The Trading Channel
Learn a simple but effective one-hour chart trading strategy to gain an edge over the market. The strategy involves using the RSI and spotting patterns, such as inverted head and shoulders and double bottoms. The video breaks down a live trade using the strategy and provides rules for entry, stops, and targets. Additionally, the video shows the results of trading this exact strategy over the past year on the dollar swiss and even provides a special bonus way to add ridiculous accuracy.
The One Hour Chart Trading Strategy: A Simple yet Powerful Tool for Traders
Introduction: How to Gain a Trading Edge
If you are a trader, you know that the key to success is having a strategy or way of trading that gives you an advantage over the market. In this video, we will be discussing a one-hour chart trading strategy that provides a ridiculous edge over the market and a money-making advantage over a long period of time. This is the same strategy that I use to enter the trade on the dollar Swiss that is currently up about 184 pips at a 2.9 to 1 reward to risk ratio. By the end of this video, you will know exactly how to use this strategy to give yourself an advantage every time you place a trade on the one-hour chart.
What You Need to Trade the One Hour Chart
To trade the one-hour chart using this strategy, you only need two things: the RSI (Relative Strength Index) indicator and your candlestick charts. The RSI will help us spot reversals, which is the focus of this reversal strategy. The candlestick charts are almost purely based around price, making it ideal for traders who prefer price action trading. For the RSI settings, I go to style and remove the RSI based M8, which is not something that I use. We use a 14 period RSI indicator.
The Two Patterns to Look For
The strategy is based on two patterns that we can find in price all over the place. In a downtrend, this looks like an inverted head and shoulders pattern, while in an uptrend, it takes the form of a double bottom pattern. These patterns only become relevant during reversals, and that is where we need the RSI indicator to help us spot these reversals.
Entering the Trade
What we are looking for is the RSI to go oversold or overbought. When the RSI goes oversold, which means that the line on the RSI goes below 30, we start looking for price patterns like the inverted head and shoulders and the double bottom pattern. We want to see the pattern form after the RSI goes oversold, which tells us that price is primed to have a reversal. We can also enter a trade if we have an RSI divergence with the price pattern, as this adds accuracy to the trade.
Breaking Down a Live Trade
In this section, we will take a look at a live trade that used this strategy. Here, we can see that after the RSI goes oversold, we start looking for a pattern. In this case, it is an inverted head and shoulders pattern that shows the first shoulder, the head, and the second shoulder. To be more objective, we start looking for the right shoulder when the price creates a pullback in the area from the first shoulder down to the head of the pattern. We enter the trade when the price breaks the neckline of the pattern.
Bullish and Bearish Examples of the Strategy
In this section, we will take a look at some bullish and bearish examples of the strategy to help you have a better handle on it. The same rules apply, but the patterns are flipped. In a bullish pattern, we look for a double bottom pattern after the RSI goes oversold, while in a bearish pattern, we look for a regular head and shoulders pattern after the RSI goes overbought.
Results of Trading the Strategy on the Dollar Swiss
In this section, we will take a look at the results of trading the exact same strategy used in the previous section on the dollar Swiss over the past year. The results show that this strategy provides a massive edge over the market, with an average of over 500 pips per trade and a reward to risk ratio of 2.35 to 1.
Bonus: How to Add Accuracy to the Strategy
As a bonus, we will show you a way to add some ridiculous accuracy to this exact trading strategy. To do this, we look for a trendline on the RSI that starts to break before the pattern breaks, signaling that the pattern is more likely to break soon.
Conclusion: A High Reward, Low Risk Trading Strategy
In conclusion, the one-hour chart trading strategy is a straightforward and powerful tool for traders. By using the RSI indicator and two price patterns, the inverted head and shoulders and double bottom pattern, we can spot reversals and gain a high reward, low-risk trading edge over the market. We hope this guide has been helpful and wish you success in your trading endeavors.
