This Simple Forex Strategy Is Amazingly Profitable
Are you a relatively new trader looking for a solid forex strategy?
Many newer traders face the challenge of trying to identify the trend on the intra-day level in order to make their Forex strategy work.
This problem can be alleviated by using the 200 EMA - (Exponential Moving Average).
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.
Using The 200 EMA Strategy
To use this very powerful Forex strategy, create charts on 3 time frames:
A 4 hour chart
A 1 hour chart
15 Minute Chart
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.
One suggestion is to use the vertical tile feature and have the 3 charts vertically side by side so you can easily eyeball the position of price relative to the 200 EMA. The candles may appear a little distorted but that really doesn't affect your strategy.
Now scroll through the various currency pairs you like to trade.
Currency pairs with a smaller pip spread, i.e. less than 10 on most platforms, come to about 9 different pairs.
Here they are:
EUR/USD | GBP/USD | USD/CHF | USD/JPY | EUR/JPY | USD/CAD | AUD/USD | NZD/USD | EUR/CHF
Search through and see if price is going against the 200 EMA on the 15 minute chart on any of the currency pairs.
So for example, look at the EUR/USD pair and note the position of price relative to the 200 EMA on the 3 time frames.
Price is what we call 'bucking the trend' if it is well above the 200 EMA on the 4 hour and 1 hour charts but below it on the 15 minute chart.
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.
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. - 23217
Many newer traders face the challenge of trying to identify the trend on the intra-day level in order to make their Forex strategy work.
This problem can be alleviated by using the 200 EMA - (Exponential Moving Average).
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.
Using The 200 EMA Strategy
To use this very powerful Forex strategy, create charts on 3 time frames:
A 4 hour chart
A 1 hour chart
15 Minute Chart
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.
One suggestion is to use the vertical tile feature and have the 3 charts vertically side by side so you can easily eyeball the position of price relative to the 200 EMA. The candles may appear a little distorted but that really doesn't affect your strategy.
Now scroll through the various currency pairs you like to trade.
Currency pairs with a smaller pip spread, i.e. less than 10 on most platforms, come to about 9 different pairs.
Here they are:
EUR/USD | GBP/USD | USD/CHF | USD/JPY | EUR/JPY | USD/CAD | AUD/USD | NZD/USD | EUR/CHF
Search through and see if price is going against the 200 EMA on the 15 minute chart on any of the currency pairs.
So for example, look at the EUR/USD pair and note the position of price relative to the 200 EMA on the 3 time frames.
Price is what we call 'bucking the trend' if it is well above the 200 EMA on the 4 hour and 1 hour charts but below it on the 15 minute chart.
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.
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. - 23217
About the Author:
Get a useful free tip on how to use the MACD indicator for safe trading here: Free Forex Strategies Learn an important lesson from Mohammed Ali regarding Forex Training: Curency Online Forex Trading
posted by X - Men @ 3:05 AM
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