Let's start with what classical literature on Forex teaches in this matter. You read, look at the numerous pictures and graphs that the authors provide in them, and you wonder: why did 90% of traders lose? Everything seems clear.
A professional trader will smile and say: it’s clear in the pictures in those books, but during real trading, all this happens correctly in 50% of cases. Therefore, I will give examples about the other 50% of cases about which in the same books for some reason the authors were bashfully silent or forgot.
And after that, let's talk about truly unmistakable entry points for traders during real trading.
Forex entry and exit indicator 123PatternsV6
This algorithm is presented in the form of lines and arrows. The formation of signals is based on pattern 123. The parameters by which this pattern is calculated, and then lines and arrows are formed based on it, are set in the 123PatternsV6 settings. You can download this algorithm for MT4 right here:
Installation in the MT4 trading terminal is standard:
- Copy 123PatternsV6 to the “MQL4/indicators” folder;
- Restart the terminal;
- Find the “Indicators” folder in the terminal;
- Drag the file onto the chart of the instrument you are interested in.
Algorithm settings
- ZigZagDepth, RetraceDepthMin, RetraceDepthMax - parameters by which pattern 123 is calculated. The higher the numerical values, the less often the signals will be generated and vice versa, the smaller the values we enter, the more often 123PatternsV6 will generate signals (the number of false ones will increase);
- ShowAllLines, ShowAllBreaks - parameters responsible for displaying lines;
- ShowTargets - parameter responsible for displaying take profit lines;
- Target1Multiply - responsible for the size of the first Take Profit;
- Target2Multiply - determines the size of the second Take Profit;
- HideTransitions - parameter responsible for displaying the channel.
An example of an indicator with channel display enabled: After we have sorted out the settings, let's look at how this indicator can be used in trading.
#7 - Fair Value
Investors who have a strong understanding of fundamental value can calculate what they believe is a fair price for a stock and then exit whenever the stock price meets or goes beyond that level. This is not an easy task as the company's value will change as share prices change (relativity). All sorts of factors, such as investor sentiment, also have an impact.
One simple way is to look at the Peter Lynch line value. Whenever a stock is below this line, it is considered undervalued, and whenever it is above, it is considered overvalued.
Ways to use the indicator of entries and exits in Forex
Options for using the 123PatternsV6 entry and exit indicator on Forex:
- Immediately after the arrow in the direction of its formation;
- On a rollback after the arrow appears;
- On the breakout of the extremum formed after the appearance of the arrow;
- Towards the previously formed arrows on the rebounds from the indicator levels.
In the first case, a position is opened immediately after the arrow appears on the next candle.
In this case, Stop Loss is set at the last extreme point before the arrow appears, and Take Profit is set at one of the indicator levels intended for exit. It is not difficult to notice that if we hold the deal until the first goal, then the TP/SL ratio will not be very profitable. It makes sense to hold the position until the second target level.
In the second case, unlike the first entry option, a position is opened on a price rollback. At the same time, the depth of the rollback can be guessed based on the indicator levels. In the figure below you can see how after the arrow appeared, the rollback stopped at the previous level of the indicator.
Stop Loss, as in the first situation, is set beyond the extreme before the algorithm signal appears. Compared to the first option, this entry is more profitable, since the TP/SL ratio is more significant.
The third method of entering the market is more reliable, but the distance to the target levels is smaller, and the Stop Loss is larger than in the previous two options.
Stop Loss is set either for the extremum formed before the appearance of the arrow, or for the last local extremum before the breakdown.
The fourth option for opening a position can be safely classified as a scalping option, since the transaction is concluded at each rebound in the direction of the previously formed arrow. At the same time, Stop Loss, unlike the previous three options, is significantly smaller, resulting in a very favorable TP/SL ratio. In addition to the classic exit using 123PatternsV6, which is assumed on the target lines TP1, TP2, you can close a position using an arrow directed in the opposite direction (signal).
The figure below shows the considered entries and exits on Forex using the 123PatternsV6 indicator.
The numbering of the inputs in the illustration corresponds to the options discussed above.
It is worth noting that 123PatternsV6 works equally well on both higher time intervals (M30-D) and small time frames (M1, M5, M15).
