Simple forex trading strategy with Renko charts

Simple forex trading strategy with Renko charts
A simple forex trading strategy is something that we as traders love to get our hands on. However, the term simple forex strategy can be very subjective and depends on the person you ask. For one trader, a simple trading strategy might be one that has just a few indicators. For another trader, a simple or an easy forex trading method might just be price action based.

THE BEST RENKO PROFITABLE FOREX STRATEGY ( KLIK HERE)


No matter what kind of answers one might get, I am sure that all traders will agree that a simple or an easy forex trading strategy is one that does not clutter the charts too much and is easy to understand and more importantly, the amount of variables involved (you may also call them as rules) are minimal.

Simple forex trading strategy with Renko charts

Simple forex trading strategy with Renko charts

Simple forex trading strategy with Renko charts



Thus, a forex trading strategy such as buy when A happens and B does something can be considered as a simple enough strategy which anyone can apply. Going beyond the basics, a simple forex trading strategy is also one that has a fairly reasonable risk/reward set up. There is without a doubt that a trading strategy must have a 1:2 risk/reward setup and anything beyond this can be considered to be very good.

There are many Renko based forex trading strategies listed on this website. However I am always on the lookout for a trading system that is not only easy to understand but good enough to trade. These are some of the factors that could qualify it to be a simple forex trading strategy.

So without much further ado, here’s introducing a rather simple trading strategy.

The Swing Failure Method
The idea for this easy forex trading strategy came from the concept of swing failure. This was a method that was outlined in the Dow Theory. This is not to be confused with the RSI Swing Failure method that is mentioned here. There is however some similarly in the concept.

The Swing Failure method is a rather old yet very robust concept in the markets. It was first introduced in the work published by Charles Dow and his partners and are part of the Dow Theory principles. The Dow Theory’s swing failure builds upon the concept that in the financial markets, the trend remains in effect until it is acted upon by an external source and the reversal is clear.

If the above seems too complex for you, it actually isn’t as there are different variations of this already used in the markets. Examples include the Alan Andrews’ median lines or pitchfork trading method and the action-reaction line method.

How to identify the trend?
According to Charles Dow, an uptrend is where price rises steadily and makes higher highs (peaks) and higher lows (troughs or dips). Similarly, in a downtrend, price declines steadily and makes lower highs and lower lows.

When price fails to make a new low or a new high and reverses course, and starts to make a new high or new low, it is considered to be a swing failure and indicates a change in trend.

These swing failure methods are usually used in the markets as support/resistance levels. The above chart shows the Dow’s Swing Failure method. As you can see, there is nothing complicated about this.

Now that we have an understanding of the swing failure chart, we can already form an idea on where to go long and where to go short using this rather simple concept of trading.

Trading rules for a simple trading strategy using Swing Failure Method
As the chart above shows, we look for short or long positions at D. Ideally we can expect to see some retracement back to the low or high formed at point B, which is where this strategy takes a little bit of a twist. Once we expect a retracement to D, we then look for the ABC pattern.

Look at the above chart but with some minor modification now, to get an idea. Again, it looks a lot easier and simple visually.

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Simple forex trading strategy with Renko charts
A simple forex trading strategy is something that we as traders love to get our hands on. However, the term simple forex strategy can be very subjective and depends on the person you ask. For one trader, a simple trading strategy might be one that has just a few indicators. For another trader, a simple or an easy forex trading method might just be price action based.

No matter what kind of answers one might get, I am sure that all traders will agree that a simple or an easy forex trading strategy is one that does not clutter the charts too much and is easy to understand and more importantly, the amount of variables involved (you may also call them as rules) are minimal.

Thus, a forex trading strategy such as buy when A happens and B does something can be considered as a simple enough strategy which anyone can apply. Going beyond the basics, a simple forex trading strategy is also one that has a fairly reasonable risk/reward set up. There is without a doubt that a trading strategy must have a 1:2 risk/reward setup and anything beyond this can be considered to be very good.

There are many Renko based forex trading strategies listed on this website. However I am always on the lookout for a trading system that is not only easy to understand but good enough to trade. These are some of the factors that could qualify it to be a simple forex trading strategy.

So without much further ado, here’s introducing a rather simple trading strategy.

The Swing Failure Method
The idea for this easy forex trading strategy came from the concept of swing failure. This was a method that was outlined in the Dow Theory. This is not to be confused with the RSI Swing Failure method that is mentioned here. There is however some similarly in the concept.

The Swing Failure method is a rather old yet very robust concept in the markets. It was first introduced in the work published by Charles Dow and his partners and are part of the Dow Theory principles. The Dow Theory’s swing failure builds upon the concept that in the financial markets, the trend remains in effect until it is acted upon by an external source and the reversal is clear.

If the above seems too complex for you, it actually isn’t as there are different variations of this already used in the markets. Examples include the Alan Andrews’ median lines or pitchfork trading method and the action-reaction line method.

How to identify the trend?
According to Charles Dow, an uptrend is where price rises steadily and makes higher highs (peaks) and higher lows (troughs or dips). Similarly, in a downtrend, price declines steadily and makes lower highs and lower lows.

When price fails to make a new low or a new high and reverses course, and starts to make a new high or new low, it is considered to be a swing failure and indicates a change in trend.

These swing failure methods are usually used in the markets as support/resistance levels. The above chart shows the Dow’s Swing Failure method. As you can see, there is nothing complicated about this.

Now that we have an understanding of the swing failure chart, we can already form an idea on where to go long and where to go short using this rather simple concept of trading.

Trading rules for a simple trading strategy using Swing Failure Method
As the chart above shows, we look for short or long positions at D. Ideally we can expect to see some retracement back to the low or high formed at point B, which is where this strategy takes a little bit of a twist. Once we expect a retracement to D, we then look for the ABC pattern.

Look at the above chart but with some minor modification now, to get an idea. Again, it looks a lot easier and simple visually.

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