Two Basic Forex Strategies To Follow
The first basic forex strategy that you can easily follow is to trade based on support and resistance lines and trend lines. You’ll notice when trading that there will be particular trend lines that form that are either moving up or down (ranging) or flat (trending). A support, resistance, or both a support and a resistance line will form based on these trends.
What you should first try to do is find a clear trend line. The more obvious the trend is, the better. After finding a trend line you must then draw a line for either your support or resistance, or for both. You’re now looking for the price of the currency pair to move 5-10 pips through the opposite side of either line that you drew. If it does so then this is the point when you want to enter into a trade. If the currency pair was ranging up and broke through a support line, then you will want to enter a short (sell) trade. You will want your stop loss to be 5-10 pips on the opposite side of the line, and your old support should be your new resistance.
Another simple forex strategy is called bucking the trend. What you will want to do is open up a 4 hour chart, 1 hour chart, and 15 minute chart all for the same currency pair. Then add a 200 EMA (Exponential Moving Average) to all of the charts. Now look for a major pair where the price is above the line on the hour and 4 hour chart and below the line on the 15 min. chart. Seeing this type of pattern usually results in the 15 min. price coming back above the 200 EMA, so look for a suitable entry point and then place an order on the pair, expecting it to be back up and beyond the 200 EMA line. This trade can also be done with the price on the hour and 4 hour charts below the 200 EMA and the 15 min. above the 200 EMA, you would be looking for a short trade in this type of situation.
Did you enjoy this post? Why not leave a comment below and continue the conversation, or subscribe to my feed and get articles like this delivered automatically to your feed reader.
Comments
No comments yet.
Leave a comment