123PatternsV6 can be used to identify global trends, after which make entries, as well as use pyramiding in the direction of the prevailing trend of the older time interval. In the figure below we see the generated signals on the hourly timeframe.
123PatternsV6 can also be used in combination with simple charting and technical analysis techniques. As an example, let’s remember the breakdown of the trend line as a signal of a trend change. After that, using the 123PatternsV6 indicator, you can enter and exit a position on Forex.
Bottom line
The options for using 123PatternsV6 that we have considered indicate that for profitable trading it is enough to use only one indicator. In this case, the trader’s work schedule will not be cluttered due to the fact that the same algorithm is used both for entering and exiting a position.
Another significant advantage of 123PatternsV6 is that it can be used at various time intervals. This makes this tool more versatile than many other algorithms.
MT4 indicators are becoming more technical and have more correct predictions, but many traders and investors also want to see the best entry and exit points in the market. Most indicators only show the direction of the trend, without showing exit points.
Often Forex indicators show much better profitability in the options market. After all, in binary options, in order to get up to 90% of the transaction, it does not matter at all how far the price in points will travel from the moment the transaction is concluded. In order for a trading position to be closed in profit, and for the trader to receive up to 90% of income, 1 point in the direction of the transaction is enough!
You can try your hand at options trading under fairly favorable trading conditions. For example, in a company you can start trading with 10 dollars in your account, concluding transactions as small as 1 dollar.
Let's look at the 2021 indicator showing for opening and closing orders, Ku Klux. This indicator is reminiscent of the famous pivots, it looks for rotating price levels on any currency pair, and also, each of its levels can be used as a level to enter or exit a trade.
Closing a deal: ways that really work
Closing a deal is one of the key moments of trading. Moreover, questions may arise from both novice sales managers and professionals. If you make a mistake at this stage of communication with the client, the likelihood that the deal will be disrupted will increase significantly. And, conversely, if you master the technique of closing deals perfectly, then in most cases a person will not leave without making a purchase.
Be that as it may, the successful sale of a product or service is always a sale with the closing of the transaction. Otherwise, we simply have a non-binding conversation between the seller and the potential buyer.
The essence of closing a deal
Almost anyone can sell goods and services under favorable circumstances, but only a seller with sufficient experience and skill can turn a client into a regular buyer and get maximum profit from the transaction.
The object of trade does not matter. No matter what you offer, the sales technique remains the same. It includes five mandatory steps:
- Establishing interaction, consisting of a greeting, a smile, and a speech module from the seller.
- Discovering the client's needs through questioning and active listening techniques.
- Presentation of a product or service based on six rules.
- Handling customer objections using a developed algorithm.
- Closing a deal using motivation to buy.
In order for the sale to be successful, you cannot skip any of the listed steps, sequentially, step by step, guiding the client along this ladder in the specified sequence.
Closing the deal is the critical point in the sales process that determines whether your efforts will bear the desired fruit. Therefore, for this moment it is necessary to select suitable phrases especially carefully.
What is the best definition for closing a deal? First, let's try to figure out what the verb “close” means. Dictionaries will tell us that the meaning of this word can be interpreted as “to cease action”, “to make inaccessible”, “to put an end to”. All of these definitions actually accurately describe the concept of “close” as used in sales.
A closed deal is not available to competitors. This is the final point, ending all opposition and ending all disputes. Once you close the trade, you finally receive your profit.
Every reasonable seller understands that the existence of a transaction cannot be recognized without closing it. It doesn’t matter how much time you devote to intimate conversations with the client, treating him to coffee and praising your service or product. The most important component of a meeting with him is closure, without which your mission will remain unfulfilled.
Is the deal nearing closure? This means that both you and the buyer are experiencing the most important and exciting moments. After all, right in these minutes the verdict is pronounced on all the efforts of the seller: will you be able to celebrate the victory or will you fail.
Are you afraid to close deals? Don't worry, you're not unique in this. A sense of risk always accompanies this process, otherwise it would not be so exciting and pushing for new achievements. Currently, specialists have developed a huge number of techniques for successfully completing sales. Classic techniques usually involve the use of psychological tricks to encourage a purchase.
