Forex Trading Strategies

Post on: 29 Июнь, 2015 No Comment

Bunny Girl

Combination of crossing of moving averages, RSI indicator and filter for entry into the transaction

Big Ben

Break through price range, between Frankfurt open and London open

Ross Hook

Is commonly used trading strategies in forex market method based on recurring break out in a sideways pattern

Trading Based on Stochastic

Transaction signal based on the oscillator, shows up at all times — from the high to the low

Trading in Trenches

Enter into a transaction based on price movement inside and outside the trench.

Fibonacci

Many forex traders use Fibonacci strategies in forex trade. Enter into a transaction based on Fibonacci correction

Scalping Red News

Trading method is in effect during a strong price movement on the 5-minute chart

Bollinger Band on 4-hour Chart

Easy for use trading strategies in forex market. Enter when the price touches the upper Bollinger band on the 4-hour chart

Method combining crossing moving averages and other indicators

Bagovino System

A method combining crossing moving averages with the indicator

Bunny Girl Forex Trading Strategies

This is a method based on crossing moving averages and on RSI.

On a 30-minute chart, place 3 moving averages for these pairs:

EUR/USD USD/CHF GBP/USD EUR/JPY

WMA 5 (in red), WMA 20 (in green), SMA 100 (in blue).

The condition for entering the transaction (long) is when the WMA 5 crosses the WMA 20 upwards and the SMA 100 is above the daily open (00:00 GMT). Enter the transaction after waiting for the filter (to avoid false signals) + 20 pips for EUR/USD pr + 25 pips for other currencies (remember to also add the spread to the entry price calculation).

The condition for entering the transaction (short) is when the WMA 5 crosses the WMA 20 downwards and the SMA 100 is below the daily open (00:00 GMT). Enter the transaction after waiting for the filter (to avoid false signals) + 20 pips for EUR/USD pr + 25 pips for other currencies (remember to also add the spread to the entry price calculation).

At the time of crossing averages or soon there too, the RSI indicator should also cross the 50 level, but should not be over-bought or over-sold. Do not enter a transaction against the SMA 100 (which indicates the trend).

Do not enter a transaction in the final 5 minutes of the 30-minute candlestick which has attained the price, but rather wait for a new candlestick to be generated.

Do not enter a transaction near strong resistance / support.

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Big Ben Method Forex Trading Strategies

This method is primarily used for the GBP/USD pair.

On the chart, draw the price range generated between the Frankfurt open and the London open.

Wait for the London open.

During the London open, look for the price to go in one direction (false break out) and then head in the opposite direction to close below the London open — this is the signal to go short; many traders prefer to use this method exclusively for going short.

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Ross Hook Forex Trading Strategies

A Ross Hook is generated by:

In this article we shall focus on a Ross Hook created by breaking out of a sideways move, since the sideways pattern is clear and easily discernible.

First, we identify a sideways move and specify it by drawing vertical lines (a sideways move may also be in the form of a trench, in which case we will draw parallel lines, or in the form of a flag, which may already hint at the continuation of the trend); the key idea is to identify several candlesticks of essentially the same height.

The candlestick which generates the Ross Hook is actually the subsequent one, since it is unable to generate a higher high, and is therefore in opposite direction to the movement — and is the correction candlestick for the break out.) In a Ross Hook, you want to have up to 3 correction candlesticks, which should be smaller than the break out candlesticks — because these are actually realization candlesticks.)

When viewing charts in order to identify a Ross Hook, you may notice that it usually occurs on support / resistance lines, since this is where traders hesitate whether to continue the break out or to realize.

Joe Ross claims that the Ross Hook is created because of over-bought / over-sold areas based on indicators (where there are many scalpers attempting to enter in the opposite direction).

Next we wait for the price to resume its original movement (i.e. continue in the break out direction). We enter when the price is past the Ross Hook.

Some traders prefer to wait for the closing of a candlestick above / below the Ross Hook, because it is created on a support / resistance line) and some trigger as soon as the price goes by the Ross Hook. The entry price is the price at which the Ross Hook was generated.

