The Easy Forex Strategy For Beginners That Really Works
Are you a relatively new trader looking for a solid forex strategy?
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.
The 200 EMA is one of the most popular indicators of all time with Forex traders the world over, and for that reason alone is worth noting due to the psychological effect on the market place price can have when hovering around the 200 EMA.
Using The 200 EMA Strategy
To use this very powerful Forex strategy, create charts on 3 time frames:
4 hour
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.
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 run your eyes over each of the currency pairs you have selected for this strategy.
Currency pairs with a smaller pip spread, i.e. less than 10 on most platforms, come to about 9 different pairs.
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 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.
Look for a good point to get into the market in harmony with the basic trading maxim of selling rallies in a down trend or conversely, buying dips in an up trend.
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.
Taking only a few minutes, do this little exercise a couple of times and day and see if you can pick up some good setups.
Watch For Price Bucking The Trend
Once you see price bucking the 200 EMA on the 15 minute chart, whereas it is on the opposite side on the 4 hour and 1 hour charts, sit up and take note. Watch carefully and grab the opportunity to get in and make some pips.
After a little practice you will see how extremely powerful this simple Forex strategy is - certainly deserving a place in your trading tool kit. - 23223
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.
The 200 EMA is one of the most popular indicators of all time with Forex traders the world over, and for that reason alone is worth noting due to the psychological effect on the market place price can have when hovering around the 200 EMA.
Using The 200 EMA Strategy
To use this very powerful Forex strategy, create charts on 3 time frames:
4 hour
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.
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 run your eyes over each of the currency pairs you have selected for this strategy.
Currency pairs with a smaller pip spread, i.e. less than 10 on most platforms, come to about 9 different pairs.
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 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.
Look for a good point to get into the market in harmony with the basic trading maxim of selling rallies in a down trend or conversely, buying dips in an up trend.
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.
Taking only a few minutes, do this little exercise a couple of times and day and see if you can pick up some good setups.
Watch For Price Bucking The Trend
Once you see price bucking the 200 EMA on the 15 minute chart, whereas it is on the opposite side on the 4 hour and 1 hour charts, sit up and take note. Watch carefully and grab the opportunity to get in and make some pips.
After a little practice you will see how extremely powerful this simple Forex strategy is - certainly deserving a place in your trading tool kit. - 23223
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: Forex Online Trading
posted by X - Men @ 12:37 AM
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