Top professional traders all over the world use this system to trade. It works on any time frame but produces better results on the longer time frames such as daily, weekly and monthly. If used properly it can help you make money.
The first step in the system is identifying one of three specific candlestick patterns. There are over 80 Japanese candlestick patterns however, we are only interested in the strongest patterns. The strong patterns we are looking for are dark cloud cover, bearish engulfing patterns, bullish engulfing patterns and piercing lines. Each of these patterns need two candlesticks to form completely. The second candlestick is the most important and it must appear very strong.
The first thing we need is a strong candlestick pattern. A order should not be placed unless a strong candle stick pattern has formed.
The second step is the candlestick pattern must have a strong Bollinger band break out of the upper or lower bands. The first and second candle must break out of the upper or lower band strongly. If the rules are not met the trade set up should be ignored.
So the second thing we need is a very strong upper or lower Bollinger band breakout.
Rule one and two show a sign which indicates that the price wants to change. Either to collapse or advance. It only tells us that either the buyers (bulls) or the sellers (bears) are getting tired, giving up, or switching sides.
The rules also requires that the strong candle stick pattern should form were neither the bulls or the bears do not have full control over the price. This means one of the parties have become exhausted in the struggle to control the price movement.
So the third thing we need is a market showing signs of exhaustion where neither bulls or bears have full control over the price action.
If you do not have all three of these conditions it is too risky to place an order.
Using this Bollinger band system you can expect to trade five times in one month. You can set your take profit order up to ten times your stop-loss order. Your stop-loss order is best set at the previous candles high or low price.
I recommend that you practice in a demo account first. No strategy is one hundred percent right all the time. We are traders not fortune tellers. However, with proper risk management, and a solid exit plan it is possible to become consistently profitable trading currencies.
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