This Simple Forex Strategy Is Amazingly Profitable
Are you learning the Forex and looking for a Forex strategy that is simple yet effective?
A challenge facing many new traders when developing their forex strategy is the ability to identify the overall trend for intra-day trading.
Using an Exponential Moving Average, specifically the 200 EMA can provide the solution.
In surveys it was found that Forex traders all around the world vote the 200 EMA as one of their top indicators. So that is reason enough to use it considering the psychological effect it can have once price starts getting within spitting distance of the 200 EMA.
How To Use The 200 EMA
To use this very powerful Forex strategy, create charts on 3 time frames:
4 Hour Chart
1 Hour Chart
15 minute
On each of the charts in the 3 different time frames, add the 200 EMA indicator and choose a color, e.g. red, to make it easily recognizable.
Preferably tile the 3 windows containing your 3 charts into a vertical fashion so you can see the 3 time frames next to each other. It will squeeze up the information on the charts somewhat but for the purpose of this strategy that doesn't matter.
Now scroll through the various currency pairs you like to trade.
If you prefer to trade only pairs with a smaller pip spread, they amount to about 9.
They are:
EUR/USD | GBP/USD | USD/CHF | USD/JPY | EUR/JPY | USD/CAD | AUD/USD | NZD/USD | EUR/CHF
What you are looking for is any currency pair that bucks the 200 EMA on the 15 minute chart.
Using the EUR/USD pair as an example, check where price is relative to the 200 EMA on the 4 hour, 1 hour, and 15 minute charts.
If price is BELOW the 200 EMA on the 15 minute chart while it is well ABOVE it on the 4 hour and 1 hour charts, then it is going against the trend!
The overall trend is up, price has temporarily gone against the trend and is currently in a retracement.
Using the fundamental trading principle of "buy the dips in an uptrend", "sell the rallies in a downtrend", look for a suitable entry point.
Say you were trading the EUR/USD pair, you would look at candle formations to see if there is a doji, or hammer, or any pattern that indicates price is exhausted and that it is about to resume the direction of the overall trend as shown on the 4 hour and 1 hour charts.
This simple exercise only takes a few minutes and can be done a few times during the day.
Take Note When Price Bucks The Trend
Sit up, take note, when you see price going beyond the 200 EMA on the smaller time frame, the 15 minute chart, while on the larger time frames, 4 hour and 1 hour, it is well beyond the 200 EMA in the opposite direction. Seize the change to make a high probability trade and bank some profits.
See for yourself how effective this simple Forex strategy is. Practice it for a short time and then, once convinced, add it to your Forex trading tool kit. - 23210
A challenge facing many new traders when developing their forex strategy is the ability to identify the overall trend for intra-day trading.
Using an Exponential Moving Average, specifically the 200 EMA can provide the solution.
In surveys it was found that Forex traders all around the world vote the 200 EMA as one of their top indicators. So that is reason enough to use it considering the psychological effect it can have once price starts getting within spitting distance of the 200 EMA.
How To Use The 200 EMA
To use this very powerful Forex strategy, create charts on 3 time frames:
4 Hour Chart
1 Hour Chart
15 minute
On each of the charts in the 3 different time frames, add the 200 EMA indicator and choose a color, e.g. red, to make it easily recognizable.
Preferably tile the 3 windows containing your 3 charts into a vertical fashion so you can see the 3 time frames next to each other. It will squeeze up the information on the charts somewhat but for the purpose of this strategy that doesn't matter.
Now scroll through the various currency pairs you like to trade.
If you prefer to trade only pairs with a smaller pip spread, they amount to about 9.
They are:
EUR/USD | GBP/USD | USD/CHF | USD/JPY | EUR/JPY | USD/CAD | AUD/USD | NZD/USD | EUR/CHF
What you are looking for is any currency pair that bucks the 200 EMA on the 15 minute chart.
Using the EUR/USD pair as an example, check where price is relative to the 200 EMA on the 4 hour, 1 hour, and 15 minute charts.
If price is BELOW the 200 EMA on the 15 minute chart while it is well ABOVE it on the 4 hour and 1 hour charts, then it is going against the trend!
The overall trend is up, price has temporarily gone against the trend and is currently in a retracement.
Using the fundamental trading principle of "buy the dips in an uptrend", "sell the rallies in a downtrend", look for a suitable entry point.
Say you were trading the EUR/USD pair, you would look at candle formations to see if there is a doji, or hammer, or any pattern that indicates price is exhausted and that it is about to resume the direction of the overall trend as shown on the 4 hour and 1 hour charts.
This simple exercise only takes a few minutes and can be done a few times during the day.
Take Note When Price Bucks The Trend
Sit up, take note, when you see price going beyond the 200 EMA on the smaller time frame, the 15 minute chart, while on the larger time frames, 4 hour and 1 hour, it is well beyond the 200 EMA in the opposite direction. Seize the change to make a high probability trade and bank some profits.
See for yourself how effective this simple Forex strategy is. Practice it for a short time and then, once convinced, add it to your Forex trading tool kit. - 23210
About the Author:
Get a useful free tip on how to use the MACD indicator for safe trading here: Forex Trading Strategies Learn an important lesson from Mohammed Ali regarding Forex Training: Curency Online Forex Trading
posted by X - Men @ 12:58 AM
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