Join our facebook group for Amibroker afl code discussion

Hammer trading strategy

Do you want to make lots of money in stock market? Do you have some basic knowledge of candlestick patterns? If your answer is yes, then this hammer trading strategy is for you.

Prerequisite - Any charting platform, any time frame (higher is recommended for swing and 5-15 minute is recommended for intraday trader), 50 days exponential moving average, 20 days exponential, daily pivot points or some knowledge to mark support and resistance. volume indicator, CCI or stochastick optional.

What is hammer trading strategy? - In this trading strategy, you have to find hammer candle at certain support resistance level. Hammer candle is considered as reversal candle so you can capture the full move even 1:5 many times with very little stoploss. The winning percentage of this strategy is very high.

Conditions for trading - 

1. To take buy entry, you must find the hammer candle at any support or pivot point. 20 EMA and 50       EMA also acts as dynamic support if price is above it.
2. 20 EMA must be above 50 EMA to ensure the trend is up.
3. The wick of hammer candle must be longer than wick of previous red candle.
4. For buy entry, hammer candle color must be green. ( we do not consider red hammer for buying)
5. Previous candle must be red if you are looking hammer for buy entry.
6. The opening of green hammer should not be lower than the  closing of previous red candle.
7. And the most important is volume. The volume of green hammer must be greater than previous          candles volume.

Where to take entry?
 If all  above conditions meet, then take an entry on high of the green hammer.

Where to keep stoploss?
Keep your stoploss at  bottom of the hammer by leaving some buffer.

Where to take profit?
You can book profit at the ratio 1:2 at least or book profit near the previous swing high.

Conclusion - This is the most profitable and almost no loss strategy if apply correctly. The stoploss is depend on hammer candle size so you can adjust your position sizing here to maintain money management. We have earned huge profits buy applying this strategy in daily timeframe though it also works great in intraday time frames (5 - 15 minutes).


Write Comments
May 3, 2020 at 10:41 AM delete

Very nice strategy..please keep posting such a wonderful strategies.

Sandeep Raut
May 3, 2020 at 11:27 PM delete

Thanks for visiting...happy trading/investing.