Do you want to learn how to make money trading stocks using a simple but effective trading strategy? Then look no further. This trading strategy is easy to spot and also easy to trade.
You will be using the bottoming tail or hammer to spot trading opportunities. In fact you will use not one but two hammers. If you have some knowledge of the hammer, then you will realize that it can be a very powerful bullish reversal signal.
When you have two hammers that appear next to each other, it is as if the stock is yelling out to you that it wants to go up.
The image above shows the Twin Hammers. Basically they are two hammers next to each other. After a period of correction, the twin hammers appear and this tells us that selling momentum is slowing down.
The twin hammers is the opposite of the twin towers.
It is very easy to trade the twin hammer. All you need to do is to buy the stock when it trades above the highs of those hammers. You can place a stop loss below the lows of these two hammers.
Let us take a look at an example below.
The chart above shows the 60 min chart of AAL. Do remember because we are trading the 60 min hammers, we will need to find trading candidates in the 60 min chart.
After a period of sell off in the stock, twin hammers appear in the 60 min chart of AAL. When you see this pattern appear, you can buy the stock when it trades above the highs of the hammers. Put a stop loss below the lows of the hammer pattern.
Because we are trading the 60 min chart, you can often close out your position at the end of the day or the next day. If the stock has a powerful move up you can hold it for a few days.
Here are some tips to take profit:
The chart above shows the 60 min chart of the S&P 500 futures. This pattern appears not only in stocks but you can use it to trade the futures as well. In fact, you could even use it to trade any financial instrument be it commodities or bitcoin.
A twin hammer pattern appeared in the S&P 500 futures. Futures traders could buy the futures when it trades above the highs of the twin hammers and place a stop loss below the lows of the pattern. Notice how the S&P 500 futures shot up higher immediately?
When this pattern works, you can immediately reap the profits. You can sell some of your position when it gives you a 1:1 risk reward and then you can sell a bit more when the S&P 500 futures reaches a resistance area.
Is this trading strategy really that simple?
Yes it is.
But below I will show you some ways to increase your trading accuracy.
The presence of two hammers in your stock is already a very powerful bullish reversal signal. However, you can increase your trading accuracy tremendously by having the pattern appear at important technical areas.
Your accuracy will increase if the twin hammer appears at:
You might not understand the above but if you take Dstockmarket's free trading course, you will be able to understand the above. Just scroll up to find the Trading Course button.
The 60 min twin hammer is a very useful trading strategy for the day trader or swing trader. When the pattern appears, stocks can often bounce up higher very fast. It may take some time for you to be familiar with this.
You might also need to look at your trading screen every hour to spot these patterns. If you trade this pattern consistently you may just find that the stock market can give you quite a lot of profits with a high degree of accuracy.
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