The stop is placed a few pips behind the correction candlesticks or within the sideways movement — for more conservative traders.

The Ross Hook pattern may be applied to all chart types.

MACD and Crossing Averages Forex Trading Strategies

In this strategy, we identify the trend on the 4-hour chart, and we enter the transaction on the 15-minute chart. 4-hour chart:

EMA 5 close price (red), EMA 10 close price (green), stochastic (3, 3, 10), RSI: 9

On the 15-minute chart, add the MACD.

Entering a transaction: When, on the 4-hour chart, the EMA 5 crosses the EMA 10 upwards and the RSI is above 50 but is not over-bought (not above 70) — go to the 15-minute chart and wait for the same situation.

On this chart, the entry signal is when the MACD crosses from negative to positive, or is already positive and goes up in value — you may enter a long position.

For short, the rules are the same: wait for the appropriate step on the 4-hour chart (EMA 5 crossing the EMA 10 downwards and RSI below 50 but not over-sold (not below 30) and once again, on the 15-minute chart, enter based on the MACD, when the oscillator crosses from positive to negative or, if the oscillator was negative, when it goes down in value.

The stop is on the final swing, with first partial exit after a 50 pips gain.

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Trading Based on Stochastic Forex Trading Strategies

With this simple strategy, you may choose indicators other than stochastic (such as: RSI, crossing averages, Parabolic SAR etc.

The idea for this strategy is that the entry signal should appear at different times, from the large chart (the daily chart) to the small one (1-hour or 30-minute chart).

For the given currency, open 3 windows for different time intervals: daily, 4-hour, 1-hour or 30-minute. On the daily chart, wait for the stochastic to turn upwards (for long) or downwards (for short); in any case the oscillator should not be over-bought / over-sold (should not be above 80 or below 20).

Go to the 4-hour chart and verify that the stochastic is in the same situation, then repeat this action on the 1-hour or 30-minute chart; if the oscillator is in the same situation for all time intervals, you may enter long / short.

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Trading in Trenches Forex Trading Strategies

When a currency pair moves between 2 parallel lines, a trench is formed.

To mark a declining trench, draw a trend line between the 2 highest highs on the price (the second high should be lower than the first). Then draw a line parallel to the two declining highs; this parallel line should touch the low point between the 2 highs.

For a rising trench, draw a trend line between the 2 lowest highs on the price (the second high should be higher than the first). Then draw a line parallel to the two rising highs; this parallel line should touch the high point between the 2 lows.

There are two ways to trade on the generated trench: Break out from trench: With a declining trench, the price crosses the top trench line to close above it (for a rising trench, the price breaks through the bottom trench line to close below it); aggressive traders should wait for the candlestick to close and enter in the next candlestick to open above it.

Conservative traders may wait for a retracement, i.e. re-testing of the broken trench limits, and then when the price exceeds the break out candlestick, enter the transaction — in order to avoid false break outs.

Profit taking is around the trench height, with the stop within the trench.

Trading within the trench: Traders wait for a third point to be generated inside the trench (for a descending trench — a third, lower low) and then enter in the same direction as the trench (short for a declining trench, long for a rising trench).

Profit taking is when the price reaches the bottom trench line (for short) or the upper trench line (for long); the stop is outside the trench.

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Fibonacci Forex Trading Strategies

Identify a distinctive upward or downward movement on the daily chart.

Draw a Fibonacci line on the move and wait for a 61.8% correction.

Switch to the 4-hour chart, wait for the correction candlestick to close and for a new candlestick to form above the 61.8% Fibonacci level; enter in the direction of the move with a stop-loss behind the 50% Fibonacci level.

You may switch to the 4-hour chart, and in case the Fibonacci correction goes beyond 50%, wait for a candlestick to open above / below the 50% Fibonacci correction, then enter in the opposite direction, until the move is completed, with the stop located above the 61.8% level.

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Scalping Red News Forex Trading Strategies

Look out for key news to be released during the day. Select the currency pair to be most impacted by the news.

