Choosing the right Forex trading strategy is the key to success.
Choosing the right Forex trading strategy is the key to success. However, it is not enough to have it — you should be able to use it correctly. To attract the maximum number of traders from South East Asia, FBS, the most popular broker in the region, explains in detail the leading trading strategies that have proven themselves in multiple deals. One of these strategies is ABCD.
Why Is the ABCD Pattern so Popular?
The advantage of the ABCD pattern is that it can be used when trading any currency pair. Therefore, investors in South East Asia can be sure of its applicability to the currencies of their countries. Other benefits include:
- Ease of logic of application and use in practice, which means that it is in demand by novice traders.
- This pattern is visually perceived on the chart, which also simplifies its application.
- The probability of making money on this pattern is close to 90%.
The last point is especially important in the context of the crisis that has developed in the background of the pandemic. The degree of unpredictability and, hence, the risks has increased. This leads to the fact that strategies that give guaranteed profits are in special demand and much more popular than high-risk strategies.
When to Use the ABCD Strategy
Applicability of the ABCD pattern:
- The timeframe is 1 hour or more.
- Ideal for highly volatile trading pairs.
- Used for such trading practices as scalping.
Components of the ABCD Pattern
Since the price ratio of a highly volatile currency pair constantly fluctuates, it is possible to win on price swings. There are three main swings for this pattern:
- downtrend (segment AB)
- price correction returning it to a higher position (BC segment)
- second downtrend (CD segment)
This pattern is reversible. That is, it is also true in the case of an upward trend, correction, and the second upward trend.
The Main Question Is When to Enter the Trade
Since this pattern predicts the rise and fall of the price, it is necessary to enter into a trade when the price has reached longing D. At this moment, the price deviates and changes its direction. However, there is no need to rush here. You need to make sure, with the help of auxiliary techniques, that the price has already reached point D and will not continue to slide down (or up in an uptrend) but will change its direction.
How to Enter a Trade Correctly
First, you need to wait for a strong uptrend or downtrend. When the price receives a significant momentum, it will be possible to identify segment AB, which will be sharply inclined either up or down. At the same time, it is important that the momentum is obvious and goes beyond the previous minimum or maximum. If it is a false breakdown, you will miss out on your profits.
Then, it is necessary to identify the correction or movement of the BC and wait until it enters the green area. Next, you need to wait for the second downward or upward trend (a segment of the CD). As soon as this trend is outlined and the bar changes color, it is necessary to set a postponement. It should not be at this point but rather below the signal candle by a couple of points.
When the order is activated, you need to try to close it at point D. If this fails, you need to wait for the next correction signal and move the order to the zone of a new signal candle
Due to the ease and success of this pattern, it can be safely recommended to beginners. If you still have questions, ask them at the Forex Factory, and experienced traders will be happy to answer you.