Closing a deal is more than just an agreement reached at the time of purchase. This term also includes all agreements established throughout the sales process.
When contacting a buyer, the sales specialist must:
- find out what he needs;
- competently present your services or products, informing about how they will help to successfully solve problems and realize needs.
By following these universal rules, you can close any transaction, bypassing all obstacles.
When to use one or another technique for closing a deal
Was the conversation with the client successful? Did you tell everything you planned and did the buyer get answers to all his questions? This means it's time to close the deal. Now the buyer must make an irrevocable decision that your product or service is worth purchasing. Therefore, closing a deal is the most exciting and exciting stage for any seller. You must encourage the buyer to make a decision that is beneficial to you, but do it as correctly and unobtrusively as possible. And here the problem of choosing the right time arises. On the one hand, it is dangerous to hesitate, risking missing the right moment. However, premature actions can lead to the client abandoning the purchase. Below we will look at exactly when it is better to use one or several methods for closing a deal.
- The potential buyer is at the top rung of Hunt's recognition ladder. The client already knows everything about the product and has decided to purchase the product, but has not yet decided on the seller from whom he will buy it. That is, a person can make a purchase not from you, but from another store, and you will no longer be able to influence him. Then the use of these methods of closing a deal is quite justified.
In the diagram below you can see what Ben Hunt's pyramid represents:
Please note that a large number of sales professionals ignore the decision-making stage at which a potential buyer is. Salespeople strive to close a deal at the product discovery or solution selection stage, which is extremely difficult.
- The buyer has decided on a deal, is ready to make a purchase, but is stalling for time out of a desire to communicate and enjoy the moment. But you cannot give the client as much attention as he wants, for example, due to the lack of the required amount of time for this.
- You are convinced that the product or service fully meets the customer's needs. The buyer is in no hurry to close the transaction due to doubts based on incorrect premises, or due to a skeptical attitude towards everything. Such customers often thank the salesperson after the deal is closed for convincing them to purchase the item that was right for them.
- The sales system involves completing transactions in a specific period , when you can purchase a product or service on special conditions that are not available at other times - on promotional days, at product presentations, etc.
An important factor in successfully closing a transaction is the client’s readiness to purchase. Always check if the following basic conditions are present:
- Financial opportunity.
- Trusting attitude.
- Wish.
- Urgency.
- Time.
- Availability of authority.
If at least one item from this list is missing, there is no point in trying to complete the deal.
It is very important to choose the right moment to apply closure techniques. The buyer must be ready to make a purchase decision. To find out the degree of willingness to purchase, ask explanatory questions: “Is this ratio of quality and price optimal?”, “Do you like the product/etc.
Do you think the buyer is ready? This means that you have every reason to push him into a deal without feeling any remorse. You can proceed to the completion stage.
Procedure for closing a deal
Do you want to be a successful seller? Put into practice a simple three-step algorithm that is suitable for all types of deal closure.
Stage 1. Formula 100% sales
This method has been used in trading for a long time. He has proven himself well and has proven his effectiveness. The essence of this approach lies in the presence of five main conditions on which the buyer’s consent to purchase a product or service depends.
- Monetary resources
The deal will only close if the buyer can afford your product or service.
The client does not have the financial capacity? This means that you will have to forget about the deal with him, no matter how wonderful your offer may be. Let's say your product is luxury solid wood furniture. Of course, the client understands how stylish this set looks. But if she doesn't have the financial ability to buy it, you as the seller have wasted your time. Of course, you can offer the potential buyer a loan, installment plan or other instruments to finance the acquisition. However, it is likely that you will simply have to accept the failed deal.
- Understanding the need for a product/service
The client must realize that he really needs what you offer to solve his problems. And this is the next component of the formula, which has a direct impact on the desire to make a purchase from you. A special system has been developed for sellers, with the help of which you can create a potential buyer’s need for your product or service.
- Trust
As a retailer, you need to build trust with the customer, as well as your store and brand. Of course, selling things from well-known brands is easier. However, the success of the transaction depends to a much greater extent on establishing a trusting relationship with the buyer than on brand recognition. The client usually buys from someone he trusts.
