Envelopes Strategy

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The Envelopes Strategy is undoubtedly one of the most efficient when it comes to helping traders realize significant profits as well as limiting their losses.

In essence it is made of two moving averages that are meant to make up two bands; the upper blue and the lower red.

The deviations for this kind of Forex trading are 0.2% for the four hour chart, 0.5% for the single day chat and lastly 1% for the weekly chart.

Traders who opt for the envelopes strategy need to ensure that the ADX line is well above the 20 point mark before they start making their transactions.

When it comes to buying , you should be on the lookout for a candle closer to the top of the upper band (blue) of the envelope and also ensure that the +DI line is on top of the 20 point mark.

Which should then guide you to open a buy order at the next opening of the next candle.

For selling you should anticipate that is closer to the lower band (red) and the –DI line is well on top of the 20 point mark which should prompt you to place a selling order at the next opening of the next candle.

You should also utilize a trailing stop order in the envelope strategy to effectually protect your profits.

In this tactic the line of the envelope much more nearer to the price can work as an ideal order of protection.

When buying always place the trailing stop order on values that indicate the top band of the envelope (blue).

When selling place the trailing stop order on the values that mark the lower band of the envelope (red).

You can also put a stop loss order on your transactions.

It is highly recommended that it shouldn’t exceed 2% to 3% of the sum total of your trading account in any single transaction.

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