Every person trading in Forex knows that simply determining indicators and reading the charts is not enough. In order to make a steady stream or a substantial amount of profit, one has to utilize Forex trading strategies. This article will discuss 3 simple Forex trading strategies that work.
Forex related news, whether apparent and/or real, immediately precede an upward spike or a downward spiral. This is because this is the most accessible means of information gathering for traders in general, and provided and reported by reputable news institutions that are generally reliable. This usually lasts for 10 to 15 minutes and then traders will see a slow return to previously traded levels. For example, historically speaking, Non Farm Payroll (NFP) which is released at the 1st Friday of every month is used by most traders to determine the value of the US Dollar (USD).
In application, all you have to do is look at the global price market and pay special attention to news related trading which are indicated as “high”. The key here is to wait for 10 to 15 minutes from the time the news of the day preceded the spike. After that, you trade in the opposite direction of the price movement. In order to generate profits, you watch out for the following:
- Your “Take Profit”, which is the trading level immediately prior to the news.
- Your “Stop Trading”, which is set as near as the most recent low or high from the news.
Inside Day Breakout
Essential to this strategy is known as the “daily candle”. The trader looks for one that stays within the previous trading day’s high and low. In other words, the candle of the day never goes above or below the high and low of the immediately preceding trading day. The more candles that meet this condition within consecutive trading days the better. The strategy is simple, the trader depending on his/her position does one of the two things:
- Buy one Percentage in points above the previous day’s high.
- Sell one Percentage in points below the previous day’s low.
Two Hour MACD Cross
This works best on trending currency pairs. Make use of at least two indicators, preferably the MACD and the 200 Period Simple Moving Average. Both indicators will be used to determine the change in trend and to determine the direction of the trend respectively. Bear in mind that price action below the latter indicates a downtrend and the reverse indicates an uptrend. With the MACD, you make use of two strategies:
- Buy when there is an uptrend and the MACD line goes over the signal line.
- Sell when there is a downtrend and the MACD line goes below the signal line.
The three strategies discussed are simple to understand, easy to implement, and require very little time to close. However, there is no such thing as a foolproof trading strategy. As such, a stop loss order cannot be emphasized enough. In order to increase your competence and confidence, it is best you make full use of a Forex demo account, undergo continuing Forex education, and always stay calm regardless of the trading direction.