- Communicate with someone in authority
Your task is to find the decision maker, that is, the decision maker. If you make a mistake and try to sell a product/service to a technician or office manager, you are unlikely to be successful. In some cases, it may be useful to communicate with someone who the decision maker listens to. However, without direct contact with the person making the purchasing decision, it will be almost impossible to conclude an agreement.
- Right here and only now
You must prove to the client that he needs to make a purchase at this moment. Explain why he should make a decision today, and not the day after tomorrow or in a year. And this is the final part of the formula.
Remember, the sale will only be successful if all conditions are met. One factor will be missing, and closing the deal will be in doubt. For example, a client wants to purchase a membership to a fitness club. She understands that playing sports is necessary to maintain good physical shape. The woman has read good reviews about your club, so she trusts you. The client is a decision maker and has financial capacity. However, you could not prove to her the need to purchase a subscription today. She postponed the purchase for two weeks, and the contract hung in the air.
The task of the first stage is to close all areas indicated in the 100% sales formula. Once you complete this, take the next step.
Stage 2. Recognizing signs of readiness to make a purchase
Have you carefully worked out all the components of the formula? This means that the moment will soon come when a potential buyer will be ready to purchase what you offer. Now you should try to catch the signals indicating the desired state of the client. You can determine readiness to buy by a person’s gestures, eye expressions, and actions.
Various sales publications recommend recognizing the client’s state by his postures, facial expressions, and non-verbal means of communication. However, not all sellers have psychic gifts. Therefore, we suggest using easy ways to read the level of interest in order to accurately select the time to move to the stage of closing the deal.
The client’s doubts about purchasing a product/service show the following signs:
- scratching your face, fiddling with things in your hands, looking into space, sweating, taking long pauses in conversation;
- re-examination of product properties;
- requests to show any documents again for review.
These signals are evidence that the client has not yet matured. Perhaps he is not yet convinced of the correctness of his choice, or he lacks information. Ask your potential buyer open-ended questions. This will help to identify what additional information he wants to receive to make a final decision, what he lacks. Then you will need to help the client make the right choice to close the sale.
The buyer's readiness to close the transaction is expressed by the following behavior:
- You have already discussed everything, but he remains in place for a long time.
- He left, but returned again.
- Searches for goods/services similar to what you offer on the Internet.
- Sums up everything you said earlier.
- Shows an active interest in the nuances of delivery or payment for products.
- Requests a contract or other documents to be read.
- Thinks out loud what the purchase will lead to.
- Provides his own evidence of the need for acquisition (“closes” himself).
- He asks me to lower the price.
Having noticed such signs in a timely manner, the seller should move up to the third stage, which is methods of closing the transaction. Experienced salespeople can do this instinctively. Based on the appearance of the buyer, they determine that the client is almost ready to buy, and the sale needs to be completed.
However, both beginners and people with experience tend to make mistakes. They may attempt to close the deal if the client is not ready or, on the contrary, continue to tell the already “ripe” buyer about the qualities of the product. The cost of an error at the second stage is extremely high. A mistake can undo all the work done previously. If you do not recognize the sign in time, the sale will most likely not take place. That's why it's so important to learn how to track and correctly interpret nonverbal signals.
Step 3: Using Different Types of Closing
At this stage, you must apply various methods to close the sale. The easiest types of closing a deal include a call to action, for example:
- "Let's do…"
- "Let's arrange..."
- "Let's make a preliminary application"
So there is some kind of motivation here. Often managers stop at this method, ignoring the others. Of course, a large number of sellers do not rise to this level at all. However, at this stage, a variety of techniques plays a fairly important role. In addition to the classic incentive to action, try asking the buyer's point of view, tell him a selling story that has similarities to his own circumstances. If the buyer is the type who thinks for a long time, warn him that he is wasting his time.
The third factor necessary for successful sales is a strong grasp of closing tools. In this case, it is not theoretical knowledge that is important, but practical skills. If you apply various techniques without much thought, taking into account specific circumstances, your percentage of successful sales will increase.
Basic ways to close a deal in sales
Each seller should be focused on ensuring that his interaction with the client always ends with the purchase of the product or service offered. To make this task easier, we recommend using a variety of closing methods that encourage the buyer to purchase the product. Here are ten techniques for effectively closing sales.
