The Easy Forex Strategy For Beginners That Really Works
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
This Forex strategy requires you to set up 3 different time frame charts:
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.
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.
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
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!
So price is temporarily going against the overall trend and is in a retracement mode.
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.
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.
Look Out For Price Going Against 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.
Once you see how powerful this easy Forex strategy is, after a little practice in a demo account, you will no doubt be convinced it deserves a place in your trading tool kit. - 16931
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
This Forex strategy requires you to set up 3 different time frame charts:
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.
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.
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
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!
So price is temporarily going against the overall trend and is in a retracement mode.
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.
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.
Look Out For Price Going Against 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.
Once you see how powerful this easy Forex strategy is, after a little practice in a demo account, you will no doubt be convinced it deserves a place in your trading tool kit. - 16931
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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 Edgar at
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