August 28, 2014
A Low-Risk Forex Strategy That You Can Use
If you are looking for a low-risk trading method that employs a very tight stop loss, but is capable of generating some big winning trades, I have come across a simple, but effective strategy this week that may be of interest to you.
I posted a link to this post on my Twitter feed earlier this week, but in case you missed it (which you probably did as I only have around 70 followers so far), the article that outlines this strategy in full can be found here.
This strategy is similar in some respects to my own 4-hour trading strategy that I used for a number of years (although not so much nowadays due to lower volatility). It just uses slightly different settings, which to be fair look a lot more profitable.
The author of this article uses this strategy on the 15-minute charts, and it would appear to be very profitable in many cases because it does get you into a new trend relatively early, whilst minimizing your risk because you will be placing a tight stop loss just below (or above) a key indicator that often acts as an important support level.
When the markets are trading sideways and volatility is low, there is always the possibility that you might get stopped out a few times before you hit on a winning trade.
Nevertheless when you do get a winner, you can potentially bank some huge profits which more than compensate for these small losing trades, and this is even more true on the longer time frames, such as the 4-hour and daily charts, for instance, where you get longer trends and a lot less noise.
You might want to add one or two additional indicators, such as the Supertrend indicator, for example, to filter your trades a bit better, and you might want to look at the longer term charts to confirm the trend before placing any trades, but overall this appears to be a simple, but very effective low-risk strategy that you might want to add to your armoury.
It's not a strategy that will win every time, but if you follow the rules and let your winning trades run, possibly moving your stop loss to break-even as soon as possible, then you should be able to make some decent profits in the long run.
Here's the link again if you want to check it out for yourself: