This Simple Forex Strategy Is Amazingly Profitable
Are you new to trading, seeking out a reliable Forex strategy?
A challenge facing many new traders when developing their forex strategy is the ability to identify the overall trend for intra-day trading.
This problem can be alleviated by using the 200 EMA - (Exponential Moving Average).
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
This Forex strategy requires you to set up 3 different time frame charts:
4 Hour Chart
A 1 hour chart
A 15 minute chart
Now add the 200 EMA indicator to each chart for the 3 time frames. You could color it red or whatever you prefer to make it stand out.
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.
They are:
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.
Take as an example the EUR/USD pair. Make a note of where price is in relation to the 200 EMA on the three different times 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.
So price is temporarily going against the overall trend and is in a retracement mode.
You now need to look for a good entry point to get into the market in line with the basic principle of buying the dips in an up trend while selling the rallies in a down 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
As soon as you see price crossing the 200 EMA on the 15 minute chart whereas it is well beyond the 200 EMA in the opposite direction on the 4 and 1 hour charts, FOCUS! Snatch the opportunity to get into the market and make a profit.
After a little practice you will see how extremely powerful this simple Forex strategy is - certainly deserving a place in your trading tool kit. - 23226
A challenge facing many new traders when developing their forex strategy is the ability to identify the overall trend for intra-day trading.
This problem can be alleviated by using the 200 EMA - (Exponential Moving Average).
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
This Forex strategy requires you to set up 3 different time frame charts:
4 Hour Chart
A 1 hour chart
A 15 minute chart
Now add the 200 EMA indicator to each chart for the 3 time frames. You could color it red or whatever you prefer to make it stand out.
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.
They are:
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.
Take as an example the EUR/USD pair. Make a note of where price is in relation to the 200 EMA on the three different times 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.
So price is temporarily going against the overall trend and is in a retracement mode.
You now need to look for a good entry point to get into the market in line with the basic principle of buying the dips in an up trend while selling the rallies in a down 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
As soon as you see price crossing the 200 EMA on the 15 minute chart whereas it is well beyond the 200 EMA in the opposite direction on the 4 and 1 hour charts, FOCUS! Snatch the opportunity to get into the market and make a profit.
After a little practice you will see how extremely powerful this simple Forex strategy is - certainly deserving a place in your trading tool kit. - 23226
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 @ 3:25 AM
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