Forex trading strategy #45 (Simple trading strategy guidelines)
Submitted by User on May 7, 2011 - 17:01.
Submitted by Sanjay Ram
Hello all, Sanjay Ram here from Liverpool, England. This is a great spirited site that lends a heart and ear to many aspiring traders, and God Bless the good people who are hosting this site.
I am a businessman, but have been trading for about three years now. I would like to share a very simple strategy. I apologise if it is too simple, or even ridiculous.
1) Plot Support and Resistence Lines on a Daily Chart.
Use pairs like EUR/USD, GBP/USD, AUD/USD, USD/CAD. Remember, S/R are Key Levels of the market; Swing points, historical S/R, short term S/R. Take all these points and connect horizontal lines. Also, note the general trend.
2) At the 4 Hour Chart, plot the lines drawn from the Daily Chart.
Now look for what generally price is doing.For example, if in the Daily Chart price has broken a resistence and moving up (one bar formed only), in the 4 hour chart, there will be a teeny meeny mini uptrend. If this trend were to continue in the Daily Charts, then the 4 hour will hold true to a trend that can last about a week or so.
3) Now plot Bollinger Band, Standard 2 deviation to 10 (not 20).
Take the middle line away and plot a 20SMA. You can do this is METATRADER.
4) Look out for price hitting onto your DRAWN horizontal lines (either S/R).
Then, look out for PIERCING candles on these S/R points. Eg, if is the said uptrend above, we will be looking for a price low to enter.Let's say price is now at a Support level, it is inside the BB, and at the said support level, it closes with wicks piercing the bands. This is as good a trade to be had in terms of probabilities. On the next candles Half close, we enter long.
5) Please keep in mind the following:
a) Always use the ATR to know what are your chances of gaining how many pips. I have written separately on this subject. Please read up on this matter.
b) Always use good money management. This site has many good reads on this subject.
c) Be disciplined. Like a recent article i saw in this respected site, do not do what you FEEl.....do what your analysis tells you.
Wait and wait and wait for your opportunity. The market will always be there after you and me are long gone, my friend, so why worry. Opportunities are galore in the Forex Market. Patience, friend, patience.
And there you have it. I am sorry if this strategy did not use any indicators or other fanciful techniques like switching too many time frames. I have a personal belief; ALL techniques are good, it all depends on the person executing it. Learn which suits you best, and believe me, you will find one!
The Market is True, The Pips are True.
(For now, try and avoid JPY, because of the recent havoc the country has been through, and their central banks trying to hold base. During the Asian session, this can be easily seen and although we can Short positions in most JPY pairs, the retracements and swings will easily eat your Stops out. Just a word of caution only.)
(I am not selling anything, I do write articles for magazines. If the Administrators allow, you may email me.)