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Forex strategy "Support and Resistance Trading Strategy"

Support and Resistance Forex trading strategy — is a widely used trading system based on the horizontal levels of support and resistance. These levels are formed by the candlesticks' highs and lows. A break-through of these levels after a period of consolidation gives a signal for a trend. This strategy doesn't require any chart indicators except for the ability to draw lines (at least imaginary).

Features

  • Well-defined low stop-loss.
  • Relatively high success rate.
  • Unclear target levels.

How to Trade?

  1. Support level is formed by the lows of two or more candlestick bars that form a rather straight horizontal line with no lower lows between them.
  2. Resistance level is formed by the highs of two or more candlestick bars that form a rather straight horizontal line with no higher highs between them.
  3. Consolidation is a period without any trend, forming near support or resistance level, with the relatively small candlestick bodies.
  4. A close below the support level signals a short position.
  5. A close above the resistance level signals a long position.
  6. Stop-loss is set to the low of the previous candlestick (for the long positions) or to the high of the previous candlestick (for the short positions).
  7. Take-profit can be set relatively to the stop-loss or as a trailing stop of some sort.

 

 

Trading spot currencies involves substantial risk and there is always the potential for loss. Your trading results may vary. 

 

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