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This is an updated post about FTR’s and how to better trade them, please scroll to the bottom of the post to see the list of FTR rules.
An FTR or Failed To Return, is a candle pattern in trading. What this pattern shows is that as price is in an up/down trend, price will push back and collect orders (causing a candle close of the opposite direction) before continuing the current trend.
This is a Bullish FTR drawn with lines, not candles, essentially what this is a small pull back in price to collect orders to trap sellers and gather more buyers before continuing up.
This is an FTR on a live chart, as you can see we had 3 bullish candles in a row, then a small red candle (the FTR candle) and after we continued the push up. How to enter on this candle pattern is very simple, wait for a close of the next candle ABOVE the FTR candle and then ride the momentum to the next zone. With a Stop Loss BELOW the wick of the FTR candle.
A Bearish FTR is simple the opposite of the bullish FTR, price is in a downtrend and has a single candle pull back that serves as a liquidity grab (order grab). And After results in a continuation of the downward move.
Above we have an example of a Bearish FTR on a candle chart. What you can see is that we where in bearish momentum, created an FTR to collect orders and then furthered the push to the downside. Entering on this would be just like the Bullish, We would seek entries after the bearish candle engulfing the FTR candle with a stop loss ABOVE the FTR candle.
- 15 minute or higher, 30 minute and 1 hour ideal.
- Trend Continuation
- If price is in consolidation INVALID
- Must have a Single FTR Candle
- If FTR candle is too big, invalid as Risk to Reward will be too high.
- Confirmation candle MUST be larger than FTR candle
- If confirmation candle is TOO big, the trades Risk to Reward will be too high and the trade is NOT VALID
- Ideal Stop Loss is above FTR candle (including wicks) some trade situations may require higher
- Ideal Take profit target is usually the next zone (may be further or may be closer if market conditions change)
- Confirmation candle closes too close to the next zone, the trade is invalid as the Risk to Reward & probability of failure will be too high
- IF FTR confirmation candle occurs in and closes OUT of a zone, with clear path to next zone in a major session, it is a potential valid trade.