“Simple as ABC” Trading Strategy
5 stars based on
The following ABC trading strategy isolates turning points, as well as gets you into trending trades. It can be used on any time frame, and takes advantage of the natural tendency of markets to move in one direction for several price swings before reversing and swinging in the other direction. Figure 1 shows a basic ABC pattern for taking a long position. There is a low, marked A, then the price moves higher, marked B, then price pulls back and is marked C. The aim of this pattern is to show that the price has moved higher, pulled back less than prior move higher, and will now likely continue higher.
Figure 2 shows the ABC sell pattern. It is just flipped upside down. There is a high point, marked A, then a move lower, marked B, and then a pullback up marked C. C cannot move all the way back to A. The sell pattern occurred right after best simple binary options strategies buy pattern, so it could have been used to capture profit on the way up and the way down.
Figure 2 shows relatively large ABC buy and sell patterns. If you look closely you will also see some smaller ABC patterns on the chart.
An entry occurs as soon best simple binary options strategies we can reasonably assume C is in place and the price is now moving in the anticipated best simple binary options strategies.
At the very latest we can enter near point B. Figure 3 is the best simple binary options strategies ABC buy pattern best simple binary options strategies in the previous chart sbut here it is shown on a 5 minute time frame.
The area for trade entry is marked with a white box. The closer the entry to C, the more chance of entering prematurely while the price is still dropping. Yet, the potential reward is greater and risk smaller. Entering closer to B makes it much more likely the price is moving favorably in your direction, but the risk is slightly larger and profit potentially smaller some of the move has already been missed. Reading Trading the Mini-Channel Breakout may help isolate entry points when the pullback takes the form a small channel.
For a buy pattern the stop is placed just below point C. For a sell pattern the stop is placed just above C. Targets are based on a couple different methods. My preferred method is simply make my profit target 1. So if the stop is 10 pips, I am looking to make 16 pips. Best simple binary options strategies the price is moving aggressively toward the target is will move it a bit further in order to catch a few more pips.
But usually I just take the profit and then look for another setup. Many traders also like to use a Fibonacci Extension tool for exits. It can be applied to any price swing and help indicate where the market is going. If you are feeling particularly aggressive, when this scenario occurs you can exit your former trade and take a new trade in the direction of the new ABC pattern.
The ABC is a simple pattern that can be used to spot reversals and trade best simple binary options strategies trends. It can be used to capture both upside and downside moves on all time frames.
When a buy pattern occurs it signals a strong likelihood that there is another move higher coming, whereas a ABC sell pattern indicates another move lower is coming. No strategy works all the time, but it can help you stay on the right side of the market, and also spot when it is turning against you. ABC Entries An entry occurs as soon as we can reasonably assume C is in place and the price is now moving in the anticipated direction. Figure 4 shows the entry area for a sell pattern.