The first step is to look at a daily bar chart to spot a +140 pip day. Every trading software/platform will provide you with the high and low for every day on a daily bar chart. In the following chart we can see that on day one the first condition of the Forex Cash Cow strategy, +140 pip move, has been fulfilled.
Now a closer look on a five minute bar chart:
It is not necessary to look at the five minute bar chart since the daily bar chart will give you all the information you need. However, I just wanted you to see the first condition of the strategy on a smaller time frame.
The next requirement to be fulfilled is that the next trading day the market moves 70 pips in the direction of the price explosion. Let’s look at the day later on a daily bar chart.
Remember, at this point we are looking for a down move since that is the direction of the price explosion. So here we can see the market first making a high at 1.7512 and then trending downward. Our entry is triggered at 1.7442 (70 pip move in the direction of the trend). We enter a short position and immediately place a stop loss order at 1.7502 (60 pips) and a profit objective order at 1.7342 (100 pips). The market reaches our profit objective on the same day and we manage to make a profit of 100 pips from this trade.
Let's look at how all of this would have occurred on a five minute bar chart.
Continue to see Cash Cow Example 2