Take Kickbacks is a very creative trend-following strategy, which is highly suitable for swing traders. Today, we would like to show you how to apply this technical strategy to seek trading opportunities from the currency pairs in the foreign exchange market.
Unlike normal trending strategies that are usually simple, the Take Kickbacks is a selective trading system with relatively complex entering terms. However, it accordingly generates very reliable trading occasions. Based on the basics of the original trend-chasing theory, this system is composed of both leading and lagging indicators. There are two Simple Moving Averages used here with the responsibility to identify market trending conditions as well as possible entries. Meanwhile, Stochastic Oscillator – an invention of Dr. George Lane – is the oscillator whose main function is to confirm the probability of the spotted trading opportunities. The settings of those indicators are as follows:
• One of the SMAs is set of 72 days and the other - 144 days. • The Stochastic Oscillator is established with the 8-3-3 setting.
There is a slight note that the Take Kickbacks mostly seeks signals from prices’ retracements. Therefore, a Zigzag beacon is also added in order to highlight important support and resistance thesholds where prices are likely to bounce from. The indicator’s setting is 5-3-1. Being tested since June 2017, this technical system has delivered for us a quite impressive result: 1519 pips generated, with the win ratio affirmed at 84.24%. There are 5-10 trading occasions appearing every month.
How to use the Take Kickbacks in Forex trading
According to the testing result, this trading technique works best on the 4-hour chart, and is most effective when used on EUR/USD. All the necessary indicators are built-in in FinmaxFX’s MT4 platform, so establishment is not difficult. A bullish occasion is identified when the following requirements are satisfied:
• Prices remain above both the SMA 72 and SMA 144. • Prices retrace back to the nearest support level ascertained at the Zigzag’s last swing low. • The Stochastic Oscillator turns below 50.
Conversely, a bearish signal is determined when the following conditions are satisfied:
• Prices remain below both the SMA 72 and SMA 144. • Prices recover to the nearest resistance obstacle defined at the Zigzag’s last swing high. • The Stochastic Oscillator crosses above 50.
Below are some crucial rules when using this strategy:
• Only one position should be opened at a time. • No signals are confirmed valid until the candle of confirmation is closed. • The stop loss should be set of 50 pips, while the take profit could be left open. You can gradually move the stop loss towards the profitable zone given a correct trade.
Pros and cons of the strategy
• Highly effective and reliable. • Generates accurate signals by strict entering terms. • Enables traders to earn huge profits from major trends. • Doesn’t require to watch the trading platform; however, users still need to glance sometimes.
• Relatively hard-to-use. • Requires a high level of patience.
The Take Kickbacks is a quite complex trading system. Nevertheless, it is highly appreciated for its accuracy in engendering trading signals. With a meticulous filter, this strategy has shown itself to be a very effective tool for swing traders who love catching trending conditions by its remarkable testing result as well as dominance. Given using it, don’t forget to use money and psychology managing methods alongside to make the strategy more comprehensive.