The railway tracks pattern strategy is another price action trading strategy that is based on analyzing the flow of candlesticks.

This trading strategy works as :

Look for the candlesticks forming the same trend.

Wait for the formation and breakout of opposite candle in the ongoing trend, the formation of a bull candle in a strong bearish trend, and bear candle in a strong bullish trend.

• Uptrend: Breakout of a bear candle in a strong bullish trend.
• Downtrend: Breakout of a bull candle in a strong bearish trend.

Instrument : You can use this strategy for any currency pairs.

Timeframes : 30 minutes and higher upto day chart.

Indicators : None.

Long Entry :

• Place a buy order when a bear candle is breakout in a strong bullish trend.
• Place your stop loss at the low on the bear candle.
• Set your take profit to 2 times what you risked (if you risked 20pips then you should aim for 40 pips profit target). Or another option is to trail stop your trades.

Short Entry :

• Place a sell order when a bull candle is breakout in a strong bearish trend.
• Place your stop loss at the high of the bull candle.
• Set your take profit target to 2 times what you risked or you can also you trailing stop to lock in profits as trades move into profit.

Take Profit :

Take profit at 1:2 risk and reward ratio, this is 2 times what you risk. You can also trail the stops.

Pros :

• Can make high profit in trending markets
• Easy to understand.

Cons :

• Will not work in the ranging market.