Forex trading strategy ‘Two to one’.

‘Two to one’ forex trading strategy is based on Renko chart. This graphical way of showing the price action is not similar to traditional Japanese candles which reflect all of the movements in value. The name of this view comes from the Japanese word ‘renga’ which means ‘bricks’. The creation of those bricks reflect is determined by fluctuations in price.

This trading strategy is extremely simple and it does not use any technical indicators. That simplicity has a lot of advantages and the main of them is that it does not overestimate the price action. This trading technique is suitable for different market conditions but the main target is to find reversal points.

Those traders who use MT4 trading terminal can set the Renko chart with the help of a secondary tool, RenkoExpertAdvisor, which has to be downloaded as the default settings do not have such a chart view. Finmax Advanced Charts tool allows traders to simply switch the chart view from traditional candles to Renko bricks.

The key feature of ‘Two to one’ forex trading strategy is related to its name. The main idea is to keep the target profits two times more than the potential loss. This way of risk management allows traders to be profitable at the end of the day. Statistics tell that the overall profit is 560 pips (four-digit quotes) starting from May, even though the number of profitable deals is less than losing ones: 69 to 82. Despite a large number of wrong outcomes, the overall profit remains thanks to the profit/loss relation rule.

If you looked at the chart carefully, you would find that some of the ‘bricks’ have long shadows in the opposite direction. Those lines are called ‘wicks’. According to Renko chart rules, a distance of two bricks has to be gone by the price in order to change the main direction of the current trend. If that does not happen and the price keeps moving in the same direction, then a wick appears on the chart and its length is equal to the distance that price has gone in the opposite direction.

The size of the brick is 10 pips. The best currency pair to trade is EUR/USD. The size of the brick has to be chosen separately for other currency pairs.

Conditions for LONG positions according to ‘Two to one’ forex trading strategy are as follows:

The previous brick has to be green (bullish).

The price comes down for the size of the brick which is 10 pips in our case.

We open a LONG position exactly on this level. Buy-limit order can be also used.

The stop-loss order is equal to the size of the brick (10 pips).

The take-profit order has to be multiplied by two (20 pips).

Forex trading strategy ‘Two to one’.


Conditions for SHORT positions according to ‘Two to one’ forex trading strategy are as follows:

The previous brick has to be red (bearish).

The price comes up for the size of the brick which is 10 pips in our case.

We open a SHORT position exactly on this level. Sell-limit order can be also used.

The stop-loss order is equal to the size of the brick (10 pips).

The take-profit order has to be multiplied by two (20 pips).
See also:
‘Step’ Forex trading strategy.
‘Step’ Forex trading strategy.
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Investment strategies
“Two MA’s” Forex Trading Strategy.
“Two MA’s” Forex Trading Strategy.
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