Fifteen minutes before data is released, enter two orders — a buy and a sell — each within 15 pips from the current price; usually shortly before important news, the market is fairly flat and moves sideways.

Once the data is released, the currency should move strongly in either direction; by using this strategy, you may be in and out of the position within seconds.

You should study the currency pair and its reaction to the news before selecting this method.

Bollinger Band on 4-hour Chart Forex Trading Strategies

On the 4-hour chart, place a Bollinger Band (20).

The bands indicate for us the support / resistance lines.

The upper band is resistance, and the lower band — support.

Often, when the price reaches the upper band — to touch it or even cross it — the price then retraces to the lower band. Entering into a transaction is fairly simple: wait until the price touches the upper band and closes below it (and not above it).

When the next candlestick opens below the upper band, you may go short with a target of 100 pips, or until the price touches the lower band. These explanations also apply for long transactions, when the candlestick touches the lower band and closes above it, and the next candlestick opens above the lower band — this is a signal for going long.

Target gain is the height of the bands, with a stop located outside the bands.

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Simple Stochastic Forex Trading Strategies

This strategy uses the stochastic to understand the price movement (over-bought and over-sold); it works fine together with identification of a double top on Japanese candlesticks for a short transaction, or a double bottom for a long transaction. It may be used for all currency pairs.

It may be used for all time frames (from 5 minutes and higher), but the 1-hour chart is recommended for avoiding false signals. The stochastic values are (14, 3, 3).

Rules for entry:

Morning Star Pattern Forex Trading Strategies

This is a highly reliable reversal pattern (recommended for use on the daily chart).

Pattern description: The market is in a downward trend. The first candlestick of the pattern is a long, red (downward) candlestick. On the second day, the second candlestick appears as a Doji candlestick (similar to a cross) or has a really small body (indicating weakening of the bears and a power balance between bulls and bears). On the third day, a blue candlestick appears (an upward candlestick, opposed to the downward trend), which closes within the range of the first, downward candlestick. Go long on the fourth candlestick (on day 4) which would open above the rising, blue candlestick. Stop loss below the Doji.

This pattern is considered a highly reliable one, especially on the daily chart.

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1,2,3 Pattern Forex Trading Strategies

This forex trading strategy is based on price movement alone; it may be used for all currency pairs and for all time intervals starting with 15 minutes.

With this strategy, we look for a significant upward or downward movement, wait for its correction (which should be smaller than the actual movement); once the correction is completed and the move continues, we enter with the trend direction.

The first candlestick to start the movement is marked no. 1 and the end of the movement is marked no. 2 (candlestick close). Usually, when the movement between 1 and 2 is completed, a correction occurs — the correction end candlestick is marked no. 3, and should not exceed the start of the movement, i.e. candlestick no. 1.

We wait for the price to exceed the close of candlestick no. 2 before entering the transaction. More conservative traders may wait for a candlestick to close below / above candlestick no. 2 before entering in the direction of the movement

The following chart shows entry into a short position, but the same rules apply for going long — in the opposite direction.

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Crossing of Fast Moving Averages Forex Trading Strategies

A trading strategy which is very easy to execute, using only fast moving averages.

It may be applied for all currency pairs.

Time frame: One hour or 15 minutes.

Indicators:

EMA 10

EMA 25

EMA 50

We enter the transaction when EMA 10 crosses through EMA 25 and then through EMA 50. Buy / sell in the direction of crossing the EMA 10. To avoid false signals, wait for the candlestick to close in the opposite direction to that of EMA 50. Rules for exit: When EMA 10 crosses EMA 50 once again, or when EMA 10 returns to touch EMA 50 (here, too, you should wait for the price candlestick to actually close on the other side of the EMA 50 so as not to exit the transaction too soon).

RSI Double Top / Bottom Forex Trading Strategies

While a trading strategy cannot be based on the RSI indicator alone, the use of RSO along with correct technical analysis may result in quite a few good pips.

You may use this strategy for all currency pairs and for all time frames from 30 minutes onwards.

Buy: When RSI crosses below 30 and the candlestick chart forms a double bottom, before the RSI crosses once again above 30.

