Forex Strategy
There are no secrets in foreign exchange trading, but there are
countless forex trading strategies. The secret to successful forex
trading is in the strategy and that is what makes the currency trading
business such a unique opportunity. There are a plethora of ideas to
research and any of them could be the catalyst that creates a new forex
trading strategy that works. There is no real competition in forex
trading unless you consider the basic currencies strategies that you
never use, because you think they are too simple. In forex trading the
only competition is a strategy that's not used or is misused.
Forex Strategies can be broken down into categories. There’s the
beginner strategy that could look something like this: Entry rules:
When 10 EMA (Exponential Moving Average) passes through 25 EMA and
then moves through 50 EMA, buy or sell in the direction of the 10 EMA,
once it definitely goes through 50 EMA. That means to wait until the
current price bar closes on the opposite side of 50 EMA. The waiting
helps avoid false trading signals. Exit rule: Exit when 10 EMA crosses 25 EMA
or when 10 EMA returns and touches 50 EMA. Once again, wait for the
price bar after the touch has closed on the opposite side of 50 EMA.
That’s an easy strategy to use when the currency market is trending
during break-outs and big price moves. It is however a fast moving
average indicator or a lagging indicator, which does not predict the
future market direction, it just reflects a current market situation.
This strategy should only be used in certain situations.
Another forex strategy would be a more complex strategy which includes
three or more technical indicators for generating trade signals. The
complex forex strategies can get too complex, but they can be adjusted
to fit into your own strategy. A complex strategy would look something
like this: Entry rule: Enter on the 5 minute uptrend forex chart. If 14 EMA
is above 21 EMA and if both the 14 EMA and the 21 EMA are above 50 EMA,
the 50 EMA is in the Bollinger Bands borders. The next step is to check
the 30 minute chart and if the up-close bar is on 14 EMA or on 21 EMA
or if 14 EMA is above 21 EMA and above 50 EMA then, go long. You can
also check the 1 hour chart and if all the same conditions exist, go
long, but if one condition is missing, pass. Exit rule: It is the
opposite of the entry rule; if the 14 EMA is below 21 EMA and if both
are below 50 EMA, check the 30 minute chart and if the price bar is
down-close bar and touching 14 EMA and 21 EMA and if they are both
below 50 EMA, go short. If there one condition is missing exit.
Advanced online forex strategies can be found on several different
websites and if you are advanced enough to want to use an advanced
forex strategy, you probably have a system of your own and are using
it. Any fx trading strategy can be mixed with another, if the trader is
willing to take the risk. There is no strategy that is immune to
losses, but every experience is a lesson. Something might develop if
you give it some time and don’t give up. Discipline is a major key to
success in forex trading.
Once a forex strategy is developed follow it. If you think you need to
modify it, write the changes down but don’t alter it as you trade.
Success in forex trading is your responsibility; a good currency
strategy makes it happen.