The document outlines four simple trading tools applicable to the USDCAD forex pair, emphasizing the simplicity of trading while acknowledging its challenges. It discusses using a channel to identify trading opportunities, risk management strategies, and entry and exit signals based on market trends and price actions. The author highlights the importance of consistency in trading and the effectiveness of utilizing simple patterns for making informed trading decisions.

1. 4 Simple Trading Tools You Can Use
http://www.netpicks.com/4-simple-trading-tools/

2. Over the years, much has been
written about how simple trading
can be yet, is not easy.
It's not just a play on words but
hammers home that the work you do
to find trades, manage risk, and other
variables that make up the act of
trading, is simple.

3. Doing it consistently is another matter
and that's when "not easy" comes into
play. The best way to learn is with live
examples and I want to focus this
article on the term "simple" by using
the USDCAD Forex pair and a swing
trade scenario.

4. I want to show 4 simple trading tools:
a simple pattern
a simple entry
a simple risk reduction
a simple exit from a trade.

5. Keep in mind though that the context
that was taken into consideration was:
Steady uptrend in the USDCAD
Two weeks of momentum moves
10 weeks of the market in a pause

6. A simple channel was drawn on the
daily chart once lows and highs were
locked in and could be used for
anchoring and duplicating. There is
nothing magical about channels but
they do tend to highlight the rhythm
of the price action quite well.

8. An interesting time is when the
channel is broken with momentum
and those can offer some solid trading
opportunities if you know how to
trade them.

9. Channels can highlight trading ranges,
trends, and even pullbacks.
A simple tool with many uses.

10. This channel though showed more of a
range in the action of the price with a
slight upward slope. I think we can
agree that the price action is making
some sloppy moves inside the channel
and nothing is really clear cut.

11. In hindsight, sure you could sell the
top as we see in the middle of the
chart however, unless you were day
trading on lower time frames, this
price action is not conducive to a clear
trading opportunity for me.

12. There was a clear setup as shown with the
orange circle and I certainly could have
moved my line so that the shadow broke it
however, consistency matters in trading
and I missed that trade.
For me, this was not a trade entry.
The green circle is another matter.

14. It's a reversal type candle of course but
the highlight for me was that it probed
below the bottom channel and was
quickly rejected.

15. Did it trigger sell orders and then
quickly reject them forcing traders to
buy to exit and helped form a strong
bull body candle? The details behind
the scenes was not important but this
failure test was an entry for me into a
long trade.

16. As a matter of fact, I did not wait for
the close of the daily candle (front
running) because location, context,
and sharp rejection was enough for
me to risk on this trade.

17. The stop was below the low of
the entry candle and I find
setting stops on these types of
plays very straight forward.

18. Mean reversion trades are
another matter as setting stops
on those setups come with their
own sets of issues.

19. One easy was to cut risk is to take
trading profits at 1R. In these range
plays, I usually cut half of the position
off which will leave me with no risk on
the trade. You can see on this chart
where my position was reduced.

21. Risk reduction and
management is critical
for your long term
trading success.

22. What had me trigger into this
trade was an obvious reversal
candle at a prime location in a
market that is in an uptrend.

23. What gets me out of this trade is an
obvious reversal candle that shows up
in the middle of a range…..a range that
has seen some sloppy price
movement.

24. The candle that gave me my risk
reduction also closes as a candle with
a small bear body and a long upper
shadow as pointed in the trading chart
above.

25. It was impossible to ignore that candle
and my stop was ramped up just
below the low. You can clearly see
that I was taken out of this position
leaving me USDCAD flat with 134 pips
on the scale and 53 on the profit stop.

27. There are clues on charts however not
every clue builds a case big enough to
base a trade on. Not every move is
playable but at certain points on a
chart, there is the possibility of the
supply/demand imbalance being big
enough to give us a playable move.

28. Simple patterns that have been around
since there have been price
charts...showing up at certain points in
a market...can offer the astute trader
plays that are worth risking some of
their bankroll on.

29. It does not have to be complicated. It
is not reinventing the wheel. It is using
simple trading tools as discussed, what
has shown to give a slight edge,

30. and getting the most of it until the
time comes to exit.
Then just allow compounding to help
grow your account.