An Easy Forex Strategy For New Traders
Are you learning the Forex and looking for a Forex strategy that is simple yet effective?
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.
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
To use this very powerful Forex strategy, create charts on 3 time frames:
4 hour
1 hour
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.
If you prefer to trade only pairs with a smaller pip spread, they amount to about 9.
Here's a list:
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.
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.
Using the EUR/USD example, you would look out for a distinctive candle that would indicate possible price exhaustion as it bucks the trend on the 15 minute chart. The probability is it would soon resume moving in the direction of the trend.
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.
Take Note When Price Bucks 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.
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. - 23159
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.
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
To use this very powerful Forex strategy, create charts on 3 time frames:
4 hour
1 hour
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.
If you prefer to trade only pairs with a smaller pip spread, they amount to about 9.
Here's a list:
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.
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.
Using the EUR/USD example, you would look out for a distinctive candle that would indicate possible price exhaustion as it bucks the trend on the 15 minute chart. The probability is it would soon resume moving in the direction of the trend.
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.
Take Note When Price Bucks 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.
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. - 23159
About the Author:
Get a useful free tip on how to use the MACD indicator for safe trading here: Forex Strategies Learn an important lesson from Mohammed Ali regarding Forex Training: Forex Online System Trading
posted by X - Men @ 2:44 AM
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