Forex trading strategy #1 (Fast moving averages crossover)

Open MT4 platform.
From the top menu select: Insert -> Indicators -> Trend -> Moving Average.
Set MA method to Exponential, press OK; and you've got an EMA on the chart.

Thomas

hi friends. i am new to forex. could anybody pleas tell me that how to put the EMA in mt4. thank you.

Hey, Joe

Saw your question about Forex broker manipulating prices and hunting stops.
This is an old topic: one says that brokers do unfair practices, another that a broker won't dare to jeopardize his reputation by hunting stop and creating fake price spikes, besides good brokers are regulated by authorities.

if you trade with a dealing desk broker, they can see your orders from A to Z. Should they decide you're "cheating on them" (read "trading illegally by using more advanced quotes".. from somewhere I don't know where), they can teach you a lesson by taking out your stop once or twice, but eventually you'll be contacted to close the account for not following the rules.

If a dealing desk broker sees that there has been a large percentage of client stops clustered at certain level, a broker can fake a price spike to its advantage, especially if its business is going bad.

But then, on the other hand, by manipulating prices a broker puts in jeopardy its future reputations. It is not uncommon for traders today to simultaneously monitor few trading platforms from different brokers. When on one platform price goes wild, but on two others it continues to trade calm, wouldn't you have questions? Sometimes one such unjustified spike can cause a violent reaction among traders submitting reviews and feedbacks all over the net. What this means to a broker?
Obviously lower ratings, a lost reputation, fewer clients -> fewer business...

Well, having said all this, you'll be safe if you avoid small, newly created and unregulated brokers. These are companies, which in case of a major failure will simply pick another name, make another website and continue their scam practice.
A large regulated broker that has been on the market for several years is unlikely going to jeopardize its reputation, because changing the entire image will be way to costly.

Either way, if you are planning to use an EA, it would be a great idea to have one stops shown to a broker and then other actual stops, which will be executed as instant buy/close Market orders according to the internal EA rules. After all it is all about protecting your money. Also consider trading with No-dealing-desk broker, this way you will know that there should be no people who will monitor your trades and trade against you.

Try this web for a broker choice:
http://www.100forexbrokers.com/
BT

I have been looking over a few strategies...now I know I should not place alot of indicators in one chart cause they'll just blow up in my face but one good thing I noticed is during observation of the new indicators in action across the ones already working in the background.

Mainly the EMA and the WMA...I had WMA set at 5 as was in the example and EMA set for the usual 10,25,50...time frame was for 5 min chart.

I noticed that movement of the WMA along with EMA 10 was a fast responding indicator and I was able to read at a much faster pace than with EMA which would usually get you in or out late.

Thing is it works fine with 5 min charts but when I tried with the 15 min charts i got a little off.

Then again the main indicator being the pivot points if you have set targets the WMA + the EMA would make a few quick pips in between.

I dont know if having such a cross between WMA and EMA is a healthy thing. Could someone confirm such a method?

Regards,

Mo

just thinking aloud on what Joe is saying .....

Would this be the same as with stock trading?
If so then even when you trade with stocks you place stop losses with the broker who at the end of the day controls it???

Hi MO,

the numbers 10,25,50 can be used for any time frame: from 1 minute to daily, weekly and higher.

to Joe T: - That's one detailed explanation of a moving average. Thank you!

Regards,
Edward

Since yesterday's read through the website I have been able to slightly focus the knowledge I gained into action.
As a start I have decided to use the pivot points and the EMA. In doing so I have been finally able to decide when I want to enter and exit a trade rather than what I used to do....guess work.
For the EMA I have started as described in this example with EMA 10,25,50 with 15 min chart. I am testing using EUR/USD and random pair GBP/CHF.

Question: can the numbers 10,25,50 be used for any time frame if one wants? i.e. for example 1 min charts or 1 hour charts or do they need to change as the time frame changes? In any case why would they need or need not change?

Regards,
MO

Hi Joe,

Welcome to Forex!
Your story was very exiting to read. Thanks a lot!

Despite being new to Forex, you seem to have a very good and quick grip on the strategic planning in the currency market. Again, I was truly exited to read about the new strategy that you've been modifying and testing recently. Particularly, an evaluation of how far away the price closes in the relation to a moving average has caught my attention (somehow I never thought of this factor before).
You've already shaped a completely new strategy. I personally like USD/JPY pair a lot. The fact that you are focusing on one currency pair at the time in order to learn its unique behaviour, daily trading ranges, trending ability and volatility factor, makes your research 10 times more as valuable and productive. Keep it up!

All-in-all, thank you for the interesting insight into your Forex journey. If there is anything I can help you with, let me know.

Regarding the question of whether a broker can see your stop loss order: I know that a broker cannot see/read your EA and the rules it trades by. However, when your EA sends orders, the data about stops, take profits etc become available. So, at that particular stage we can assume that if a broker runs a dealing desk, he can manipulate prices. A broker won't do it just for you, but if your stop is happened to be where all other stops are, then you're at higher risk. It would be an unacceptable practice for a broker by any standards, but it can happen.

Best regards,
Edward

Hi,

I started learning about trading just 2 months ago as i bought an expert advisor without reading about them being scams or bogus...I thought I would let it run on the demo account while i learn about trading and observe the robot's movement.
So far it has made a few small successful trades and 2 small losses. It doesnt trade much with a total of about 6 - 10 trades in 2 months.
I would like to test it on a live account just to see if it does keep up the current trend or it changes its behaviour.
On the other hand in the 2 months i've spent searching the net for something useful that could lead me to trading I couldn't find anything and the knowledge I learned is minimal and general. So I applause the creator of this website and appreciate him taking the time and effort to keep it up.

I do hope that everyone could bear with my questions that may sound silly at times but one learns from the silliest things. As I am brand new in the forex business here's my first question:

I have read about the Exponential Moving Averages but would like to know what do the numbers in the setting mean? As explained here to set them at e.g. 10,25,50 or 14,24,49, etc, etc.

What is there impact? how important is getting the right numbers other than getting an indication of when to enter or exit the market?

Regards,
Mo

For one day you use daily bars, for 30 min - 30 min bars.

Thomas

Thank you for this web site, great work!
My trading platform allows to set price bars to different time intervals. Would you set price bars based on the time frame, so for 1 day use 30 mins bars?

Hi Fredrick,

Start with the following free e-books:

http://www.fxpivot-points.com/
http://www.fibonaccibook.com/

Regards,
Edward

please i dont know the principles of the pivot point or the fibonacci pls can i be helped? im a newbie and really need serious assistance on those aspects. fredrick

You have not probably seen huge trends yet. Even properly leveraged and managed accounts can suffer if not major losses, then years of hanging onto a losing trade... In either case these are "dead money", because they don't move: you cannot use them for trading, you cannot withdraw them, they are hanging there for no good... and you still under a risk of losing it all if currency trends even further...

rich

I personally dont believe in stop loss, If your money is leveraged correctly you should be fine and should be able to stay in a trade until your up.