Hello traders, here’s another way which I use to trade the forex trendline trading system, a price action trading system.
Its by using the aggressive trade entry method.
All the rules on how to trade with trendlines remain the same which you can see here including how to draw trendlines etc but the main thing that needs to change is how you enter a trade based on the trendline trading setup.
Instead of using buy stop or sell stop pending orders, you use INSTANT market order as soon as price hits a trendline setup that you’ve been watching.
How To Trade The Forex Trendline Trading System With The Aggressive Entry Method
As soon as price hits a trendline, you sell or buy at market immediately.
You do not wait to confirm your buy or sell signals with reversal candlesticks….not at all.
You just immediately buy or sell at market.
So if price hits the trendline and bounces back, you make money, if not you lose money. Its that simple. There’s no waiting for this or that indicator to line up.
You just press the buy or sell button when price the trendline. That’s it.
How Much Stop Loss Is Required With This Method?
When I trade using this method, I put a much larger stop loss because I have no reversal candlestick or price action to give me an indication (yet) as to a suitable place where I can place my stop loss.
So my stop loss are around 30-50 pips away from the trendline INITIALLY.
Later, based on price action/candlesticks that form around that trendline, I will then I decrease the size of my stop loss distance.
For example after I enter a sell trade with a 40 pips stop loss and later I see a shooting star bearish reversal candlestick form after price hits the trendline, I will then move my stop loss to at least 2-5 pips above the high of that shooting star reversal candlestick.
Note: I’m not talking about moving the stop loss to break even here. I’m just talking about the placing the initial stop loss and later further minimizing my risk by decreasing the size of my stop loss.
The initial stop loss is not fixed and can vary a lot between:
- different currencies as some have large spreads
- larger timeframes generally would require larger stop loses.
So your initial stop loss must be considered in light of these two factors mentioned above as well as how much percentage of your trading account you are going to risk in each trade you place.
Advantages of The Aggressive Trendling Trading Method
There are 3 advantages of the aggressive trendline trading method:
I Will explain each of these in much detail as I can:
#1: You are in profit very quickly
You will notice that there will be times when price hits a trendline and immediately bounces back…it bounces back that quickly that profits do come VERY FAST!
If price turns around at the exact price level where the trendline was hit and you execute a market order trade, you are really Buying at the very bottom or selling at the very top.
Which means your trade will be in profit very quickly. There will be times when it will fluctuate a bit before price starts going your way so you just need to hang on and let the market play out.
If you were waiting for a reversal candlestick confirmation on the daily, 4hr or 1hr tiemframe, price would have hit the trendline and moved so many pips away from that trendline already.
Which means you can get anywhere from 10 to 100 pips or price move away from that trendline which could have been YOUR profit if you had sold or bought immediately when price touched the trendline.
#2: You Can Move Move Stop Loss To Break Even Quickly
The second advantages of this method is that if price hits the trendline and bounces away from it very quickly, you have the chance to move your initial stop loss and bring it to break even making your trade risk free.
The further away price moves away from your trade entry price and in this case would be the touch of the trendline, the better it is for you as this will allow you to move your initial stop loss to break even with less chance of getting stopped out prematurely.
And this brings me to the third point…
#3: You Can Multiply Your Profits Fast With Pyramiding
If you have a first trade that is totally risk free trade (stop loss had been moved to break even), then what is stopping you from placing a second trade based on a reversal candlestick that you can see in the daily, 4hr or 1hr timeframe?
Lets assume that price hits a falling trendline and bounces back down forming a shooting star bearish reversal candlestick and at its close, price was 40 pips away from the trendline it touched.
This also means that you are in profit by at least 40 pips. Which means you can move your stop loss to break even. Which means that trade is now a risk-free trade.
Here’s the thing:
- You didn’t know that this shooting star was going to form because you sold as soon as price hit that trendline.
- The shooting star formed later after you sold and now you are in profit by 40 pips and your stop loss has been moved to break even.
The big question is: what is stopping you from placing a second trade based on the shooting star reversal candlestick?
Place that pending order and trade the breakout of the low of the shooting star candlestick.
You understand what I’m trying to explain here?
So place a pending sell stop order a few pips under the low of that shooting star candlestick and if price breaks its low and falls down, you’ll also start accumulating profits on the second trade as well as the 1st trade.
That’s a really low risk way to increase your forex trading account.
DISADVANTAGES OF THE AGGRESSIVE TRENDLINE TRADING SYSTEM
- its not the conservative way to trade…you are not relying on any reversal candlestick confirmation to to enter a buy or sell trade and you and I know that when price comes to a trendline, two things do happen: it obeys it or it breaks it and you can lose or make money depending on which outcome you trade your money on.
- your initial stop loss distance or stop loss size will be large 30-50 pips but later you may have to adjust/decrease based on price action you see.
- This trading method is not for the fainthearted. Why did I say that? Well, you will see price increasing (green candlestick) and you’d be selling or you will be seeing a red candlestick still forming going down and you’d be buying. Don’t believe everything I say or write. Test it out yourself.
- Draw trendlines on past price data and you’ll notice many times, price will hit a trendline and not move past it much more than at least 5-30 pips before obeying the trendline. Sometime price will just hit the trendline “on the dot” and bonce back.
- this method allows you to pyramid and multiply your profits without addition risk at all.
- Every forex strategy has it strengths and weakness…this one is no exception: if price breaks a trendline, you are going to lose money.
- Do you need to use this method all the time? Nope….It is better to be selective sometimes when doing this. Only picking the best trendline trading setups to trade this method. So what are the best trendline trading setups? In my opinion, its the seutps that happen in larger tiemframes and have the points 1, 2 and 3 spread apart evenly or at least a reasonable distance between them so that its so obvious what is happening and that even a 5th grader can see what is happening.
And finally, don’t forget to share, tweet, like, comment etc or even share the link of this system on any trading sites you are a member of.
Hi Rkay. Thank you so much for your sharing. I have been learning a lot from your blog. Speaking of trading with multiple time frames, what I understand from your strategy is that you place your profit target with a larger time frame (e.g. daily), but put your stop loss by using a lower time frame (e.g. 1 hour). Right? Please correct me if I get it wrong. My question is that if I put a smaller stop loss with a lower time frame, let say with a 1-hour chart, will I get stopped out with major news release while swinging my trade (since I try to target a larger profit with a larger time frame)? Thanks again.