One - Two - Three

Ever open a trade and it immediately goes in the opposite direction? Ok maybe it just happens to us but I doubt it. Just before you are ready to pull the trigger the emotions are high and it is tough to ride the first ticks against your position. You may feel that if you don't get in right now you will not have another chance at that price.

Most of the time that is not the case. Many times patience will bring you rewards by following the One - Two - Three method for opening the trade. Pick your currency pair and set your opening price. Draw a line on your chart and wait for the price to go in the opposite direction by 20 or so pips and then return to your opening price. When it returns a second time after hitting your retrace target then it is time to open the position.   You will have to determine based upon what the chart tells you how much the retrace should be.

Because it just did a quick retrace it is likely not to repeat it so soon. The benefit to this strategy is two fold. If the pair goes in the opposite direction and continues then you just saved your account by not taking a bad loss. If it follows the retrace pattern suggested here then you are likely not to see a negative position in the short run.

The downside is if the price powers thru your opening target and you miss the opportunity to open the trade at the price you wanted. This does happen but statictics will show you it happens at a lower rate than the previous two patterns. If you are good enough to pick only winners that immedately take off then this strategy is not necessary.

Try it for a few of your trades and see the results. The image below will illustrate the One - Two - Three pattern.

At the arrow labeled one we decided we wanted to take a short position in this pair.   We draw a blue line on the graph at our target opening price.   We also put on the red horizontal line that shows us how much the pair must retrace before we are willing to open the position.   The green horizontal line shows us the power price.   An option to this method is if the price powers thru and doesn't retrace then we will open the position anyway.

Before we could open this position the price in fact moved against us up to position two and then within a couple of hours came back down to position three where we could open the trade.   When we opened the trade it went in the direction we wanted and we banked a profitable trade.

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