What do we do when the price enters uncharted territory with no previous lows or highs to serve as support and resistance levels? Here is your guide into the unknown.
Gambit strategy: balance between risk and gain
2020-07-02 • Updated
Gambit trading strategy is a bold attempt to gain maximum profit while not losing sight of risk. Please consider that it may take a lot of time for this strategy to work. Thus, arm yourself with patience. The good thing is that this strategy is worth it: you can get a big profit from waiting for the right moment to enter without taking additional risks.
The strategy was created by Walter T. Downs, a dedicated chess-player and mathematician, for calm and lucrative trading on D1 timeframe. But it turned out that it works on H4, too. The only indicator you need to enter the market is Bollinger bands.
If there is a bullish trend – you should BUY on rollbacks from the upper Bollinger line. If there is a bearish trend - SELL on rebounds from the lower line.
- The minimum and maximum of the "signal" candle (2) should be above the minimum and maximum of the previous candle (1).
- The close price of the signal candle should be in the lower part of the candle’s range.
- Central Bollinger line should be moving down for at least 10 days in a row.
If all requirements are met, we can sell at the open price of the third candle (3) following the "signal" one. Stop Loss should be set slightly above the maximum of the "signal" candle (2). On the fourth day after we opened our position, we should trail Stop Loss at the open price. The trade should be closed when the candlestick crosses the lower green Bollinger line.
- The minimum and maximum of the "signal" candle should be located below the minimum and maximum of the previous candle.
- The "signal" candle should close above the middle point of the candle’s range and above the center Bollinger line.
- The central Bollinger line should be rising for at least 10 days in a row.
If all requirements are met, we buy at the open price of the next candle following the "signal" candle. Stop Loss should be placed below the minimum of the "signal" candle. On the fourth day after we opened our position, we should trail Stop Loss to the open price. We will close the trade when the candlestick crosses above the upper green Bollinger line.
In this article, we will discuss what the shooting star pattern is, how to recognize it, and how you can use it in your trading. Let’s get started!
By this time, you have already learned some basics…
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