Forex trading techniques pdf

Simple Trading strategies

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These are both things that can really decimate your account. Trading with margin is no different than trading without it as long as you respect it and use it wisely. I'll teach you how to do this using proper money management techniques. Trend following is a scientific and mechanical way to approach trading that removes most of the guesswork. It has a strong history of performance during crisis periods and is at the core of most of my trading methods.

The idea behind the Continuation Method is to wait for a setback in the market and then jump in the direction of the trend. We are using only technical analysis meaning that we are going to be looking at price charts for different currency pairs to make our decisions. You can trade this method based on long-term or medium-term trends this means that it doesn't have to take a lot of time. Its purpose is to tell whether a commodity or currency market is trading near the high or the low, or somewhere in between, of its recent trading range.

Question: What Are the Best Forex Trading Strategies?

We will use this in combination with a simple trend finding technique to determine the best possible entry during a correction in the trend. The 50 Exponential MovingAverage -EMA is a type of infinite impulse response filter that applies weighting factors, which decrease exponentially.

Trading Strategies for Beginners

The weighting for each older datum decreases exponentially, never reaching zero. This helps us to measure trend by taking all previous data into account. We will use this as a way to exit the market and trail our stop loss to protect profits. These indicators can be found in most charting software programs. Chart SetupYour charts should look very clean with these indicators on there. Here is a screenshot showing how the chart looks with each of the indicators in place.

With this method you have the option of trading in multiple time frames. Here is a breakdown for how to use the different time frames. End of Day Trading -This means you will look at the charts one time a day at the end of the day. You will be in trades for days. Charts to use: Weekly and Daily Charts -Confirm trend on the weekly and trade the daily.

Swing Trading -This means that you will look at the charts a few times a day and you will be in trades from days. Charts to use: Daily and 4-Hour Charts -Confirm trend on the daily and trade the 1-hour.

Intra-DayTrading -This means that you will look at the charts several times a day and you will be in trades from days. Rule 1: Find the trend on the higher time frame. If you are doing End of Day trading then you will be using the weekly and daily chart.

The first thing you want to do is find the trend on the higher time frame chart weekly. The way you do this is very simple. You look at the 50 EMA and count back ten bars and determine whether or not it was sloping up more over the last ten bars or if it was sloping down more over the last ten bars. If the 50 EMA was is sloping up then the trend is up. If the 50 EMA is sloping down the trend is down. If the trend is up you can only take buy trades. If the trend is down you can only take sell trades.

Forex Trading PDF for Beginners (2021)

The 50 EMA red line on the chart begins to change at bar one by beginning to slope up, however you won't consider a trend change until bar ten. After bar ten you can begin to look for buy trades on the Daily Chart. This leads to Rule 2. Rule 2: Move down to the lower time frame daily chart in this example and look for a pull back against the trend. The trend on the weekly chart turned up and the trend on the Daily chart is up as well.

The next thing that you want to do is to look for a pull back against the trend. The way you identify this is very simple. If a candle closes below the 50 EMA while the trend is up then this is considered a pullback against the trend. If a candle closes above the 50 EMA while the trend is down, then this is a pullback against the trend. This leads to Rule 3. Let's look at a chart example:The green dotted line shows where you would place our entry and the red dotted line shows where you would place our stop loss.

Y would place a buy stop above the high of the signal candle or below the low for a sell.

The stop loss will go below the low of the closest swing point in the opposite direction. A swing point is defined as a candle with a lower low than the previous candle and the following candle. In the case of this current example you can see an uptrend and you are looking to buy the market. Once it goes below the level you are now looking for it to rise back above the level. Notice that the previous example was a loss.

News trading

Not every trade will be a winner. I wanted toshow you a losing trade right off so that when you see all of the winners you will understand that losses will happen. Let's look at another example. This is the very next trade that happens just a few days later. In this case you can see that the trade makes a tidy profit.

Strategies

Here's the process again to get to this point: As you can see, all of the requirements of the first 3 rules of engagement have been met. Let's look at the profit taking strategy next. In this example your pip risk is pips. That means the price must move pips in your favor before you can move your stop. Once price reaches this price you will use what I call the "Money Line Close" in order to trail your stop. This enables you to dynamically follow the market as far as possible before cashing out and taking profits. This way you can let our winners run and cut your losses short.

Once price reaches 1.

Let's look at this same example. Once price reaches the green line level above you can then look to use the Money LineClose. Notice that price is above the 5 SMA at the point of the green line. Then abruptly it closes below the 5 SMA. The next day it closes below the 5 SMA again. At this point you move your stop to the lowest of the two closes as identified by the green dotted line. The following day price breaches the lowest of the two closes and you are stopped out of the trade with a profit of pips.

The end reward to risk ratio is 1. Let's look at some more examples:In this example we will look at this same strategy but how it works for swing trading using the 4-hour chart. As you'll see nothing changes between how we use it for end of day trading and for swing trading. In case you aren't familiar with the terms swing trading and end of day trading let me give you a definition:End of Day Trading Order: A buy or sell order that specifies a price for the security, andkeeps the transaction open until the end of the trading day.

If a transaction is not made as the desired price is not met by the close of trading, the end of day order will be canceled. In this case the order will not be cancelled until it is filled or until you manually cancel it. Swing Trading: A short-term strategy used by traders to buy and sell a market whose technical indicators suggest an upward or downward trend in the near future --generally one day to two weeks.

In this example you can see how everything works the same no matter what chart you are on. If you want to spend even less time in a trade you can drop down to the 60 minute chart and do the exact same thing. The key is trading in the direction of the trend and being precise on following the rules. However you'll find that by using this method you will win 6 to 8 times out of Position SizingPosition sizing also known as money management is critical to your success as a Forex Trader. When trading the Forex you are using high leverage and position sizing becomes even more critical.

Position size is the only real determining factor as to how much you will win and how much you will lose on a trade. I recommend using a fixed fractional position sizing method.

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