This Simple Forex Strategy Is Amazingly Profitable
Are you learning the Forex and looking for a Forex strategy that is simple yet effective?
Many Forex strategies rely on clearly identifying the intra-day trend, and this presents quite a challenge for the newcomer to the market.
Using an Exponential Moving Average, specifically the 200 EMA can provide the solution.
Forex traders around the world voted the 200 EMA indicator as one of their all time favorites. That should make us sit up and take note. In view of the power of psychology, if that number of traders take note once price gets within reach of the 200 EMA, there is bound to be a reaction in the market most times.
Using The 200 EMA Strategy
Start using this effective Forex strategy by setting up charts on three different time frames:
A 4 hour chart
1 hour
A 15 minute chart
Now plot a 200 EMA indicator on each chart and, as a suggestion, color it red, for easy visual impact.
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.
There are about 9 different currency pairs with a pip spread less than 10, so many prefer just to trade these.
Here's a list:
EUR/USD | GBP/USD | USD/CHF | USD/JPY | EUR/JPY | USD/CAD | AUD/USD | NZD/USD | EUR/CHF
Train your eyes to identify a currency pair that goes against the 200 EMA on the smaller time frame, 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 well above the 200 EMA on the 4 hour chart, well above the 200 EMA on the 1 hour chart, but BELOW the 200 EMA on the 15 minute chart, price is bucking 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.
In the example given above you would look for an opportunity to buy the EUR/USD, perhaps watching for a candle signal that price has exhausted it's downward momentum, bucking the 15 minute chart 200 EMA and will soon resume it's upward momentum.
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.
After a little practice you will see how extremely powerful this simple Forex strategy is - certainly deserving a place in your trading tool kit. - 23222
Many Forex strategies rely on clearly identifying the intra-day trend, and this presents quite a challenge for the newcomer to the market.
Using an Exponential Moving Average, specifically the 200 EMA can provide the solution.
Forex traders around the world voted the 200 EMA indicator as one of their all time favorites. That should make us sit up and take note. In view of the power of psychology, if that number of traders take note once price gets within reach of the 200 EMA, there is bound to be a reaction in the market most times.
Using The 200 EMA Strategy
Start using this effective Forex strategy by setting up charts on three different time frames:
A 4 hour chart
1 hour
A 15 minute chart
Now plot a 200 EMA indicator on each chart and, as a suggestion, color it red, for easy visual impact.
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.
There are about 9 different currency pairs with a pip spread less than 10, so many prefer just to trade these.
Here's a list:
EUR/USD | GBP/USD | USD/CHF | USD/JPY | EUR/JPY | USD/CAD | AUD/USD | NZD/USD | EUR/CHF
Train your eyes to identify a currency pair that goes against the 200 EMA on the smaller time frame, 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 well above the 200 EMA on the 4 hour chart, well above the 200 EMA on the 1 hour chart, but BELOW the 200 EMA on the 15 minute chart, price is bucking 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.
In the example given above you would look for an opportunity to buy the EUR/USD, perhaps watching for a candle signal that price has exhausted it's downward momentum, bucking the 15 minute chart 200 EMA and will soon resume it's upward momentum.
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.
After a little practice you will see how extremely powerful this simple Forex strategy is - certainly deserving a place in your trading tool kit. - 23222
About the Author:
Get a useful free tip on how to use the MACD indicator for safe trading here: Forex Strategy Learn an important lesson from Mohammed Ali regarding Forex Training: Curency Online Forex Trading
posted by X - Men @ 5:12 AM
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