Do you really want to make money in the forex or stock market? Are traditional bearing trading strategies not working for you anymore? Are you looking for a new trading strategy that really works? If the answer to all these questions is yes, you are at the right place.
Have you ever observed the price when it goes up and comes down? Price goes up and comes down by making specific patterns. Magic candle pattern is one of them. If you can recognize this pattern on the chart, you get the exact reversal point where you can place your buy/sell order and make lots of money. This is one of the best forex trading strategies.
The magic candle trading strategy works in any market including forex, equity, commodity, and crypto. You just need to recognize the magic candle and trade on it. The accuracy of this trading strategy is very high.
Let’s see how a magic candle trading strategy will help you earn lots of money in the forex market.
The most important point is to recognize the trend. If you want to increase the winning probability of your trade, then you should always take the trade in the direction of the trend. There are many ways to determine the trend but in this article, we are going to use the 200 EMA. It is one of the really magic EMAs. 200 EMA acts as a great support and resistance level in the long run.
When the price is trading above 200 EMA, we can consider that the market is in an uptrend and when it is below 200 EMA, the short-term trend is down.
How to trade using a magic candle trading strategy?
1.. Make sure the market is trading above 200 EMA. Never buy when the market is trading below 200 EMA.
2. When the market is in an uptrend, it comes down to the support level. We call it a pullback. After the pullback, the market starts going in the direction of the trend so first, we need to wait for the market to come down to the support level. The support level could be anything. It could be the horizontal support line, it could be the trendline or it could be the dynamic support line like 200 EMA or 20 EMA.
3. When the market comes down to the support level, it makes red lower-low candles. The lower low candle indicates the downtrend. Now when the market tries to go up from the support level, find the candle having low is higher than the previous candle low and high is also higher than the previous candle high. We call this candle a magic candle.
4. Now where to take a buy entry? Well, buy entry can be placed at the high of the magic candle and stoploss can be placed below the swing low. It is always safe to keep the stop loss below the swing low with a little bit of buffer.
5. Profit booking is the most important part of every trading. When people see a small profit they just book it but that is not the correct approach. You can not make big money if you are habitual to book small profits. You should wait for the market to come to the resistance level. Patience pays here so always wait for the next resistance level to book the profit.
Important points to remember
- The price must be above 200 EMA.
- Wati for the price to come to the support level.
- Find the magic candle at the support level.
- The high of the magic candle should be higher than the previous candle’s high.
- The low of the magic candle should be higher than the previous candle’s low.
- Buy above the high of the magic candle.
- Always place the stop loss at the swing low.
- Book the profit at the next resistance level.
Magic candle trading strategy (Short selling)
In the last article, we have seen how you can use a magic candle trading strategy for buying, now in this article, we will see the same strategy for selling.
The magic candle trading strategy is one of the most profitable trading strategies and it works in any market including forex, crypto, equity, and commodity.
The major trend performs an important role in any market. To make money with the magic candle trading strategy, you need to trade in the direction of the trend. There are many ways to determine the trend, but the most simple way among them is to use 200 EMA.
When the price is trading below 200 EMA, We can say that the market is in a downtrend. when the market goes up temporarily to a resistance level, we call it a pullback. After the pullback, the market starts going in its original direction.
How to trade magic candle trading strategy for short selling?
1..Make sure the price is trading below 200 EMA. Never sell when the price is trading above 200 EMA. Here 200 EMA indicates the long-term trend and the long-term trend lasts longer so our winning probability is high.
2. Now wait for the market to go up to the resistance level. The resistance level could be the horizontal line, trendline, or dynamic resistance like 200 EMA or 50 EMA.
3. Notice the candles that are going up. They are making higher highs. Now wait for a red candle whose high is less than the previous candle’s high and the same candle’s low is less than its previous candle’s low. We call this red candle a magic candle.
4. The correct sell entry plays an important role in this strategy so place the sell entry below the low of the red candle. Make sure you keep a little bit of buffer while placing the sell entry below the low of the magic candle.
5. Stop plays an important role in every trade. It keeps you safe from big losses so never trade without the stoploss. In the magic candle trading strategy, the stop loss can be placed above the swing high. That is the safest location to put the stop loss because there is less probability that the price would reach there and hit your stop loss.
6. The most important point is profit booking. If you book a small profit, you probably will not make huge money from the forex market so profit should always be booked at the next support level. If you follow this strategy, you may get at least 1:3 profit.
Important points to remember
- Make sure the price is trading below 200 EMA.
- Wait for the price to go up to the resistance level.
- Wait for the magic candle to be formed at the resistance level.
- The high of the magic candle should be lower than the high of the previous candle.
- The low of the magic candle should be lower than the low of the previous candle.
- Place the sell entry below the low of the magic candle.
- Place the stop loss above the swing high.
- Book the profit at the next support level.
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