Andrew's Pitchfork is a Forex trading strategy that can predict protracted market swings and help you in identifying potential market trends that can indicate potential exit and entry points. With Andrew's Pitchfork trading strategy, you get a better understanding of the significant market reversal points and it is a good supporter of the trend trading strategy. This particular Forex trading strategy is also helpful in identifying stop-loss positions. Let's discuss everything you need to know about Andrew's Pitchfork:
Andrew's Pitchfork trading strategy uses parallel trend lines in the Forex charts to identify all the possible support and resistance levels. This strategy also provides a trader with the potential breakdown and breakout points. The Andrew’s Pitchfork lines are drawn by placing three different points at a previous trend's end and then drawing a line starting from the first point, running through the middle of the second and third points. This series of three trend lines are used to identify the market trend and reversals.
Trading within the lines
When a currency pair price goes beyond the trend line in the middle and rises to the uppermost level of the trendline, the rising-buying movement slowly starts to fade away. You can identify a Doji candlestick formation confirming the downtrend. You place the entry point as soon as the currency pair prices start falling, just below the end of the third trend line. As soon as the downtrend is in place, the entry order is executed, and the price again moves towards the median line. This would lead to the trader making successful profits through Andrew's Pitchfork Forex trading within the lines strategy.
Here’s a step-by-step guide in trading within the lines:
Trading outside the lines
The second way to trade with Andrew's Pitchfork strategy is to trade outside the lines. Even though trading outside the trend lines does not happen as frequently as trading within the lines, it is also a way to earn significant profits in the Forex market. The trader assumes the currency pair prices to go back to the median trend line. However, there is a possibility of the market shifting in its direction. Hence, to avoid any potential losses, the traders capture the market retracements, filter the adverse movements and close the positions a little before time. This leads to the traders mitigating their Forex risk and protecting themselves against hefty losses.
Here’s a step-by-step guide in trading outside the lines:
Andrew's Pitchfork trading strategy is definitely one of the most widely used and helpful strategies that help you identify support and resistance levels in the market, which results in providing you with the correct entry and exit points. You can start trading with Andrew's Pitchfork trading strategy by signing up on Blueberry Markets that has all the charting tools and techniques necessary you need in Forex trading.
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