How it works?
The Trading Market: Up and Down
This is the most common and repeatable pattern in the trading market. In the diagram price is trending upwards in one direction and then reversing to correct and stabilise the market.
Like the diagram, we can always expect a reversal between 25% and 75% from the peak (B).
The Strategy: Example Trade
Our algorithm doesn’t need to predict the direction of the price, it simply needs to react to reversals
The algorithm opens scaling positions in fixed intervals in one direction. This will repeat until the market reverses. The automated system will have calculated a target price to close all open positions, so that the higher profiting trades will compensate for the lower losing trades (Example below).
The numbers: Profit
The higher profiting trades made a total profit of +£7.96, whereas the lower losing trades made a total lost of -£4.57.
Overall, a net profit of £3.39 was added to the trading account.
This occurs several times every day, generating passive income.
Detailed Explanation
Still unsure? Have a look at our earlier articles and guides