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.