What is your forex trading strategy

Let me ask you a question before you read the below article. Would you like to know how profitable we are with our trading system? Read this if the answer is yes: Become A Forex Forex Trader In 5 Easy Steps. I have always believed, that having the discipline to take losses is relatively easy if you believe in your system but holding longer term trends is far harder.

The reason for this is obvious:. If you are following long term trends, you will be sitting on a big open equity profit, when the inevitable, short term pull backs come against you and eat into the profit, the temptation is always there, to take a profit in rather than let it run. Trend following means having an open target and in addition, you know that you have to give back a good bit at the what of the trend, as no one knows when a trend in motion what going to end but in swing trading, you will have a set target and when its hit — you are out.

The Concept of Overbought and Oversold. If you look at any FX chart, you will see trends but these trends, will have reactions strategy the upside and downside where prices are pushed to what up or down, away from the average price, but prices will always return to more realistic levels.

The aim of the swing trader is — to sell into overbought levels and buy into oversold levels and liquidate the trade, when prices have returned to fair value. Markets will always spike to far up or down in the short term, because humans are emotional beings and they make trading decisions based upon greed and fear. This concept is easy enough to understand and will always occur, because human nature is constant and greed and fear are reflected in the chart as overbought and oversold levels.

Over the years I have seen some incredibly complex swing trading systems and seen traders who use them, fail with them. When swing trading, you need a simple system because all you are doing your trading the odds and when trading the odds, a simple system will be more robust with fewer parameters to break. Swing trading is a bit like watching waves on a beach when the tide comes in; You know the tide is going to come trading its inevitable but as the waves hit the beach and go forex and forwards, as the tide comes into the shore, each wave is your in terms of how far it comes in and how far it pulls back.

In Forex market its a similar concept, every scenario is different and while we will lay down some general guidelines, these should still be reviewed by you, in light of the individual trading scenario you are looking at. I do not think swing trading can be reduced to pure trading rules and an outline of rules which you can review on each pair and pull the trigger on is a far better way of trading.

In terms strategy swing trading there is no best currency pair to trade, you can trade any of the major forex or crosses. A typical swing trade, will last from between a day and a week strategy one point we want to make clear — is that each currency may give you what — 4 good swing trades a month. You strategy want to trade when the set ups are right!

So in conclusion, always be selective in your trading and keep the odds on your side. Below we have outlined the various indicators and the logic behind them and then we will give you some tips on combining them into a simple strategy.

The Relative Strength Index RSI. The RSI trading introduced to traders by Wells Wilder in in the legendary book New Concepts in Technical trading and is one of the most widely used momentum indicators in Forex Trading. Generally, if the RSI rises above 30 it is considered bullish and on the other hand if the RSI falls below 70, it is a bearish signal. Like MACD, RSI divergence and convergence are really good trade setups.

When the market is trading, RSI Divergence is a great trade setup to go short. We have illustrated a high and low in price with divergence on the RSI. The RSI is a tool which is useful but it is not effective on its own in our view and should be used as a back up tool and we like to use it in trading of your our favorite timing indicator the stochastic.

This is an indicator which was developed by George C. Lane in the late s and while its been around for half a century, we still consider it the ultimate indicator for timing trading your and its based on a very simple what.

Below 20 is considered oversold and above 80 is overbought. However, reading below 20 or above 80 does not mean that the market will reverse. When using the stochastic by its very nature you will get a lot of false signals so you need to trade extremes if using it on its own — you can trade levels which are not extremes and we will look at how to do this in a moment and how to filter signals.

As What see we have a detailed article about Bollinger Band on LuckScout. Therefore, it is recommended to read that article to learn about Bollinger Bands in details: How to Use Bollinger Bands. This simple method combines the volatility of the Bollinger Band to isolate overbought and oversold levels to set up possible swing trading scenarios and adding the RSI and Stochastic in your the timing indicators to enter the trades.

Lets take the graph we have just looked at above and add these forex in:. There is also a good article about MACD on Forex. Please read it to learn about MACD and the way it can be used: How to Use MACD in Forex Trading. Now lets take the above chart and add in the indicators above and see what the combination looks like and how the indicators come together. We use the stochastic as our main tool trading enter trades and the advantage of combining it with the MACD is that it will allow you to filter trades better in terms your entry strategy this will become clearer if we look at some charts.

Look trading the MACD strategy in strategy of — the further away from the centre line the better in terms of spotting trading opportunities. When looking for trading scenarios — look for the MACD line to lose momentum and check the stochastic and RSI. If the stochastic is at an extreme and the MACD line is losing momentum — your signal to sell, can be from the stochastic so long it is overbought or oversold.

The MACD your does NOT have to cross the stochastic will normally your first of course when the MACD does cross though, it will provide additional confirmation for the signal. You should also on all highs your lowswatch the MACD histogram for additional confirmation of falling momentum. When setting a target, this will depend on how extreme the move is — but as a general rule, we always look for support or resistance levels, around the mid Bollinger Band in strong trends. I salute your article, Mr Peter M.

The technique is rather specific. I have learnt a lot. My views on reading the physcology of the candle sticks behaviour couple with this other systems will give me a less risk decision. It is good to have good Teachers. My Plato and Socrate. Swing trading is best for novice but I have heard many saying that big money in forex trading is in riding the trend. Can strategy trade for a living using swing trading? Thank you very for all these helpful and great articles.

I would like a one one with you Mr. Peter regarding my trading strategy. Is there an email address or skype id I can reach you through?. If yes reach me via …. What time frame do you recommend for this type of trading? I plan to learn this system as my default debut one.

Could you please give me your settings for your RSI and Stochastic indicators, Re: Also, you mentioned you get about good setups a month per currency pair, what would you say is the success rate of the good setups? I have a passion to peruse trading FX but a little time poor waiting for forex, is there a signal service you can recommend? Strategy article, building upon what I already have, was precisely what I needed to round out my swing trading.

I what found it, and at a good time. Thank you sincerely for this and all the other great articles you produce. Which Stochastic are you referring to? Is it Stochastic Oscillator, Stochastic RSI, Stochastic Momentum Index etc?

Really a great article for newbies like me. Really appreciate FxKey team for such wonderful service. I am learning a lot from LuckScout. After following this type of strategy, i slowly started gaining profits. Once again thanks a lot for being trading good teacher. Thank you so much Peter M. Get Our New What For Free. A Simple Swing Trading Strategy for Forex Traders By: Enter Your Email Address and Check Your Inbox: LEARN A PROVEN BUSINESS PLAN. Forex 2, at 5: September 30, at 5: October 20, at July 2, at 4: August 6, at 6: September 25, at 8: September 25, at 1: October 28, at 2: November 21, at 1: December 17, at trading December 26, at December 27, at 1: January 10, at 4: January 11, at 3: January 17, at 7: March 6, at 7: March 6, at 3: March 9, at Mohammad Obaidur Rahman says: June 14, at 3: June 7, at 1: July 1, at 7: November 20, at 5: November 21, at The Easiest Way to Get Rich Fast.

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