Sound good?

I thought so…

Ok, let’s get started…

I’m about to show you a great little trading tactic you can use to grab some quick profits.

I’m assuming that you already have some knowledge of how to trade forex. If you don’t, run over to www.babypips.com and start building a foundation – because what I’m about to share doesn’t get into how the forex markets work, or how to place orders, etc… it’s the nuts and bolts of a quick and dirty strategy you can use to start banking some pips in the next day or so.

In fact its so easy you might just want to make this your entire strategy.

What is it?

It’s a price based trading strategy that:

Doesn’t require any special indicators.
Works based on trader psychology and strategy.
Can be applied in any market.

The “Quick 20 – Smash & Grab” Strategy

First we’re going to pull up an hourly chart. I use Metatrader, so you can follow along with my charts, however this works with any charts.

Step 1: Grab your chart.

Pull up an hourly chart. I like to follow GBP/USD and EUR/USD, and I advise you to follow those – of course it works in other pairs, but why get greedy

Step 2: Find Support and Resistance Zones.

Zoom out and look for highly identifiable support and resistance zones.

Support and resistance are levels price points where the market stopped and turned around.

So if you look at the chart below, you’ll see I’ve marked off potential areas of support and resistance. (Ignore the red and green dashed lines – that was simply an order I had placed in the market.)

The blue highlighted areas are not exhaustive by any means… the whole point is to show you where ever the market turns, support/resistance points are found.

What do I mean by highly identifiable?

Well as I said, anywhere the market turned is a support or resistance level. But not all support and resistance levels are created equally…

Areas where the market has repeatedly hit and turned at are “better” levels of support and resistance. The more hits the better.

Also the bigger the time between hits – the better.

It’s probably easier to understand with a picture…

The areas with the arrows pointing to them have multiple instances of price reaching and turning at those levels. Now they are not exact price touches and turns, but regions. The more the better.

When I find these points I draw some lines on to highlight the support/resistance areas…

I put thick lines for support/resistance I feel is stronger – and thinner lines for weaker levels.

That’s it.

Now I’ll probably get asked, “Why aren’t your lines on exact levels?” or “Why are some lines touching price, and other not?”

The whole objective here is to simply mark areas where price has shown to turn – that way we can use those levels in the next step.

Step 3: Pinpoint Price Setup – And Place The Order

Find the most recent price action that is near (or touching) a support or resistance level and place trades on the other side of the support / resistance with a stop of 20 pips and a target of 20 pips.

So in this example, seeing the resistance level at 1.6554, I’d find the place an order to buy at the high of the bar in the blue ellipse – 1.6555 (+4 pips for the spread) taking it to 1.6559.

I’d then set a target at 1.6579 (1.6559 + 20 pips) and a stop loss at 1.6539 (1.6539 – 20 pips).

Step 4: You’re Done!

Sit back and let the trade work itself out… go for a walk… read a book… go to work…

Of course I can’t force you to walk away, but it’s always nice coming back to your computer after an afternoon out and seeing more money in your account than you spent that day

Of course all trades don’t turn into winners – and that’s fine… as long as we win more than we lose we’re happy.

And with this strategy – we’re happy…

But don’t take my word for it – test it out for yourself!

There is a way to enhance this strategy even more… and we’ll get more onto that in the next article.

Categories: Trading

*Disclaimer:It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options.