Scalping is a widely used trading strategy that works in any market whether you trade forex, stocks, futures, commodities, bonds or ETFs. Scalping can be done in many different ways. There are traders who have developed their own profitable scalping strategies. Lucky Spike is one such scalping strategy that is being used by many traders to make consistent profits each and every day.
Successful traders follow the K.I.S.S principle. Whatever trading strategy you follow, the simpler you will keep it, the higher the probability of making a winning trade. Lucky Spike Scalping Strategy uses this K.I.S.S principle. Let’s discuss it.
Many traders use candlestick patterns in their trading signals. Lucky Spike uses a strong and easily noticeable candlestick pattern. Now, if you have been trading with candlestick charts, you will most probably be aware of the Shooting Star, Morning Star, Hammer, The Hanging Man, Doji and other similar candlestick patterns. All the above candlestick patterns have one thing in common. A small candle body and long shadows.
Lucky Spike Strategy can be used on smaller timeframes as well as on the daily, weekly or even on monthly charts. You will be trading only one candlestick in this strategy. First determine that the market is in a strong uptrend or a downtrend. You can use the Heiken Ashi Indicator to find out whether the market is in a strong uptrend or a downtrend.
Now, in a strongly trending market, a Lucky Spike Pattern can be anyone of the above candlestick patterns like the Shooting Star, Morning Star, Hammer, Inverted Hammer, Hanging Man or the Doji with a very small candle body and one shadow longer than the other. When this pattern appear in a strongly trending market, it is a signal for a quick trend reversal. Instead of trading trend reversals, we will be only trading one candlestick. When you spot such a pattern, get ready for a quick trade.
When you find anyone of the above patterns in a strong downtrend with a small candle body and one long shadow, go long on the open of the next candle with the stop loss placed just below the lower shadow of the Lucky Spike. Take profit at the close of the next candle.
Similarly, when you find the Lucky Spike appearing in an up trending market, enter into a short trade at the open of the next candle. Place the stop loss on the high of the Lucky Spike and take profit on the close of the next candle!
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