What is Hammer?
Hammer is a core concept in currency trading.
A bullish single candlestick reversal pattern featuring a small real body near the top of the range and a long lower shadow (wick) at least twice the body length.
Understanding Hammer helps you manage your risk and spot high-probability trade setups.
Why It Matters for Forex Traders
In forex trading, Hammer helps you protect your capital. It gives you a clear rule to follow instead of guessing.
How to Identify and Apply Hammer
- 1Spot and mark Hammer on your chart during active trading hours.
- 2Check that the overall market trend agrees with your trade idea.
- 3Always place a protective stop loss before entering any position.
Practical Forex Example
For example, on a EUR/USD trade, applying Hammer allows you to set clear entry and exit points before risking real money.
PRO TRADER TIP
Always test strategies involving Hammer on a free demo account first before trading with real capital.