strategy that would allow them to trade in a consistent manner. These strategies are based on a set of rules that would prevent or allow them to take a trade. Because they have done their due diligence in studying their strategies, they know for a fact that their strategies have a relatively high chance of getting one of those huge trades. They know that even if they could lose a few times in a row, they have a chance of earning five times more than what they have lost.
Traders also use a set of technical indicators that they know work well for their strategies. These indicators are what gives them a trading edge, allowing them to profit in the long run.
Renko iTrend Forex Trading Strategy is a systematic strategy which could provide trades that would result in huge profits when used correctly. It uses custom indicators that is intended to catch huge trending waves that could produce big gains.
Renko Color Bars
The classic Renko Bars is a unique type of charting that focuses on price movements and momentum more than anything else. In fact, it disregards time all together and focuses on price. It produces bars whenever price moves in a certain direction at a preset distance.
While the classic Renko Bars is very useful, traders who prefer a sense of how price is moving in relation to time would miss the standard candlestick charting.
Renko Color Bars on the other hand fuses theses two aspects. It overlays bars on the price chart which are colored based on the current trend on the classic Renko Bars. This allows traders to assess how the classic candlestick chart is moving while benefiting from the information provided by the Renko Bars.
Renko Color Bars is useful in identifying long-term trends because it does not change too often. Instead, its color remains the same as long as it is detecting the same momentum.
iTrend Indicator
iTrend indicator is a momentum indicator designed to detect trend changes.
It is displayed using two lines that oscillate around zero. One line is colored lime green while the other line is colored red. Trends are indicated based on how the two lines are stacked. A bullish trend is detected whenever the lime green line is above the red line. On the other hand, a bearish trend is indicated whenever the lime green line crosses below the red line. As such, trade signals are generated whenever the two lines crossover.
Trading Strategy
This trading strategy trades on confluences between the two indicators. Strong confluences occurring at almost the same time using the two indicators tend to anticipate trades that could result in huge trends.
To trade this strategy, the iTrend indicator should start to crossover sharply indicating a probable trend reversal that has momentum behind it. Crossovers that are shallow could still result in a trend reversal but have less momentum compared to sharp crossovers.
At almost the same time as the crossover, the Renko Color Bars should also change color indicating a trend reversal based on momentum.
If the trade turns out to be a new trend, trades are held until the Renko Color Bars would change color once again indicating a probable trend reversal.
Indicators:
- i_Trend (default setting)
- RenkoColorBars (default setting)
Preferred Time Frames: 1-hour charts
Currency Pairs: major and minor pairs
Trading Session: Tokyo, London and New York sessions
Buy Trade Setup
Entry
- On the iTrend indicator, the lime green line should cross strongly above the red line indicating a bullish momentum.
- The Renko Color Bars should change to silver indicating a bullish trend reversal.
- These bullish signals should be closely aligned.
- Enter a buy order on the confirmation of the conditions above.
Stop Loss
- Set the stop loss on the fractal below the entry candle.
Exit
- Close the trade as soon as the Renko Color Bars change to red.
Sell Trade Setup
Entry
- On the iTrend indicator, the lime green line should cross strongly below the red line indicating a bearish momentum.
- The Renko Color Bars should change to red indicating a bearish trend reversal.
- These bearish signals should be closely aligned.
- Enter a sell order on the confirmation of the conditions above.
Stop Loss
- Set the stop loss on the fractal above the entry candle.
Exit
- Close the trade as soon as the Renko Color Bars change to silver.
Conclusion
This trading strategy works best for traders who are aiming for high yields rather than high probability trades.
This strategy has the potential to produce huge profits when the market is trending strongly. However, this strategy would not perform as well when used in a ranging market condition. As such, it is best to observe price action on a naked chart without the Renko Color Bars prior to trading. This would allow you to assess if this strategy would fit the current market that you would want to trade in.
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