Dead Line (DDL) method
Consists of inducing purchases through time restrictions or availability of products/services. To influence a potential buyer, give him a time and space frame. To do this, use the following closing phrases:
- Total sale until...
- The number of places is limited. Left for today...
- The promotion is valid until…
- Sale of remaining balances after closing...
- Limited edition...
- There are only quantities of goods left in the warehouse...
2. “Next Step” Technique
Involves planning future joint actions with the buyer. The deal closing script should begin with sentences such as
- Let's do the following now...
- What will be our next step?
- If we reach a general agreement, what do we do next?
These phrases smoothly lead the client to discussing the process of completing negotiations, the first stage of which is the signing of the contract, followed by payment of the invoice. You might tell the buyer something like this:
“Great, now we are concluding an agreement. After that everything will be delivered to you. Then our workers will carry out installation work. This way everything will be done by Friday evening. You will be able to use what you purchased starting Monday.”
The human brain is characterized by a certain conservatism. Additionally, if you provide a clear action plan, the client will likely agree with it, so as not to stress himself. And the closing of positions on the transaction will take place.
Demo method
This technology is not suitable for closing quick deals. Its use is justified either for introducing a new product to the market with short sales, or in the case of long-term interaction with customers. This technique involves the use of the following types of promotion of goods or services:
- Food tasting.
- First free lesson/attendance.
- Installing the application.
- Providing the opportunity to try on clothes.
- Demo version of the software.
- Test drive a vehicle.
Technology "Choice without choice"
This method refers to manipulative methods of completing sales. Its essence is that you provide the potential buyer with a pseudo-choice without mentioning payment. This way you force the client to focus on additional conditions. Moreover, the implementation of one of them requires payment on the invoice.
Ask the following questions:
- Delivery location - office or apartment?
- Should I provide service for a year or two?
- Buying a gray or olive chair?
Methodology "Positive way"
This technique is effective if the communication between the sales specialist and the client is characterized by a positive emotional background. It involves summing up a positive outcome of contact with a potential buyer.
"Three yes" technology
This method of closing a deal can only be implemented by an experienced sales specialist. This method is complex and requires intellectual effort. It was developed back in Ancient Greece by the famous philosopher Socrates. The technology is based on the peculiarities of our psychology. If the client gives a positive answer several times, it will be difficult for him to refuse later.
Colombo technique
The above methods refer to the classic methods of closing a deal. But the following technology is not traditional, but can serve well under some circumstances. It is suitable if the client is hiding behind false objections and cannot be reached.
Pretend that you have given up and let the potential buyer breathe freely. Your task is to find out what the client is really not happy with. Say goodbye, and as you leave, ask a specific question. He must be direct and honest. Do not use manipulative subtext!
Selling story method
Tell the buyer a story that will connect him with his own situation. This will help to unobtrusively demonstrate the advantages of the product, and will also gently push you to purchase. Along with direct questions, this method can be effectively used not only at the stage of closing a transaction, but also at any stage of the sale.
Finally, we will give a few more recommendations. Above all, strive to close the sale at all costs, even if you have a very difficult client. A successful salesman can be compared to a professional boxer who is able to take a punch in any situation. Next, always exude confidence. And this is actually the most important condition for victory. You must be 100% confident in yourself, otherwise you will not be able to sell anything. And finally, never give up. If you can't close the sale in one way, try another. Try all the remedies until you find the right one. Closing a deal is a difficult task, but you have every chance of doing it if you communicate clearly and clearly with the client, avoid mistakes, feel confident and stay on target.
Pivot indicator Ku Klux
The Ku Klux indicator is recommended for use on currency pairs EURUSD, AUDUSD, GBPUSD, EURJPY, USDCHF, on time intervals from M5 to H4. Trading can be carried out in all trading sessions except the Pacific one, since during this period too low volatility makes it difficult to analyze the market. Recommended brokers for work - and.
It's better not to touch the input parameters if you don't know what you're doing. You can change the Text_Font_Size parameter to a larger or smaller one if you need to increase or decrease the font in the indicator indicators.