Sell: When RSI crosses above 70 and the candlestick chart forms a double top, before the RSI crosses once again below 70. Stop below the double bottom for long, or above the double top for short. Profit taking according to technical analysis.

Carry Trade Forex Trading Strategies

This investment strategy is based on selecting a currency pair with a high interest rate differential, which benefits the holder.

The strategy originated in the real investment market, where in the past investors would take long-term loans from Japanese banks, paying 0.75% interest per annum. The money is invested in assets such as: real estate, equities or deposits in countries such as Australia, with an interest rate of 7% per annum.

Nowadays, the need to actually take out a loan is eliminated, by actually taking a leveraged long by going long AUD/JPY (Australian Dollar / Japanese Yen).

Assume, for example, that interest rates for GBP are at 5.75% and on JPY — at 0.5%, you may actually buy (go long) GBP/JPY and gain from the interest rate differential, provided that you hold the pair for the long term.

In actual fact, the investor buys a currency which yields a higher interest rate, paying with a currency offering a low interest rate, such that the investor gains, over the long term, the higher interest on the currency held — which is allegedly risk-free interest.

The currencies on which you may go long are the pairs USD/JPY, EUR/JPY, GBP/JPY.

You may buy the currencies long based on technical analysis on the daily chart or on the 4-hour chart, which confirms the trend in the long direction — after which we buy the currency; although this is a long-term trade, we never the less recommend you place a stop-loss at a safe point based on your technical analysis.

Sunflower Method Forex Trading Strategies

This method originated on www. forexfactory. com and is based not on averages crossing, but on price retracement towards the shorter averages.

For major currency pairs, on the 1-hour chart, draw four fast averages:

EMA 8 (in pink);

EMA 12 (in purple).

EMA 24 (in blue)

EMA 72 (in green).

The averages should be sorted in descending order (short) or ascending order (long) and far enough from the EMA 72.

Upon price retracement to around EMA 12 or EMA 24, wait for the movement to renew and then enter in the direction of the averages (i.e. with the trend direction), when the retracement is completed and price movement is renewed in the direction of the averages. (The stronger the trend, the weaker the price retracement, i.e. the price will only touch EMA 8 or EMA 12).

For more accurate timing of entry, you may use the 5-minute method.

Parabolic Sar + ADX Forex Trading Strategies

Trading strategy based on indicators alone, which may be applied for all currency pairs, from the 1-hour chart onwards.

The indicators used are ADX and Parabolic SAR, sell signal when (DI+), is below (DI-) and the Parabolic SAR generates a sell signal.

Buy signal when (DI+), is above (DI-) and the Parabolic SAR generates a sell signal.

Trading strategy based on daily pivot points

Pivot levels are considered support / resistance levels based on a simple mathematical calculation.

The pivot point is calculated based on candlestick values for the previous day.

To calculate pivot points, obtain the high, low and close of the previous day’s Japanese candlestick.

First, calculate the pivot point, from which you derive 2 support points (S1, S2) and 2 resistance points (R1,R2).

The formula for pivot calculation is:

R3 = H + 2( Pivot — L ) =

R2 = Pivot + ( H — L ) =

R1 = ( 2 x Pivot ) — L =

Pivot = ( H + L + C ) / 3 =

S1 = ( 2 x Pivot ) — H =

S2 = Pivot — ( H — L ) =

S3 = L — 2( H — Pivot ) =

The pivot point is in fact an average of the high / low / close values of the previous day’s Japanese candlestick. The strategy using pivot points is not complicated: when the price crosses the pivot point upwards we enter the buy area — up to realizing the first profit target at the first resistance point R1, with a second profit target at R2.

The same rules apply in the opposite direction as well: When the price crosses the pivot point downwards, we enter the sell zone — up to realizing the first profit target at S1, with a second profit target at S2. Working with pivot points becomes successful when used in conjunction with another strategy, which helps in identifying the trend, i.e. if the trend identified is a long one, we can wait for the London open and go long when a candlestick closes above the daily pivot, with a profit target of R1 or R2, and the opposite of course is true for going short.