How to Set Up Andrew’s Pitchfork Trading Strategy in Olymp Trade.

What is Andrew’s Pitchfork Trading Strategy?

Andrew’s Pitchfork Trading Strategy is a trading strategy whose structure resembles a pitchfork.

It was authored by Alan Andrew.

The strategy helps traders catch trends with a channel that does not only contain two lines, but also an extra median line.

In essence, the price channel analyzing the price while trading Andrew’s Pitchfork strategy has three lines.

The middle line in the strategy serves as the handle to the pitchfork-like price channel formed.

So what do you use to draw the pitchfork price channel?

You can use trend lines to draw the three-line channel.

Alternatively, some trading and charting platforms do have a tool specifically for drawing the pitchfork price channel which you can apply.

In the latter case, all you have to do is just determine where to place the channel and all the other work will be done for you.

Normal price channels are complete with two lines.

However, it is not the case for Andrew’s pitchfork price channel, because the median line is core to the strategy.

That is the reason why Andrew’s pitchfork trading strategy is also known as the Median Line Method.

Andrew’s Pitchfork Trading Setups.

The technical bit of this strategy lies in the drawing of the three-line price channel.

Once the channel is ready, the subsequent steps in trading the strategy are so simple.

Actually, if the channel was bullish, you only need to look for bullish reversal candlesticks or patterns at the lowest line of the channel and enter up trades.

On the contrary, if the channel was bearish, you will only need to look for bearish reversal candlesticks or patterns when the price is at the highest line of the channel and enter down trades.

That is to say that there are no specific trade setups for this strategy, other than first establishing the channel then looking for reversal candlesticks or patterns at the extreme levels of the channel.

If all that is true,

Then you must then be yearning to know how to draw the pitchfork channel and use it to trade in your Olymp Trade account.

Well, in this post, you will learn exactly how to set up and profitably trade the Andrew’s Pitchfork Trading Strategy in Olymp Trade. 

Setting Up and Trading Andrew’s Pitchfork Trading Strategy in Olymp Trade.

1. Establish the General Market Trend.

Why the hell would you need to establish the general market trend yet all you want to do is just draw a channel?

Well, if that is what you are asking, then the answer is, you need to establish the general market trend in order to know what kind of a channel to draw.

There are two kinds of pitchfork price channels – bullish and bearish.

You draw a bullish pitchfork channel on a bullish trend and a bearish pitchfork channel on a bearish trend.

I hope you now understand why this step is very important to this strategy, don’t you?

But how do you establish the general market trend?

For this strategy, use price action to determine the general course of the market.

Price action involves paying attention to the price swing highs and swing lows.

A market that forms higher highs and higher lows is in a bullish trend.

However, a market forming lower highs and lower lows is in a bearish trend.

It is that simple establishing the market trend for use in this strategy.

Whichever of the two market trend types you get, take note of it as you proceed to the next step.

2. Draw the Pitchfork Price Channel.

The kind of pitchfork price channel you draw in this step depends on the general market trend you established in the first step.

Remember how many pitchfork channel types there are? Two of them – a bullish and a bearish pitchfork price channel.

Bullish Pitchfork Channel.

If the market in the first step was forming higher highs and higher lows, then it is in a bullish trend.

The kind of pitchfork price channel required in such a market is the bullish pitchfork channel.

Here is how to draw a bullish pitchfork price channel using trend lines:

• Establish a major swing low along with the uptrend, not far from the current price level, and name it A.
• Establish a major swing high along the same uptrend, ahead of the swing low named A, and name it B.
• Locate the major swing low which follows after the swing high named B, and name it C.
• Draw one line from point A to B, then another line from point B to C.
• Draw a line passing through point A and the mid-point of the line joining points B and C. Let the line continue to infinity.
• Draw another line passing through point B and parallel to the line passing through point A and the mid-point of line BC. Let it also continue to infinity.
• Draw the last line passing through point C and parallel to the line passing through point A and the mid-point of line BC. This line should also continue to infinity.

You will obtain a three-line price channel sloping upwards, with the line reaching point A popping backward as the handle to the pitchfork.

The median line will be the line passing through point A and the mid-point of line BC.

The line passing through B and parallel to the median line will be the highest limit of the channel.

Lastly, the line passing through C and parallel to the median line will be the lowest limit of the channel.

Bearish Pitchfork Channel.

If on the other hand, the market in the first step was forming lower highs and lower lows, then it is in a bearish trend. The kind of pitchfork price channel required for such a market is the bearish pitchfork channel.