To work with this indicator, you need to use only pending orders. Use them to buy from buy levels and sell from sell levels. Stop loss for purchases should be set at the BSL level, for sales - SSL. Placing stop orders is mandatory; this will reduce the likelihood of large losses and even reduce these risks to zero.
As soon as the profit begins to grow, the transaction must be transferred to breakeven, after the transaction reaches the nearest price level, then move it to another level, etc. The deal is closed only at stop loss or breakeven, and also when approaching the next level that is important for the trader.
This indicator is similar to the Murray indicator, but it is not a trading strategy. Like any indicator, it needs additions and filters, in the form of moving averages, MACD, RSI oscillators, etc. Active trading with Ku Klux, together with filters, can bring good income with proper money management. You should not exceed risks of 2-5% per transaction and open several transactions on different currency pairs. If you want to trade on several pairs, it is better to break the total risk of 2-5% into several parts.
Best regards, Alexander Ivanov
Beginners and professionals speculating in the financial markets often use technical indicators for trading, created by Bill Williams, one of the most successful traders and financial analysts of the 20th century. Over the course of his speculative and research activities, B. Williams has developed several indicators that help simplify the search for entry points and reduce the likelihood of losses. “Alligator” is especially popular. This analytical tool is easy to understand and has fairly high signal accuracy. Before moving on to its consideration, we recommend opening an account with CME
.
#5 – Chandelier Stop
Chandelier Stop is essentially a trailing stop that uses ATR instead of using arbitrary percentage or pip values.
In other words, instead of placing a stop loss at 20% or 20 pips below the market, you place a stop based on the ATR. Typically traders use ATR(14) and a multiplier, so if ATR(14) is 30 and the multiplier is 4, the trailing stop will be placed at 30 * 4 pips.
The Chandelier Stop was developed by Charles Le Beau and versions of it were presented in Trading with Dr. Elder by Alexander Elder and Andreas Klenow's Trend Following.
The main advantage of a Chandelier stop is that it adjusts to volatility, giving volatile stocks more room for price action than less volatile stocks. This is another good outlet for trend followers.
Below is the code in Amibroker for the Chandelier stop:
ApplyStop(stoptypeTrailing,StopModePoint,4*ATR(14),True,True);
How does the indicator work?
This indicator has this name for a reason. It consists of three lines, each of which has its own name - “jaw”, “teeth” and “lips”. When the market is in a calm state, quotes are traded in a small range, and a balance is maintained between buyers and sellers; the “alligator” is in a state of hibernation, its “mouth” is closed.
As soon as strong movement, excitement and increased volatility begin in the market, the beast wakes up. At this moment, the “alligator’s mouth” opens - all three lines intersect each other, and they begin to move away from each other. The “alligator,” figuratively speaking, is trying to catch the price chart with its teeth, swallowing buyers or sellers (depending on where the impulse is directed).
For successful trading, a trader must follow the “alligator” and repeat his actions. If the “beast” awakens and opens its “mouth”, trying to catch the price going up, you need to buy. If its open mouth follows the declining price, you need to sell.
#8 - Time Based Exit
Using a time-based stop can be useful for traders because depending on the time (day, week, month, year) the markets form different patterns.
For example, stock market volume rises during the American session, and subsides after the close. Therefore, some day trading strategies are designed to capture movements after the market closes, followed by a close at the market open.
Likewise, since some companies release earnings reports once every three months, some strategies seem to do well in three-month release periods.
Quantpedia has a good selection of such strategies that have been used successfully at exit time.
How to identify market entry signals?
Calculating the optimal moment to open a new order is not difficult. Analyze the situation for different currency pairs. Find those that are showing a strong trend (either up or down) on the 4-hour, daily, and weekly charts. If there is none, and the market is in a flat, it is better to choose another financial asset.
If you manage to find such a trading instrument, place the “Alligator” indicator on the quote chart. The BUY trade should be opened immediately after the “Alligator” has opened its “mouth” - that is, all three lines have crossed, rushed up and are moving away from each other. SELL transactions are created in the same way - but in this case, the lines after mutual intersection are directed downward, and the “alligator’s jaws” increase.
