An Easy Forex Strategy For New Traders
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.
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
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 plot a 200 EMA indicator on each chart and, as a suggestion, color it red, for easy visual impact.
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
What you are looking for is any currency pair that bucks the 200 EMA on the 15 minute chart.
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.
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.
Say you were trading the EUR/USD pair, you would look at candle formations to see if there is a doji, or hammer, or any pattern that indicates price is exhausted and that it is about to resume the direction of the overall trend as shown on the 4 hour and 1 hour charts.
This simple exercise only takes a few minutes and can be done a few times during the day.
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. - 23200
A challenge facing many new traders when developing their forex strategy is the ability to identify the overall trend for intra-day trading.
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
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 plot a 200 EMA indicator on each chart and, as a suggestion, color it red, for easy visual impact.
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
What you are looking for is any currency pair that bucks the 200 EMA on the 15 minute chart.
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.
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.
Say you were trading the EUR/USD pair, you would look at candle formations to see if there is a doji, or hammer, or any pattern that indicates price is exhausted and that it is about to resume the direction of the overall trend as shown on the 4 hour and 1 hour charts.
This simple exercise only takes a few minutes and can be done a few times during the day.
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. - 23200
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 Trading
posted by X - Men @ 7:00 AM
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