3 Unorthodox Trading Techniques

Today I would like to present you 3 unorthodox trading techniques. What do I mean by unorthodox? Well mainly that the trading techniques represented in this article are not widely used especially by beginner traders, but can add up to your arsenal of trading tools and can yield you some additional profits.

First of all, I would like to remind you that this is just an educational article and we will cover some basic things about those techniques. If you want to take full advantage and include them in your trading arsenal, I advise you to do in-depth research so you can fully understand how those techniques work. Also, keep in mind that they are a little bit riskier than the usual trading techniques, so again I advise you to be cautious and to test everything on a demo account, before implementing the methods on your real trading account.

As I trader I always thrive for more profits, but also for better results, meaning that I try to implement different trading techniques, but at the same time keeping it reasonable and safe, without jumping in on very high-risk trades, thus achieving a higher percentage of winning trades. I would recommend you to do the same, but everyone has its’ own trading style, so whatever you feel comfortable with is okay.

Enough with the chit-chat, lets’ start with the trading techniques and their implementation:

1. GAP Trading:

Starting off with a trading technique that we have mentioned before, but in my opinion, has to be discussed once again. It is a technique that most of the beginner traders are not familiar with, but can be used to add up to that bankroll every once in a while.

Lets’ start with a few words regarding what is a GAP. In the most straightforward way put as a GAP is a difference between the closing price on a currency pair or other asset on the market and the opening price of the same asset. Usually, this phenomenon occurs (especially for Forex markets) on Monday. As you know, the markets close on Friday and re-open on Monday, and every once in a while a difference between the closing and opening price appears. This is what a GAP is. On other markets that do not operate 24/5 GAPs occur more often and this technique can be implemented there as well — just make sure you do your research on the asset you are going to trade.

The idea of the whole technique lies in the probability of that GAP being filled. What I mean is that most often than not after the markets open on a different price from the closing price the market tends to catch up on that GAP, and the price makes an opposite move thus filling the difference between the opening price and closing price. This gives you the opportunity once the market opens to take a position against the opening price, meaning that if a drop-down occurs and the market opens on a lower price than it closed you can Buy the asset (and vice versa for the higher opening price than closing price).

Let me show you an example, so you can better understand what I am talking about:

This is the EUR/JPY currency pair on a H1 time frame. As you can see after this weekend, we had a pretty nice GAP of around 87 pips, which was filled. You could have taken advantage of that GAP and add some of those pips as profit. You can’t always find GAPs like that and every now and then the GAP won’t work out as expected, but it is good to have this technique in your trading arsenal for the occasional profit-taking.

2. FORK Trading:

Typically used to trade news events, this technique, in my opinion, can also be used in everyday trading. Keep in mind that this approach has some risk involved in it, and it should not be used lightly and very often, but can be added to your trading arsenal. So lets’ move on with the technique itself.

What is a FORK? Well, basically a FORK represents two pending orders placed by you around the price, meaning above and below the current price. Picture in your mind a real fork you use at your dinner table. The middle part of the three parts of a fork represents the current price movement. The other 2 parts which surround the middle part are your pending orders — one for Buy and one for Sell.

When can this technique be used? The FORK trading technique can be used only when the price movement is flat, meaning that there is no particular direction in which the price is moving, but it is more likely in a range/square formation/. Another thing you should add to use the FORK is your assessment of the current situation. If you are not confident of the price direction after this consolidation period or flat movement is over you can safely use the FORK to cover both possible scenarios — either an upswing or a downswing. Let’s see it on the chart, so you can better understand what I am talking about.

On the chart below we are looking at the GBP/USD currency pair on the H4 time frame. The first condition (to have flat movement of the price) is fulfilled. Here I want to add to always take in to account the whips/tails of the candles. That way you will avoid unnecessary and wrong entries. Second thing is to place your pending orders at some safe distance from the square formation. Of course not too far away as you do not want to miss on half of the move. As you can see here our Sell pending order is triggered by a huge bearish candle which is a confirmation that the price has finally decided where it will go. You can see for yourself what follows after that — huge bearish trend and huge profits for you.

One more thing:

Do not forget to place Stop Losses on your pending orders. For the Sell Pending Order, I would recommend setting the SL where the Buy Pending Order is and vice versa. Once a pending order is triggered I would advise you to cancel the other pending order.

That would be enough for you to start off your journey with the FORK trading. Again test it a few times, before implementing it on a real trading account.

3. MULTIPLE POSITION Trading:

I want to start off with a notice here. This trading technique is highly risky, and I do not recommend it to be used very often or by beginner traders. Another thing to take notice about here is that you will need to have a decent bankroll to implement this technique as it can be pretty costly if you have it wrong. The idea behind this technique is to rely mainly on your technical analysis skills, and they have to be pretty good to implement it correctly.

What is the whole point of this technique? Well, the main point is to catch a possible move up or down, before it has even started. You will be doing that by opening multiple positions on one and the same market. Most of you will probably say that this technique can be described as gambling. In many ways, you will be correct, but with the proper technical analysis and of course position and money management you can start accumulating profits way before the masses hit that market.

This way of trading is used by the sharks and whales out there. Basically what they do is they find a trend which of course should satisfy a few conditions:

• First of all the trend you will be going against should be pretty old. That way the Buyers/Sellers are already exhausted by pushing the price and the time for picking up their profits is coming.
• The price should be at or near a strong Support/Resistance level. Your technical analysis should be excellent and based on it you should predict where a reversal might occur and how to place your Stop Losses.
• The third condition is connected with Money Management. As you are opening positions against the trend you should do it gradually. What I mean by that is if you start Selling an uptrend earlier, before the price has reached your potential Resistance Level, you should Sell with lower investment and gradually increase the investments on your position as the price gets closer to that Resistance Level.
• Your Stop Losses should always be placed above/below the levels you believe will affect and reverse the price movements.
• It is best to try and implement this technique on the higher time frames — H4 and above.
• Always take a position when you have a signal of a possible reversal! Do not pull the trigger if you are not certain!

Lets’ see an example of this:

We are going to look at the EUR/USD currency pair. Starting off with the Weekly Timeframe:

We can see here that the pair has been on an extensive uptrend for a while now and probably buyers are already getting exhausted. At the same time the price is getting near a previous weekly top from where we saw a drop down and this area will act as a Resistance Area.

Next step for us is to go to a lower time frame and look for possible entry points.

Below is the Daily chart with possible entries based on the plan we made on the Weekly time frame. The SL is put above Resistance Aria fulfilling one of the conditions mentioned above. Finding entries depends on you. And finally lets’ see what happened after those 3 entries we took.

We can see that the drop was strong and over time price almost reached the previous bottom from where the uptrend started. This was a huge profit run.

You can try to implement this trading technique on lower time frames, but I suggest to you if you have the capital needed to focus on higher time frames and move on an investment approach.

This would be all for today. I remind you that all 3 of those trading techniques are risky and you should implement them only as a second way for income and not as a primary trading strategy. Also, I advise you to get more in-depth knowledge regarding them and to test them on a demo account, before trying to implement them in your real trading account.

I wish everyone best of luck and most importantly — profitable trading!

Written by Iliyan Iliev

31.05.2018