If you are new to the Forex market and are looking for a trading strategy to make a profit, then Barcode will be the best choice. It is not as complicated as the other trading strategies. On the contrary, it is very easy to use.
Just by focusing on observing, you will find good entry points that help your account grow steadily. Here, I will guide you on how to trade with the Barcode trading strategy. It encapsulates only 2 words: simple and effective.
Since this is a trading strategy around the DeMarker indicator, let’s learn about it.
What is the DeMaker indicator?
DeMarker (also known as DeM) is an oscillator based on the principles of technical analyst Thomas DeMark. It is calculated by comparing the maximum and minimum prices in the current cycle with the equivalent prices of the previous cycle.
Thus, this indicator can be used to evaluate the direction of the market. In addition, it can also identify overbought and oversold conditions.
Important levels when using the DeMarker indicator
As mentioned above, 0.7 and 0.3 of the DeMarker indicator are the two levels of overbought/oversold. If the price crosses these two levels, it signals a potential reversal.
Innovative Barcode trading strategy from the DeMarker indicator
To use the Barcode trading strategy, you need to reset the DeMarker indicator according to the histogram and reset the parameter to 1 as its default is 14.
It will look like the barcode of a certain product. The green bars that show an overbought signal appear when DeMarker rises beyond 0.7. On the contrary, the red bars marking oversold signals form when DeMarker falls below 0.3. Those are some signals that signal an imminent reversal.
With a 1-minute candlestick chart, you will find the following ways to enter an order with the Barcode trading strategy.
Open an UP order when there are 3 consecutive red bars below the oversold zone 0.3 and the 4th bar which is green and stays above the overbought zone 0.7. For the best results, the 4th bar will correspond to a green candlestick.
Open a DOWN order when there are 3 consecutive green bars above the overbought zone 0.7 and the 4th bar which is red and stays below the oversold zone 0.3. In particular, the 4th bar must correspond to a red candle.
How to safely manage capital when trading with the Barcode trading strategy
This is a trading strategy with lots of entry points during the day. Therefore, it is necessary to set specific profit targets so that when you reach them you need to exit the market. This is to avoid falling into consecutive orders with no stops.
When your judgment has been inaccurate in a long time of trading, it is easy to make mistakes when placing orders and lead to losses. So, you need to manage your capital as a percentage of the total capital.
For me, each investment should be 5% of the total capital. The best daily target is at 10% – 15%. Stop trading when you have lost 30% of the capital.
With the above capital management method, you can earn 10% of profit in 2 consecutive winning orders. It is not too difficult when using the Barcode trading strategy. Just wait patiently for signals to appear clearly to place an order and you have a win rate of 80%.
The Barcode trading strategy is very simple yet effective. It will not be difficult to use even if you are a beginner with little knowledge. Just pay attention to the signals from the DeMarker indicator and you can make a profit from Olymp Trade.
Remember the first thing to do with any strategy is to test it on a Demo account. When the result is a steady stream of profit, it is time to recharge your investment.