Three Black & White Forex Trading Strategy

The Three Black & White forex trading strategy is essentially a reversal pattern that can be effectively used to track a bullish/bearish trend at the bottom/peak of an existing trend.

There’s nothing as sweet as catching a trend when it starts. The strategy attempts to locate the three black crows (bearish) and three white soldiers (bullish) on the activity chart.

Chart Setup

MetaTrader4 Indicators: Elder_Impulse_System.ex4 (default setting), Doda-Donchian.ex4 (default setting)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, Day

Recommended Trading Sessions: Any

Currency Pairs: Any pair

Download

Download the Three Black & White Forex Trading Strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a buy trade if the following indicator or chart pattern gets displayed:

  1. If the three white soldiers candlestick pattern is seen on the activity chart as depicted with the formation of candles labelled 1, 2, & 3 on Fig. 1.0, price is said to be bullish i.e. a trigger to go long.
  2. If price trades above the red dotted line of the Doda-Donchian.ex4 custom indicator, price is said to be bullish, hence a buy signal.
  3. If the lime vertical bars of the Elder_Impulse_System.ex4 pops up within its indicator window, price is said to be bullish, thus supporting the buy signal.

Stop Loss for Buy Entry: Place stop loss 5 pips below red dotted line of the Doda-Donchian.ex4.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules of conditions hold sway:

  1. If the three black crows forms (refer to Sell Entry Rules below) at the peak of an uptrend, it is a reversal signal i.e. an exit or take profit trigger.
  2. If price closes below the red dotted line of the Doda-Donchian.ex4 custom indicator, it is a signal to exit or take profit without delay.
  3. If the blue bars of the Elder_Impulse_System.ex4 custom indicator forms within its indicator window as shown on Fig. 1.0, it is an indication that buyers are exiting the market, thereby signaling an end to the buy signal. An exit or take profit is advised.

Sell Entry Rules

Enter a sell order if the following chart or indicator pattern gets displayed:

  1. If the three black crows candlestick pattern is seen on the activity chart as depicted with the formation of candles labelled 1, 2, & 3 on Fig. 1.1, price is said to be bearish i.e. a trigger to go short.
  2. If price trades below the red dotted line of the Doda-Donchian.ex4 custom indicator, price is said to be bearish, hence a sell signal.
  3. If the red vertical bars of the Elder_Impulse_System.ex4 shows up within its indicator window, price is said to be bearish, thus supporting our overall sell alert.

Stop Loss for Sell Entry: Place stop loss 5 pips above red dotted line of the Doda-Donchian.ex4.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the rules or conditions take precedence:

  1. If the three white soldiers candlestick pattern forms (refer to buy Entry Rules above) at the bottom of a downtrend, it is a reversal signal, hence a trigger to exit or take profit.
  2. If price closes above the red dotted line of the Doda-Donchian.ex4 custom indicator, it is a signal to exit or take profit straight away.
  3. If the blue bars of the Elder_Impulse_System.ex4 custom indicator forms during a downtrend following successive red bars, an exit or take profit is advised.

Sell Trade Example

Fig. 1.1

Free Download

Download the Three Black & White Forex Trading Strategy

About The Trading Indicators

The Doda-Donchian.ex4 is a custom indicator produced by Gopal Krishan Doda and popularly known as the turtle indicator.

It is a trend following indicator that deploys the EMA (120) coupled with other values to eliminate noise when scanning the market for trend changes

The Elder_Impulse_System.ex4 indicator combines trend following and momentum. The indicator is color coded into price bars for easy visualization.

The three black crows and three white soldiers price action pattern are both reversal patterns that form at the peak (sell signal) and bottom (buy signal) of a trend respectively.

Share Now!