Forex-ology Simplified - 5 Unorthodox Steps of a Winning Forex Strategy
First of all, I want to stress that this trading system of mine is no
holy grail and anyone can use it to such high success rate if they
follow the rules of the trading system. I have been trading for years
and this is one of my forex trading strategies that have kept my
So now I will reveal a forex strategy that I use very often to profit consistently from the market. After you read it, you might think that actually it's such a simple system. But like I said earlier, trading should be simple, don't complicate it. Below are the steps of my forex day trading strategy.
Step 1: Look at the main trend using daily chart. The first look from left to right of the chart should tell you it's a down trend or up trend.
Step 2: After knowing what the main forex trend is, I will go to Forex Factory website to check for fundamental news release. If there is upcoming news 2 hours in front of me, I won't even go to step 3 and onwards to look for trading signals because there might be whipsaws.
Step 3: If there is no news, I will have a forex trading plan. For example, if the main trend is up, I will only be looking for buy signals generated from my forex indicators, I will not look to selling. Vice versa if the main trend is down.
Step 4: Now this is the most crucial stage, my trading decision lies here. I use the crossing of 4 EMA (Exponential Moving Average) and 23 EMA to define buy and sell signals on the 30 minute chart. There are other indicators involved, the weekly pivot, Stochastic and MACD (Moving Average Convergence Divergence) must also follow the trend and cannot look flat. I filter whipsaws by trading only during high liquidity sessions and checking whether the trend is the same using 4 hourly chart. That's all!
Step 5: The trade is set at a tight stop loss of around 35 pips while I have 2 methods of targeting profit. One is using healthy risk to reward ratio of at least 1:2. The second is using daily support and resistance.
That's my successful forex trading system and it seems simple isn't it? Of course risk management, money management and psychology should be combined in this trading system for it to work properly.
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ABOUT THE AUTHOR
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The author, Daniel Su, is the founder of http://www.ForexTradingPower.com where you can get free premium forex trading tips and resources.