As a result on this trade, we earned40 pips on the first position and 76 pips on the second position. The reasonwhy this second trade was more profitable than the one in the first exampleis because the double zero level was also a significant technical level. Making sure that the double zero level is a significant level is a key elementof filtering for good trades.
The next example, shown in Figure 9. The great thing about this trade is that itis a triple zero level rather than just a double zero level. Triple zero levelshold even more significance than double zero levels because of their lessfrequent occurrence. Welook to go long a few pips below the double zero level at 1. We placeour stop 20 pips away at 1. The currency pair hits a low of 1. We then sell half of our position when the currencypair rallies by double the amount that we risked at 1.
The stop on theremaining half of the position is then moved to breakeven at 1. Weproceed to trail the stop once again by the two-bar low and end up exiting. As a result, we earned 40 pips on. Once again, this trade.
Fading Double Zeros - ParaCurve
Although the examples covered in this chapter are all to the long side,. Share your opinion, can help everyone to understand the forex strategy. Strategy Rules Long 1. First, locate a currency pair that is trading well below its intraday period simple moving average on a or minute chart. Next, enter a long position several pips below the figure no more than Place an initial protective stop no more than 20 pips below the entry price.
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- Trades against the double zero levels!
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When the position is profitable by double the amount that you risked, close half of the position and move your stop on the remaining portion of the trade to breakeven. Trail your stop as the price moves in your favor. Short 1. First, locate a currency pair that is trading well above its intraday period simple moving average on a or minute chart. Next, short the currency pair several pips above the figure no more than Place an initial protective stop no more than 20 pips above the entry price. Market Conditions This strategy works best when the move happens without any major economic number as a catalyst—in other words, in quieter market conditions.
It is used most successfully for pairs with tighter trading ranges, crosses, and commodity currencies. This strategy does work for the majors but under quieter market conditions since the stops are relatively tight. Further Optimization The psychologically important round number levels have even greater significance if they coincide with a key technical level. Therefore the strategy tends to have an even higher probability of success when other important support or resistance levels converge at the figure, such as moving averages, key Fibonacci levels, and Bollinger bands, just to name a few.
Examples So let us take a look at some of the examples of this strategy in action.
22# Fading The Double Zero Trading System
In accordance with the rules, we place an entry order a few pips below the breakeven number at 1. Our order is triggered and we put our stop 20 pips away at 1. We then sell half of the position when the currency pair rallies by double the amount that we risked at 1. The stop on the remaining half of the position is then moved to breakeven at 1. The trailing stop can be done using a variety of methods including a monetary or percentage basis.
We choose to trail the stop by a two-bar low for a really short-term trade and end up getting out of the other half of the position at 1. Therefore on this trade we earned 40 pips on the first position and 36 pips on the second position. Not only is it a psychologically important level, but it also served as an important support and resistance level throughout and into early The level is also the All of this provides a strong signal that lots of speculators may have taken profit orders at that level and that a contra-trend trade is very likely.
Fading Double Zeros
As a result, we place our limit order a few pips below As a result, we earned 40 pips on the first position and 86 pips on the second position. Once again, this trade worked particularly well because 1. Although the examples covered in this chapter are all to the long side, the strategy also works to the short side. By Steve W. In Price Action Trading Strategy. Facebook Twitter LinkedIn. Last week, we were discussing the best times to use double zeros.
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ParaCurve is free and has been since Help us out and rate our content! Since , ParaCurve formerly NBT has been a provider of a wide range of articles geared towards a common sense approach to trading using fundamental market analysis in conjunction with globally identifiable technical levels. Steve is a 17 year trader, having formerly worked as a sell and buy side global macro analyst for several of the largest financial institutions in the world. You can follow us on Twitter or Facebook. Series and support at FXS Analytics. FX-Sniper June 22, Frederick November 28, I would be grateful for an explanation.
Genuine request!!
Anonymous January 18, TheRumpledOne June 10, I can't find this post: Last week, we were discussing the best times to use double zeros. Please post the link.
Steve W. June 10, RO sorry which one? TheRumpledOne December 29, The post you referred to with your comment: "Last week, we were discussing the best times to use double zeros.