Thursday, January 03, 2008

Simple Forex strategies

I havent't recently updated this blog because, i am currently more focused on Stock Market, and system for sports betting which i recently created. When i will finish it, i wil give you link to this system, i suppose it will be free till the end of the season.

Anyway, simple forex strategies, what i mean by that? In my mind these are strategies that are very simple :). I often see guys with super advanced entry strategies. They use MACD, RSI, ADX, 10 different MAs and EMAs, Fibbonaci retracement, Elliot Waves to predict the best entry point.

I think it's funny.

Because often these guys do not realize that actually there are only two types of indicators.
  • Trend following - indicates whatever Market is in up or down trend (MACD for example)
  • Momentum - tells you if Market is overbought or oversold (RSI)
There are also Volume and Volatility indicators but they are not suitable for Forex market. So if you use more then 2 indicators then you can right now narrow your choice down to only two.

How many oscillators do i use? I use none or zero, so in my mind forex strategy with 2 indicators is still complex strategy. Traders often say that you need a lot of indicators to get rid of false signal. But what i found out when i started using many tools was that i got as many signals that i should take LONG position as for SHORT position. So, keep in mind the old saying: sometimes less is more.

After eliminating all oscillators we are left with very simple tools:
  • trend lines, as well as support and resistance levels
  • Fibbonacci retracement
When i trade Forex i also use two other tools the are not as much popular as MACD, RSI but they work for me.
  • Andrews' Pitchfork
  • Standard Deviation Channel
All of them, help me to determine trend, because what forex trading really comes down to is:

Determine trend, but do NOT try to predict future, it is impossible. determine trend based on what you already have on the chart. There are at least three types of trend: up, down, consolidation, i think i already said it, but it is worth repeating over and over.

Determine Take Profit and Stop Loss, GO IN. That's it.

Ok so to sum this up. You can build a very complex strategy or system if it works for you, it didn't work for me at all. But remember, do not underestimate value and importance of very simple tools like trend lines, fibbonacci retracement and standard deviation channels.

10 comments:

Jhon jhon said...
This comment has been removed by the author.
Daniel parker said...

"Forex trading strategies are tools that are designed to help the trader to make trading in the best way,
Good trade-saving strategies the trader from large economic losses and alternatively bring economic expressed dealer plates spaced on the merchant's investments."

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michale wong said...

Trading with intraday SGX signals and having some little patience is also necessary for getting good returns.

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aditi said...

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Digital Equity said...

The more simple a Forex strategy is the better. I think the more simpler you think about the trading process its the better as keeping the whole process simple is the main key to earn a good amount of money from the market with consistent profit ratio but sometimes the profit ratio is hurt with tweaks of brokers and i already faced such problems and i really appreciate lxmarkets.com as one of the best broker to provide best profit making service in my trading career. Super flexibility, lower commissions and spreads, fund safety and moreover a very supportive customer support peoples.

Md Torikul said...

Strategy is an important matter for every Forex trader. Some prefer scalping strategy some prefer price action strategy. Among those strategies I prefer more scalping strategy. I can earn more through scalping strategy. For scalping I prefer more a broker called Trade12 having facilities like high leverage as well as low spread. They have more than 50 pairs and they take low spread in most of their pairs.

Ornob Shakil said...

Forex is not a kind of difficult business if you keep it and make it simple with proper knowledge and a good broker. Above article marked some important facts about forex trading what we should to make our profit consistent. I already made my profits consistent with the best broker in the forex market. That is TryMarkets. Any newbie trader can join and try them, I can assure you that you are going to relive from your worries when you start to trade with them.

Md Torikul said...

Strategy must be needed to trade with Forex. Without strategy a trader can not be succeed from here. Forex is the largest economic business in the world. There are many currency pairs to trade with. It is the main ingredient for a trader to trade. EURUS, USDJPY,GBPUS,GBPUSD are the polish pair here. Brokers are also a big factor here. So we should be careful of choosing a broker. I am a trader of Trade12 having high leverage up to 1:400, low spread, quick execution, no set up fees etc.