#4 – Trailing stop
Trailing stops track a stock's price as it moves higher or lower, thereby locking in profits and reducing risk. In the case of a long trade, a trailing stop can be attached to each new high, and it will move up as stock prices rise. It can be specified as a percentage or in points.
For example, a 35% trailing stop allows the stock to continue moving higher and higher, but the moment it drops 35% from its highest level, the stop will be triggered and the position will be closed. Trailing stops are useful for trend followers because they adhere to the "golden rule" of allowing profits to run higher and cutting off bad trades.
Closing trade transactions based on the Alligator indicator signal
If you have already opened an account on CME
, have started trading using the Alligator indicator and have already opened the first transactions, you need to find out in advance at what moments it is better to take profits.
Let’s note right away: take profits should not be used. If you really want to use any restrictive order, then it is better to use either a stop loss (move it after the price, placing it under the nearest critical levels) or a trailing stop. But it is better to take profit using the classic Alligator signal - when its “jaws” begin to close, all three lines intersect and they turn in the opposite direction.
#3 – Stop price action
Stops on trendlines are good for traders who look at naked price action. Since price action patterns are highly discretionary (controllable), it makes sense to also have a relatively discretionary stop loss level.
Strong uptrends show successive higher highs and higher lows, and this provides an excellent opportunity to draw an uptrend line connecting the lows. A stop loss slightly below this line can be a good way to manually lock out profits and keep risk to a minimum.
Support levels and resistance levels drawn on a chart work in a similar way and can be used to place stops in areas that offer the best risk/reward ratio.
Filtering Alligator signals using the MACD indicator
The Alligator indicator has one significant drawback - it produces trading signals with some delay. When opening transactions, this is not very critical, because... even if the signal is somewhat delayed, the trader has the opportunity to open a deal on a “rollback” (correction), thereby reducing his risks. But when closing trading positions, this causes serious problems. When the alligator's mouth closes, this indicates the end of the driving impulse, and at such moments traders should close previously created trades. But the closing of the “mouth” occurs with some delay, when a correction is already forming, and the trader cannot say in advance: how deep the pullback will be, whether the trend movement will continue after it, or whether the pullback will develop into an opposite trend.
This problem is solved using the MACD indicator, which, although it also works with some delay, allows you to determine exit points from trading positions earlier. This tool is used as follows: you place the MACD indicator on the working field of the quote chart, and after opening a trade using the Alligator signal, monitor the histogram and control line. As long as the control line is within the histogram of the MACD indicator, we hold the deal. As soon as it goes beyond the histogram, this is a signal to close the order.
This signal appears before the “alligator’s jaws” close. Consequently, the trader will lose fewer profit points on a pullback movement. For comparison, take a look at the picture above. It shows the profit taking point based on the signals of the Alligator itself, without auxiliary indicators. The screenshot below shows the trade exit point based on MACD signals plotted on the same chart. As you can see, when using MACD, the BUY trade is closed higher (that is, the profit is greater).
#2 - Reverse Entry Rule
One way to exit a trade, and one that makes a lot of sense, is to simply exit when your entry rules have completely changed.
For example, if you bought a stock because it just hit a new 50-day high, you should probably sell it when it hits a new 50-day low, if not sooner.
Likewise, if you bought a stock because you figured it was cheap, you should sell it as soon as you figured it was already expensive.
How to fix maximum profit on transactions?
The RSI oscillator indicator provides even more accurate signals to exit trades created when the “alligator’s jaws” open. Set it up in advance. Set the period to 14, place the upper limit (overbought zone) at 80, and the lower limit (oversold zone) at 20. Initially, these values are 70 and 30, but with such settings the RSI indicator works worse in the Alligator B trading strategy Williams.
When you have already opened a trade, keep an eye on the RSI line. If you entered a short position (SELL), you should close the order immediately when the indicator line touches the lower zone (level 20). Profit on long positions (BUY) must be taken when the RSI line touches the border of the overbought zone, located at around 80. An example is shown in the screenshot below.
Before you start testing this strategy, we recommend
Trading on the Forex market is earning money from the difference in rates from buying/selling currencies.
