In this video, a low-risk and profitable trading strategy known as the Huffman strategy is explained. The strategy focuses on identifying the trend and the inventory retracement bar. By using indicators such as the exponential moving average and the inventory retracement bar, traders can accurately identify entry points for short or long positions. The video highlights the importance of using both indicators to avoid false angles and to accurately identify wicks that meet the 45% requirement.

The Hoffman Strategy: A Low-Risk Trading Strategy for Quick Profit

Introduction

In today’s video, we’re going to talk about a smart trading strategy with low risk and high potential profit. The Hoffman Strategy, created by a trader who won 30 local and international real-money trading competitions, is one of the best trading strategies that can guide you to enter successful trades by identifying the market movement. In this article, we will explain the Hoffman Strategy step-by-step and provide tips on how to use it effectively.

The Foundation of the Hoffman Strategy

The Hoffman Strategy is based on two essential components. The first one is understanding the trend direction, and the second one is the Inventory Retracement Bar, also known as the Stock Correction Bar. These two elements serve as an initial guide to help you know which direction the market is moving, lowering your risk of entering a losing position while providing you with an opportunity to gain quick profits.

Choose the Right Time Frame

The Hoffman Strategy can be applied to any time frame, from one minute to one day or more. However, to maintain a balance between accuracy and efficiency, it’s recommended to use the Hoffman Strategy on a 15-minute frame, 1-hour or 30-minute frame. In this article, we will demonstrate the Hoffman Strategy using the 15-minute frame.

Understanding Trend Movement

There are three types of trend movement – Upward trend, Downward trend, and Horizontal trend. A horizontal trend is characterized by squeeze vitality or pause movement. It’s important to note that this direction is what we are targeting. Usually, after a horizontal movement, the direction will either ascend or descend, then form an angle of 45 degrees or more from the horizontal direction it was in previously. The angle is the treasure that we need to find.

Locating The Trends

The first step is to look for a horizontal trend movement. Next, determine its angle, then enter a deal according to some conditions which we will discuss shortly. Here are some examples of horizontal trend movements with 45-degree angles:.

1. Uptrend with a 45-degree angle
2. Downtrend with a 45-degree angle
3. A horizontal trend movement that goes downward to form a 45-degree angle
4. A horizontal trend movement that goes upward to form a 45-degree angle

The Role of Moving Averages

To avoid entering misleading positions or getting fooled by the market’s movement, Hoffman recommends using exponential moving average (EMA) indicator. The EMA will help you clear the view and make it easier for you to understand the trend’s movement. To implement this technique, we will use EMA 20.

The Inventory Retracement Bar

The Inventory Retracement Bar is the second condition required to execute the Hoffman strategy. In simple terms, it’s a candlestick bar that opens and closes 45% or more off its high in an uptrend or low in a downtrend. It’s important to note that the color of the candlesticks doesn’t matter, and the wick should be equal or greater than the candle’s size by 45%. Such bars provide ideal entry levels to enter either a short or long position, depending on the color. The Hoffman strategy uses bearish candles to enter into long positions and bullish candles for short positions.

Using Indicators to Enhance the Hoffman Strategy

To accurately and comfortably locate the Hoffman Candles and angles, there are certain indicators we can use to show us where to enter our trades. The first one is the Inventory Retracement Bar, which was created by UCS Gears. This indicator shows many red and green triangles that represent the Hoffman Candles we previously discussed. Green triangles indicate an opportunity to enter a short position, while red triangles represent long positions.

The Wrap Up

The Hoffman Strategy is one of the most efficient trading strategies available. To execute it correctly, understanding the trend’s direction and the Inventory Retracement Bar is critical. This information can be combined with the EMA 20 and the Inventory Retracement Bar indicator to develop a practical and low-risk trading strategy. By doing so, you can maintain a balance between risk and reward and quickly gain profits.

Choose The Best Forex Broker