Hello Trader,
You are most likely here reading this right now because you were searching for the demark forex trading strategy. Well, at least you have come to the right place and I will show you how to trade using the demark trading technique.
The DeMark Trading Strategy was developed by a guy called Tom DeMark.
The DeMark Trading Method is based on drawing trendlines on recent swing highs or lows and as soon as these trendlines are broken, a position is opened.
This may not be 100% actually as the original demark trading strategy because you may find elsewhere but just a slight variation to keep trading this setup simple.
Timeframes: 15min upwards
Currency Pairs: Any
Forex Indicators: Nil
DRAWING TRENDLINES IS ESSENTIAL WITH THE DEMARK TRADING METHOD
The DeMark Trading Strategy relies on you knowing how to draw trendlines properly. If you don’t know how to draw trendlines then here’s a brief lesson on drawing trendlines:
- There are only two trendlines any trader can draw, an it can be either a falling trendline or a rising trendline.
- To draw a rising trendline, you find two “bottoms” of price moves and connect them and you have a trendline like this:
- To draw a falling trendline, you find two “peaks” of price moves and connect them and you have a trendline, like this:
THE TRADING RULES OF THE DEMARK FOREX TRADING STRATEGY
The buying and selling rules of the demark trading method are really simple. All you need is a breakout of a trendline. Once that breakout is confirmed by the close of the “breakout candlestick” outside of the trendline that has been broken then you initiate a buy or sell order.
Here are the rules (refer to this chart below):
Step 1: Draw your up and down trend lines on your chart using the nearest lows for an upward trendline and using the recent peaks for your downward trendlines.
Step 2 : Wait for a break of the trend line on the chart to signal trend direction
Step 3: At the close of the candlestick that breaks out, place an pending (buy stop or sell stop order) a few pips away from the high or low of the candlestick.
Step 4: For your take profit, use the previous swing highs or lows as your take profit target levels.
Step 5: Or you can use a trailing stop and place it behind the peaks and bottoms as a trade moves profitably to lock in your profit.
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