When trading on the Forex market, each trader faces a relevant decision about entering and exiting a transaction. On the currency exchange between traders, all disputes and disagreements occur on only one topic: “So what is more important: entering or exiting a transaction?”
Undoubtedly, both of these factors are very important, if from their activities in the market. However, it is also worth considering that traders usually put more effort into entering Forex trades than exiting them.
#1 – Stop loss with fixed risk
A fixed risk stop loss is an order where you decide in advance how much you can afford to lose and place a stop loss on the market that matches that amount.
This is one of the worst ways to exit a trade. Too often traders neglect to check the effectiveness of stop loss levels and end up using any arbitrary number. Traders can place a stop at 10% of the market, but why 10%? Why not 9.8% or 10.1%?
The main problem with a fixed risk stop loss is that it does not reflect market dynamics and is not related to the reason for placing the trade in the first place. The difficulty is that stocks fluctuate wildly. They often touch their feet and then turn back, ending up more or less where they were before. This type of stop is probably best suited for worst-case scenarios, which are truly rare events.
Features of the market entry indicator
As an example, we chose Stochastic for a reason. It is quite common and simple. After installing the indicator, you should mount this instrument on the chart. This indicator is universal, so the choice of pair depends only on you.
In order to install it on the chart, you just need to drag it from the navigator window with the mouse. You can simply double-click the mouse.
Above on the chart, we will analyze the main parameters and functions of the indicator:
Green arrows are a signal to buy a currency. Red ones, accordingly, indicate that it is time to sell the currency.
When the sound signals are turned on, a new arrow appears. In this case, you can hear a sound that the work is becoming easier.
In addition, there is an option to send notifications, which indicates the emergence of a new entry point. This is quite convenient, since the notification comes by email. But not all market entry indicators are equipped with this function. Therefore, be careful when choosing the appropriate tool.
I wonder how it is customary to determine the exact signals to enter the Forex market?
In fact, everything here is somewhat simpler than it might seem to a beginner. In general, two signals are used. Or rather, signals from two indicators. This is our Stochastic and traditional moving average.
In this case, buy signals and sell signals arise only when certain stochastic and moving signals coincide. As for the description of additional settings, they are located in the text file of the archive of a particular indicator.
How do trend and flat affect the accuracy of signals for entering a position (trade) on the market?
It should be understood that the accuracy of entering the market always depends on which tools to use. For example, if the indicators you have chosen are trend-based, then it is better for the advisor to work directly in the trend. If, on the contrary, the market is flat, then you risk receiving a lot of incorrect signals that will not bring profit, but only losses.
The indicator described in our article combines the capabilities of both flat and . This is due to the fact that the signals it uses for its work are from the Stochastic indicator, which perfectly demonstrates the levels of purchase and sale, and the moving average, which is a trend indicator. In Stochastic there are several moving averages that have different settings. This allows you to enter Forex more correctly, especially after registering the intersection of moving averages.
If you look closely, you will see that many signals in history, well, for about a couple of hours, were not the same as they turned out to be in the end
. That is, not all of them were profitable. But this significant drawback is compensated for. After all, as we have already stated, with its help you can trade at any quotes.
For additional filtering, which increases the chances of successful trading, you can use an alternative tool. For example, this applies to or.
Yes, even banal trading on long-term trends can become such an alternative. Due to this, the number of market entries is reduced. Moreover, the trader’s chances of making a profit increase significantly.
#6 - target profit
Profit targets are best used for mean reversion trading systems and short-term strategies. The problem with using target profits is that it is too easy to limit your profit potential. Target profit doesn't work when it comes to trend following because the whole point of trend following is to let the wins roll along and you can never know how long the trend will continue.
Target profit also does not do well in repeated testing. But it can be useful for day traders who are closely tied to the market they are trading.
#9 – Cutting off the tops or “skimming”
British small-cap expert Simon Thompson is known for being a major player and often advocates a technique known as top cutting. A top cut is where you have a good winning position in a stock, but you notice a new opportunity elsewhere.
This technique involves closing two-thirds of the trade and adding a 10% trailing stop for the rest. This ensures you have money left in the game if the stock continues to rise, but also provides some capital you can put into new investments.
