There’s no such thing as the “Holy Grail” system in forex trading wherein every trade opened will close in profit. Sure, it’s kind of heartbreaking to hear, but acknowledging that there is such system can be financially detrimental. You’ll end up paying thousands of dollars for algorithms and systems pitched to be the ultimate money-making machine. Instead, discover the proven system to benefiting from forex using the guide below.
The oldest and simplest technique to trade any market, whether it’s forex or crude oil, is trend-trading. It basically involves identifying a trend and riding it out until the trend eventually reverses. While trend-trading allows you to enter at any price level since price action is one-sided, augment potential profits by entering after there’s been a minor correction or pullback in price.
When trading trends, use only higher time frame charts like the 1-hour, 4-hour, and Daily charts. They give more reliable signals of when to enter compared to 5-minute and 15-minute charts. Furthermore, try to cut risk in a winning position by closing a portion of it after a predetermined amount of pips or resistance levels.
Moving averages are a common indicator for forex traders. It’s a simple system that produces decent results. Discover the proven system to benefiting from forex using MACD crossover. You simply wait for the moving averages to overlap each other. Trade in the direction where the higher moving average period broke through.
Experiment on the parameters you use for the moving average lines. Some people use 10 and 15 on the time period covered by the indicator while others use 50 to 200. Find what suits you instead of following parameters given by random people on the web. Depending on the time period and type of moving average you put, either smooth or exponential, the frequency of signals you get will vary.
Another simple system consists of bands that encapsulate the highs and lows of a price chart. These lines represent the range in which the currency pair is trading in. If the line is broken either upwards or downwards, trades using Bollinger bands will be opening positions to the opposite direction of where price broke off of.
Similar with MACD, try to experiment on different parameters on your Bollinger bands. It will affect how many trades you can open in a day or week and how reliable these signals are.