Andrews Pitchfork Trading Strategy for the Forex Market


Andrews Pitchfork is a popular and profitable trading tool that is very easy to plot in the chart. This trading tool is available in most of the trading platforms and works well in forex, stock, indices, metals and cryptocurrency markets. How can you make a profit from Andrews Pitchfork? In the following section, we will guide you about this trading tool so that you can make a consistent profit from it.

25 June, 2020 | AtoZ MarketsIn the forex market, there are several trading tools that traders use to extend the possibility of making a profit. Some trading rules are used as a secondary indicator to increase the probability of trading. On the other hand, some trading tools can be used as an individual trading strategy. It is the trader’s choice of how he wants to use the trading tool.

Andrews Pitchfork is a trading tool that you can use besides your trading strategy to increase the probability, or you can use it as an individual trading strategy. Before using it, you need to understand the logic behind the rules and how you should consider this as a trustable trading strategy. As we know, no trading strategy can make you profitable until you understand the ways to use it. Furthermore, some risks are unavoidable in the forex market. Therefore, even if you have an excellent useful trading strategy, you might face loss in case of not having a sound money management system.

Before going about the Andrews Pitchfork trading strategy, we need to see what the trading tool means for traders.

What is Andrews Pitchfork?

Andrews Pitchfork is used to identify market trend continuation and reversal. Traders can identify a trading channel to predict the market movement. Furthermore, it also indicates the upcoming correction of the price. 

This trading tool was developed by Alam Andrews, which looks like traditional trend lines based on market lows and highs.

For retail traders, it is essential to identify the potential market reversal zone to predict the possible market movement. In Andrews Pitchfork there are three parallel trendlines, constructed from different highs and lows. In a downtrend, it moves from a high, low, and high and in an uptrend, it moves from a low, high, and low again.

Andrews Pitchfork

In the image above, we can see how the Andrews Pitchfork trading tool looks like. Now move to how we can draw these lines in your trading chart.

How to Draw the Andrews Pitchfork?

This trading tool is free in almost all platforms like cTrader, MT4 and MT5. Therefore, you don’t have to worry about drawing it manually. However, there are three points in the Andrews Pitchfork that you should know how to plot. If you fail to identify the three legs of this trading tool, your trading decision might go wrong.

For Mt4 trading platform, this trading tool is available on the Insert tab. If you use Tradingview, you will find it on the “Gann and Fibonacci Tools” section. 

Mt4 Andrews Pitchfork

After getting the trading tool, you have to plot these three points based on the high-low-high or low-high-low basis. These three points are essential for traders, and it requires some technical knowledge.

Follow the below-mentioned steps to draw the Andrews Pitchfork in your chart:

Primary Three Points

The high-low-high or low-high-low represents the upcoming emerging market or existing trend on the chart. Therefore, these three points should follow these logics.

  • The first point is the starting of a trend.
  • Second point is the high of the current trend.
  • The third point is the retracement of the initial swing.

Three reference Point

The image above represents how to spot these three points.

The Median Line

To identify the median line, you should spot the middle point of point 2 and point 3. It will be drawn once you plot three primary points.

The image below represents how the median line looks like:

Median Line

Pitchfork Channel

It is a parallel channel that goes through the median line and the middle of point 2 and 3.  The good thing is that you don’t have to draw it manually as it will be pulled automatically when you plot the three points. However, it is essential to understand the logic behind every element of these trading tools.

Once you find the Pitchfork channel, this trading tool is complete and ready to take the trading decision. You can make two types of trading decisions- like Breakout and price action.

In the following section, we will see the Andrews Pitchfork trading strategy with a complete trading guide.

Andrews Pitchfork Trading Strategy

Andrews Pitchfork has the parallel lines that will work as trendline support and resistance levels. Therefore, we may see the price to react from these levels. However, any breakout from these levels would indicate potential trading opportunities.

Andrews Pitchfork Breakout Strategy

In this trading strategy, you should find the price that is moving within the channel. Observe the price until It Breaks out from the channel with A strong candle. It is crucial to identify the strength of Breakout as it will increase the probability. As we know in the forex market, traders who have much monetary power can take the price on aside. Therefore, a strong breakout means the price might be controlled by a party who is creating the Breakout. 

Follow these steps to  identify the trading Entry from the Andrews Pitchfork breakout trading strategy:

  • Wait for the price to come back to the channel after the Breakout as a retracement. Enter the trade after a rejection candle appears. 
  • Put your stop-loss below or above the rejection candle with 10-15 pips buffer.
  • Monitor the near term event level or key level to identify a potential take profit level. Move your stop loss at break-even as soon as the price makes new high or low.

Andrews Pitchfork Breakout

The image above represents how to take an entry from the Andrews Pitchfork breakout strategy. 

Andrews Pitchfork Price Action Trade

Andrews Pitchfork has three Parallel Lines that work as support and resistance levels. Therefore if you see the price to reject from these levels, it will indicate that price will stall further within the channel.

Therefore, follow these steps to take an entry from the Andrews Pitchfork price action trading:

  • Wait for the price to test the parallel channel with a corrective speed and wait for a rejection candle. Enter the trade as soon as the candle closes.
  • Put your stop-loss below or above the rejection candle with 10-15 pips buffer.
  • Monitor the price action at the next parallel levels to identify a potential take profit level. Move your stop loss at break-even as soon as the price makes new high or low.

Price Action Strategy

The image above represents how to take an entry from the Andrews Pitchfork Price action strategy.

Summary

Let’s see what we have learned today from the Andrews Pitchfork trading strategy:

  • The first point is the starting point of a trend.
  • The second point is the high of the current trend.
  • The third point is the retracement of the trend.
  • For breakout trading, it is crucial to enter the trade after a correction.
  • Enter the trade after the candle closing only.

Andrews Pitchfork trading tool is very straightforward but profitable. Furthermore, it is elementary to plot it in the chart as this threading tool is available in most of the trading platforms. However, some risks are impossible to eliminate from the market. Therefore, make sure to manage your trade correctly with proper money management skills.

Think we have missed something? Let us know in the comment section below!

 

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