Battle ready! The base 150 armor piercing strategy explained

  • By Carole Ann Furman

  • August 13, 2018
  • 7:11 pm BST

The base 150 armor piercing strategy was inspired by traders from the Price Action school of trading. As the name suggests, Price Action relates to what price is doing regardless of the trading instrument used and is visible on a trading chart. In very rudimentary terms, it allows you to see how a certain currency pair performed over a set period.

If two traders are using the same chart, they will see the same price action, but that does not mean they will draw the same conclusions or follow the same technique to reap a profit. Therefore, the Price Action is considered objective, and what a trader chooses to do with the information it provides and how they interpret it is subjective.

A group of traders managed to earn tidy sums from 80 deals in a row using this strategy, subsequently popularizing it. It is another nifty strategy to be able to draw upon for profits.

The key components required to execute this strategy

  • The currency pairs required are EUR/USD, GBP/USD, USD/CHF and USD/JPY
  • The time frame required is H1, H4, D1
  • Use exponential moving averages (MA) as your time frame

Rules of the game

When you look at support and resistance lines, you’ll notice that sometimes the price makes a short downward dip toward the closest support level. According to the strategy, you should find these short-term pivotal points and get into the market when the trend reverses.

This is exactly what you will need to use the moving averages for. Plot a slow MA with big periods of 150 and 365, and two shorter-time MAs with periods of 6 and 25 to confirm your pivotal point.

Trade on the H4-D1 time frames, but use a smaller time frame to confirm your point of entry. As you move down with the quotes to the closest support level, which will be found near the 150 MA and 365 MA, you’ll lose some money. However, you could make handsome wins from trading on the bigger trend moves.

How to trade this strategy

Here is some good forex advice on how to go about implementing this strategy. Of course, it is not only limited to forex strategy – you can also apply it to many other spheres of trading. It is a good idea to practice this technique on a demo level as you learn how to trade CFDs.

First, make sure that the price breaks any slow exponential moving average (150 or 365). The
MA 6 should be located at or above the slow MA level. After price quotes reach the faster MA, you should switch your screen to the shorter time frame and wait for a reversal signal.

Once you’ve received the reversal signal on the H4 timeframe, you should then hang on and wait for confirmation on the H1 timeframe. You can only enter the market at the reversal point once you have this confirmation.

Place your stop loss at the nearest maximum. Normally, the maximum of the signal candlestick you’ll place it at is the one that you will find at the reversal point. Your take-profit point is placed at the distance that is twice as big as those that we defined for our stop-loss.

It should now be apparent that with careful and meticulous planning, you can strike profits nicely if the strategy base 150 is executed properly. There should be no reason that you can’t apply this in your intraday trading activity and increase your chances of earning tidy profits regularly.