Three Line Strike Trading Strategy

Introduction

• Favorite Candlestick Formation: Three Line Strike
• Purpose: Teach about the efficiency and significance of the Three Line Strike in trading.

Key Concepts

• Trend is Your Friend:
  • Important rule in day trading.
  • When prices trend, they retrace before continuing in the same direction.

What is a Three Line Strike?

• Depicted as:
  • Three candles in one direction (either bullish or bearish).
  • Followed by one large engulfing candle in the opposite direction.
• Indicates a potential trend continuation.

Trading the Three Line Strike

• Execution:
  • Enter trade at the close of the engulfing candle.
  • Suggested parameters:
    • Stop Loss: 10 pips
    • Take Profit: 20 pips
• Example Results:
  • In a span of 14 hours and 20 minutes, multiple trades yielded 16% profit on the account by following the Three Line Strike strategy.

Market Structure and Timing

• Identifying Trends:
  • New trends often start with a massive moving candle.
  • Look for breaks in market structure:
    • Previous trend might break, leading to lower highs and lower lows, indicating a new trend.
• Trading Window:
  • Trades are best executed during London session (6 a.m. to 10 a.m. London time).

Trade Examples

• Criteria for Entry:
  • Look for three bullish candles followed by one bearish candle.
  • Avoid taking trades that go against the trend.
• Risk Management:
  • Ensure that the engulfing candle fits within preferred stop loss parameters (less than 10 pips).

Performance and Recommendations

• Win Rate:
  • Historically, a win rate of 70-75% when following this strategy in the right market hours.
• Backtesting:
  • Important to backtest across various sessions and currency pairs.
  • Preferred pairs: AUD/USD and GBP/USD.

Conclusion

• Final Tips:
  • Follow market structure closely.
  • After structure breaks, look for the next trend.
• Community Engagement:
  • Encouragement to like and subscribe for more content on trading strategies.