The Forex market is incredibly unpredictable, just as it is profitable, which is why professional traders spend years trying to create a strategy with just more gains than losses. According to the random walk hypothesis first brought up to illustrate stock market volatility, price changes were akin to a coin toss with 50-50 chances.
This still doesn’t stop traders from trading, because a trading strategy with as little as a 51%-win rate can be very profitable, as long as other rules are considered. For example, a trader with such a strategy, the 51%-win rate, makes 100 trades, 49 of them will be losses and 51 will be profitable. Provided they have a profit to win ratio of 2:1 and higher, they would be very successful. Imagine if each loss costed them $100, $4,900 total loss, but the gains were each $200 with the 2:1 profit to loss ratio, that’s a $10,200 profit.
Now imagine you knew of an even more profitable trading strategy, like the Wukar trading strategy with a 70%-win rate, this would obviously bring a lot more profits. This trading strategy has been very successful among traders who know about it, but few Forex traders have heard of it. Now let’s explore this strategy to see how it works:
How to use the Wukar trading strategy
The best way to show you how you can use this trading strategy is by example, and in this case we would be trading the EUR/JPY pair on the M15 timeframe. Once you have the indicator and expert advisors installed and integrated into your Forex trading platforms, your charts will look like this:
As you can see, there are plenty of indicators there including:
- The daily opening line which indicates the value of the pair when the markets opened in the European session, particularly the Frankfurt Stock Exchange. It is a horizontal line that stretches from the opening candle of the day to the last, 2 hours after the New York Stock Exchange bell rang
- The UFX trend multi-metre which provides overall statistics of the currency pair and predict the direction of the markets
- The 2 rectangles on the right which represent that the daily and hourly movements coincide, showing that the movements during the current hour are following the day’s overall trend. This is especially important for swing traders who prefer to hold on to trades for hours and catch the overall trend throughout the day. To be able to see them more clearly, click on this button from your trading platform
- The yellow horizontal lines represent a separate indicator, the Grid_v2 indicator which guides you on important support and resistance levels. It might be confusing to have both it and the default grid lines, and you can remove the default ones by: Right clicking on the chart, going to properties, shifting to the ‘Common’ tab and unchecking the ‘Show grid’ checkbox
- The information on the bottom left corner is provided by the ADR indicator and shows you some need-to-know information about the currency pair you’re looking at, most importantly the ADR (average daily range). This indicates how much many pips that currency pair moves in any given day
The Wukar strategy involves an analysis all this information to provide hints on when to place orders. From the example above, the two red rectangles show that both the daily and hourly trends indicate a bearish market sentiment on the EUR/JPY and that you should short this pair. If these rectangles were both green, like in the figure below, it would signify a potential ‘buy’ order.
However, in this case, the price is way beyond the opening price and the movement is close to the ADR. This indicates that the markets can’t sustain the trend much longer, even though you could still buy the pair. The ADR represents the average price movement, so if the currency has almost reached that limit, it is unlikely to move any farther.
When the rectangles show a different colour, like in the image below, this is a sign of uncertainty in the markets, and you should not place any trades at this point. To catch a long trend, the hourly sentiment should coincide with the day’s general sentiment, otherwise the hourly trend might turn around. Nevertheless, a scalper can still make use of this short trend to make some quick money in a few minutes and get out.
When one of the rectangles shows a yellow colour, then this is a sign of a change in market sentiment, and that the trend might reverse. You should not trade at this time, until you get more information about the direction of price.
The Wukar indicator helps you out by automatically adding the take profit and stop loss parameters after analyzing the Forex charts. This improves upon your risk management and also ensures you receive maximum profits from the 2:1 profit ratio programmed.
What to remember about Wukar
Traders who have been successful using this system recommend a few points worth remembering, but you can always do things your own way – these are not rules, just guidelines:
- Select currency pairs with a high ADR such as the GBP/USD, EUR/JPY, GBP/JPY, etc. These currency pairs move a lot in any given day, creating the opportunity to make numerous trades and gain plenty of pips
- This system can work in all timeframes, but it is most effective on the M15 timeframe because of the parameters already put in place for the indicators
- You should not trade with this strategy during any announcements of important financial news; such news can reverse the daily trend and render the strategy inaccurate. This is why technical analysts, for whom this tool is most suited, should also keep an eye on the Forex calendar just in case there’s a reason for the markets to shift
- The ADR should always be above 10, and the more it is the better
- Don’t trade with a pair that is close to or has already reached its average ADR
For more information on using technical indicators like this one, here’s a video from one of the most popular Forex brokers: