Hello my dear traders! It is not secret that one of the most popular trading strategies among professional traders in the Forex market is Price Action.
However, Price Action strategy may seem too complicated for novice traders mainly because of the large number of conditions and rules.
Today we will look at a trading strategy called Jarroo which is based on a Price Action strategy. The Jarroo Forex strategy has some interesting features: a different way to identify key price levels, simplified definition of entrance and exit levels.
Even if you are trading profitably using the Price Action strategy, I still recommend you to pay attention to its simplified version called Jarroo.
Main characteristics of the trading strategy Jarroo:
Main terms of the Jarroo Forex strategy:
LCS = lowest close of support. The price level below which the price could not be closed.
HCR = highest close of resistance. The price level above which the price could not be closed.
PBT & CA = price breaks through & closes above – the price breaks through and closes above that level.
PBT & CB = price breaks through & closes below – price breaks through and closes below that level.
DCC = Daily Close Confirmation
Building the price levels.
According to the trading strategy Jarroo, the price levels are identified differently from what most of the traders are used to.
1) First, we are looking for swings – local minimums and maximums of the price movement. They are usually very noticeable and you can find them from the first glance. If you don’t find them easily, means there are no swings.
2) Next, we mark only those levels of highs / lows, which have at least two candles with the same closing / opening levels.
3) Note that the levels lines are drawn through the points of opening/closing.
Look at the example of the EUR/USD Day1 chart:
When to enter the market
Once a candle has broken your price level and closed above it (for buy) or below (for sell), you should place a pending order (buy or sell) next to this level.
Look at the image below:
Stop Loss and Your Profit Goals
A stop loss order is set up on the opposite point of Low/High candle that broke the price level. If your stop loss is too close to the level, set it for the High/Low of the previous candle. If the breakout candle is very long, put a stop loss order just behind the level line.
For the take-profit order use the next support or resistance levels. It should be equal to the distance of the stop-loss multiplied by 2 or 3, plus a shadow of the previous candle.
Jarroo Forex strategy rules:
1. The best money management for this Forex trading strategy would be 1-2% per trade.
2. After reaching the nearest target or a profit equal to 2 stop losses, you should move your stop loss to a positive area.
3. If a candle closes on the lower or higher level (against our position) from which you entered the market, close your position without waiting for the stop loss.
4. Rule DCC (Daily Close Confirmation):
For the more conservative traders, a following method of entrance can be used. Once there is a signal candle that broke through the level, you do not put a pending order but wait for another candle. And only if the following candle closes above or below the level without breaking it through in the opposite direction, you place a pending order.
The trading strategy Jarroo would be perfect for Forex traders who have found the Price Action strategy too complicated. However the unique approach to price level identification and finding the right moment to enter the market, may be attractive to other traders who are looking for a good trading strategy to trade Forex market successfully.
eToro is one of our recommended Forex brokers for trading using a trading strategy Jarroo. The company provides advanced professional charts that you can use to draw the lines and analyze the market for this strategy.