GBPUSD - a textbook example of a 2618 trade
Since some people do not know what a 2618 trade is, and the opportunity is there, I thought I'd make an example for educational purposes.
A 2618 trade is probably the safest way to trade a double top or double bottom and although the Risk/Reward ratio is a little less favorable, my preferred way to enter a double top/bottom trade.
Basically, you wait for the downward trend, away from the double top (the upward for double bottom) to break and close below the neck line of the double top/bottom.
Then, if a retracement occurs, you put a limit order at the .618 retracement of the previous leg of the move, in the direction of the previous move.
You might miss a couple of double top/bottom trades if no retracement occurs, but percentagewise you'll win a lot more of these trades.
Hope this was informative to you, don't forget to hit the like button :)
A 2618 trade is probably the safest way to trade a double top or double bottom and although the Risk/Reward ratio is a little less favorable, my preferred way to enter a double top/bottom trade.
Basically, you wait for the downward trend, away from the double top (the upward for double bottom) to break and close below the neck line of the double top/bottom.
Then, if a retracement occurs, you put a limit order at the .618 retracement of the previous leg of the move, in the direction of the previous move.
You might miss a couple of double top/bottom trades if no retracement occurs, but percentagewise you'll win a lot more of these trades.
Hope this was informative to you, don't forget to hit the like button :)
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Twitter: twitter.com/NicoMuselle
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