DislikedPlease give examples in forex and if you may explain how you set up or select a pair. What are pin bars?Ignored
So - here is an example from the foreign exchange market and one that would be paying you interest all the way down.
USD/CAD.
1. Monthly forms a pin bar at a swing high. This is a reasonable enough trade to take in its own right. Many traders might target the ascending TL. Little did they know that this is about to start a six year bear market.
2. Shorter term traders are vindicated. It bounces at the TL and they are stopped out. But then it comes right back up and stalls near the highs once again. When it turns the second position could be added as the TL gives way.
3. TL has now gone and monthly is a double bar high, lower close. (DBHLC) This is a setup that you can learn more about in the J16 thread. Third position could be added on a break of this lower.
4. This pin bar is right off the 38 fib of the whole move down. Add fourth position as price moves on down below this.
5. Previous support has now become resistance. It is tested and the price forms a candle known as a doji. (Long wick either side with open and close near the middle which indicates indecision)You could add your next position as this doji breaks lower. Stops on all positions could be placed above the horizontal support. See how they look like steps as the bear market develops?
6. Have a look at the second step down which is around 1.1895. Very aggressive traders could have added as this higher step was tested from below and failed. More conservative traders would wait for the most recent step which formed a pin bar that tested it from below. This would have been a good place to take your sixth position.
This trade would be still open with over 6,000 pips profit on the first position alone not to mention the fact you now have added five more times on the way down.