The fakey forex trading strategy is a trading system that is based on a pattern called the fakey pattern.
It is a forex trading system that can be used to trade false breakouts especially in areas of support and resistance on the charts.
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What Is A Fakey Pattern In Forex?
A fakey pattern is a forex reversal candlestick pattern, which can be either bullish or bearish.
And the fakey pattern consists of two parts
- the first part of the pattern is an inside bar pattern
- the second part of the pattern is the false breakout candlestick pattern that makes a false breakout of the inside bar pattern. This is the fakey candlestick or fakey bar.
Here’s the importance of the fakey pattern:
There will be times when you will see that the price will appear to be going in one direction but then suddenly reverse, sucking in all the amateur traders in as the professional traders push price back in the opposite direction. This can set off some big trendy moves in the market.
There are two types of fakey patterns:
- bullish fakey
- bearish fakey
A bullish fakey pattern forms when a market is in a downtrend for a while and if it forms in levels of support, it should be considered a bullish reversal signal and you should be looking to buy.
Here’s an example of what a bullish fakey pattern looks like:
A bearish fakey pattern forms when a market has been in an uptrend for a while and if the bearish fakey forms in levels of resistance, it should be considered a bearish reversal signal and you should be looking to sell.
Here’s an example of what a bearish fakey pattern looks like:
The above fakey patterns shows are the main fakey patterns traders look for.
But there are few variations of the fakey pattern as well.
Fakey Pattern Variations
The fakey pattern variations come in a 4 candlestick pattern. The first two candlesticks form and inside bar pattern but the next two determine whether a pattern is bullish or bearish.
The examples below will make things clear on this subject.
Here’s an example of a bullish fakey pattern variation:
Here are example of a bearish fakey pattern variation:
- When you see a bullish fakey pattern form, then place a pending buy stop order at least 1-2 pips above the high of the third bar in the in a normal fakey pattern. If a variation of the fakey pattern then place a pending order 1-2 pips above the high of the 4th bar in the pattern.
- Place your stop loss at least between 2-5 pips below the lowest point of the entire fakey pattern setup.
- Take profit targets: you can aim for risk:reward of 1:3 or look for a previous swing high and if the risk:reward is 1:3 or greater, use that as your take profit target.
Here is an example of a bullish fakey pattern that happened on a trendline trading strategy / setup.
- When you see a bearish fakey pattern form, then place a pending sell stop order at least 1-2 pips below the low of the third bar in the in a normal fakey pattern. If a variation of the bearish fakey pattern then place a pending order 1-2 pips below the low of the 4th bar in the pattern.
- Place your stop loss at least between 2-5 pips above the highest point of the entire fakey pattern setup.
- Take profit targets: you can aim for risk:reward of 1:3 or look for a previous swing lows and if the risk:reward is 1:3 or greater, use that as your take profit target.
Advantages of The Fakey Forex Trading Strategy
- less clutter on your chart because this is a naked price action trading strategy.
- the fakey trading system has the potential to allow you to sell at the very top and buy at the very bottom which means you can get in at the very beginning when the trend starts changing.
Disadvantages of The Fakey Forex Trading System
- it can be a bit confusing for new forex traders at first
- there are ideal fakeys and those fakey variations and the fakey variations can be hard to spot if you don’t really know what exactly to look for.
- the fakey pattern and the trading strategy is not the forex holy grail, as with all other forex trading strategies , there will be times you will have false price moves and you will suffer trading loses.
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