TestedFX Sexy Pitchfork Intersection Strategy Trading Rules:
All trades are 4R !! If you don’t understand this, please DO NOT TRADE until you have researched Risk to Reward ratios. Basically 4R means you win 4x your risk. Ie. SL = 25 pips and TP is 100 pips so you win 4x your risk.
AUTHOR’S NOTE: Statistically Pitchforks reach the median line 80% of the time. Yet they are the most overlooked and underused tool used by traders. Of course you will NOT get an 80% win rate with this strategy because we can never know for sure if price will bounce on a line or bust through.
WARNING: TRADE ON 4 HOUR OR HIGHER TIMEFRAME. Less than expert level traders should trade on 4 hour or higher time frames. Getting in and out of a trade will likely cost you 2 to 3 pips with spread and commission. This strategy produces precision entries which sounds good BUT on smaller time frames this will affect your average R significantly and eat up much of your profits. For example on a 15 min timeframe this strategy will often give you 6 or 7 pip SL. When you add 2 or 3 pips your Risk to Reward ratio will often be 3R instead of 4R. Our long term backtests show an average win of 1.3R when losses are factored in. So on a 15 min time frame you would only be left with 0.3R average win which is ok but not optimal. Inexperienced traders to this strategy will likely make mistakes which will eat up the rest of the profits. So please all new traders keep to the 4H or higher time frames and backtest a lot before you start trading.
1) Trade with the Pitchfork ONLY.
At least one line must be pushing in the direction of the trade. Breakouts tend to occur when multiple lines are facing the same direction.
2) Sexy Line Touch: Enter the trade when the sexy line is touched just outside a fib zone. A sexy line is a line just outside the fib rejection zone or outer line of a pitchfork. Price loves to reach out and touch or almost touch it before reversing which is your key to precision entries.
a) 3+ LINES: Only trade with 3+ confirmation lines.
b) EMPTY SPACE: Trade the outermost line. There should be no more sexy lines to touch nearby.
3) NO MESS
Don't trade when there are so many lines you can't see what is going on. The cost to not trade is exactly $0. So skip areas where trend direction is not clear and pitchforks are going in too many conflicting directions.
4) Set TP just past the next level.
5) Set SL at 4R.
Recommendations:
1) Once you lose on a pitchfork move on to the next pitchfork. In choppy markets I also apply this rule to wins since a long term trend is unlikely.
2) Search for trades using Andrew's Pitchforks in a trend. In consolidation search for trades using Modified-Schiff Pitchforks. Confirm trades by turning on both pitchforks momentarily to find sexy line touches.
3) Backtest, Backtest, Backtest !! This strategy isn’t for traders who want clear easy entries. Often multiple pitchforks give conflicting or overlapping signals. Practice to know when the market is too complex and you need to “Skip the Mess” takes practice. Also knowing how much "Empty Space" is enough takes practice too.
All trades are 4R !! If you don’t understand this, please DO NOT TRADE until you have researched Risk to Reward ratios. Basically 4R means you win 4x your risk. Ie. SL = 25 pips and TP is 100 pips so you win 4x your risk.
AUTHOR’S NOTE: Statistically Pitchforks reach the median line 80% of the time. Yet they are the most overlooked and underused tool used by traders. Of course you will NOT get an 80% win rate with this strategy because we can never know for sure if price will bounce on a line or bust through.
WARNING: TRADE ON 4 HOUR OR HIGHER TIMEFRAME. Less than expert level traders should trade on 4 hour or higher time frames. Getting in and out of a trade will likely cost you 2 to 3 pips with spread and commission. This strategy produces precision entries which sounds good BUT on smaller time frames this will affect your average R significantly and eat up much of your profits. For example on a 15 min timeframe this strategy will often give you 6 or 7 pip SL. When you add 2 or 3 pips your Risk to Reward ratio will often be 3R instead of 4R. Our long term backtests show an average win of 1.3R when losses are factored in. So on a 15 min time frame you would only be left with 0.3R average win which is ok but not optimal. Inexperienced traders to this strategy will likely make mistakes which will eat up the rest of the profits. So please all new traders keep to the 4H or higher time frames and backtest a lot before you start trading.
1) Trade with the Pitchfork ONLY.
At least one line must be pushing in the direction of the trade. Breakouts tend to occur when multiple lines are facing the same direction.
2) Sexy Line Touch: Enter the trade when the sexy line is touched just outside a fib zone. A sexy line is a line just outside the fib rejection zone or outer line of a pitchfork. Price loves to reach out and touch or almost touch it before reversing which is your key to precision entries.
a) 3+ LINES: Only trade with 3+ confirmation lines.
b) EMPTY SPACE: Trade the outermost line. There should be no more sexy lines to touch nearby.
3) NO MESS
Don't trade when there are so many lines you can't see what is going on. The cost to not trade is exactly $0. So skip areas where trend direction is not clear and pitchforks are going in too many conflicting directions.
4) Set TP just past the next level.
5) Set SL at 4R.
Recommendations:
1) Once you lose on a pitchfork move on to the next pitchfork. In choppy markets I also apply this rule to wins since a long term trend is unlikely.
2) Search for trades using Andrew's Pitchforks in a trend. In consolidation search for trades using Modified-Schiff Pitchforks. Confirm trades by turning on both pitchforks momentarily to find sexy line touches.
3) Backtest, Backtest, Backtest !! This strategy isn’t for traders who want clear easy entries. Often multiple pitchforks give conflicting or overlapping signals. Practice to know when the market is too complex and you need to “Skip the Mess” takes practice. Also knowing how much "Empty Space" is enough takes practice too.
Release Notes:
Added Red and Green alert signals so it is easier to know when to start looking for confirmation lines.
Release Notes:
Added black dots to signify important lines where reversal is likely. Added ATR bands to further find places where reversals are likely.