Here is how to draw a bearish pitchfork price channel using trend lines:

• Establish a major swing high along the downtrend, not far from the current price level, and name it A.
• Establish a major swing low along the same downtrend, ahead of the swing high named A, and name it B.
• Locate the major swing high which follows after the swing low named B, and name it C.
• Draw one line from point A to B, then another line from point B to C.
• Draw a line passing through point A and the mid-point of the line joining points B and C. Let the line continue to infinity.
• Draw another line passing through point B and parallel to the line passing through point A and the mid-point of line BC. Let it also continue to infinity.
• Draw the last line passing through point C and parallel to the line passing through point A and the mid-point of line BC. This line should also continue to infinity.

You will get a three-line price channel sloping downwards, with the line reaching point A popping backwards as the handle to the pitchfork.

The median line will be the line passing through point A and the mid-point of line BC.

The line passing through C and parallel to the median line will be the highest limit of the channel.

Lastly, the line passing through B and parallel to the median line will be the lowest limit of the channel.

3. Look for Trading Signals.

Congratulations on successfully drawing the pitchfork price channels on the respective market trends.

Trading the channel has now begun, and it begins by looking for trading signals.

We mentioned that the technical bit rested on the drawing of the channel.

Once the channel is drawn, everything else becomes simple.

If you have drawn a bullish pitchfork channel on a bullish market, then you expect a bullish signal.

A bullish signal is when the price falls within the channel and tests the lowest limit of the channel.

The lowest limit of the bullish pitchfork channel is the line passing through C and parallel to the median line.

If you, however, had drawn a bearish pitchfork channel on a bearish market, then you expect a bearish signal.

A bearish signal develops when the price rises within the channel to test the highest limit of the channel.

The highest limit of the bearish pitchfork channel is the line passing through C and parallel to the median line.

4. Confirm the Trading Signal.

You must subject your bullish or bearish trading signal to a confirmation before trading it.

It is the only way a trading signal can be validated or invalidated.

If you obtained a bullish signal, here are the two confirmations it must go through:

• Even if the price falls to test the lowest limit of the channel, no candlestick should have its high lower than the lowest limit of the channel.
• After the lowest limit of the channel has been tested by the price without any candlestick having it’s high lower than the limit, the price must form a bullish candlestick as the entry trigger.

If you obtained a bearish signal, on the other hand, here are the two confirmations it must go through:

• Even if the price rises to test the highest limit of the channel, no candlestick should have its low higher than that highest limit of the channel.
• After the highest limit of the channel has been tested by the price without any candlestick having it’s low higher than the limit, the price must form a bearish candlestick as the entry trigger.

Also Read: – HOW TO INCREASE YOUR CHANCES OF MAKING MONEY IN OLYMP TRADE WITH THE HOLY GRAIL TRADING SET-UP.

5. Set Up Buy Stop or Sell Stop Pending Order.

Following a confirmed bullish signal, set up a buy stop pending order 1 pip or tick above the high of the bullish bar which acts as the entry trigger.

Confirm from the following list of all the things you must do before setting up a buy order:

• Establish a bullish market trend.
• Draw a bullish pitchfork channel.
• Wait for the price to fall and test the lowest limit of the channel.
• Ensure no candlestick has its high lower than that lowest limit of the channel.
• Set up a buy stop pending order 1 tick or pip above the high of the bullish candlestick which forms after all the above conditions are met.

On the flip side, set up a sell stop pending order 1 pip or tick below the low of the bearish bar which acts as the entry trigger, following a confirmed bearish signal.

Here is the list of all the things you must do before setting up a sell order, for confirmation:

• Establish a bearish market trend.
• Draw a bearish pitchfork channel.
• Wait for the price to rise and test the highest limit of the channel.
• Ensure no candlestick has its low higher than that highest limit of the channel.
• Set up a sell stop pending order 1 tick or pip below the low of the bearish candlestick which forms after all the above conditions are met.

6. Adjust Stop Loss and Take Profit.

Place your Stop Loss for buy order 1 pip or tick below the low of the trigger candlestick.

For the sell order, place the Stop Loss 1 tick or Pip above the trigger candlestick.

You can opt for a bit wider Stop Loss depending on your risk appetite.

You should place your Take Profit at the median line or on the extreme of the pitchfork channel opposite to your entry.

For the buy order, take your profits at the median line if a conservative trader or at the highest limit of the channel if an aggressive trader.

For the sell order, however, take profits at the median line if a conservative trader or at the lowest limit of the channel if an aggressive trader.

Whatever you do, ensure the risk to reward ratio you use adds up.

If the risk to reward ratio is 1:2 or above, then you are playing well. If less than that, then the trade may not be worth taking.

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