With all the complexities of trading forex, knowing which indicators to use, looking for account managers or joining various signal groups. You can easily save yourself the hassle by folllowing this simple technique which really do rock wonders. On top of this, all you need do is have a heart of learning, determination and taking charge.
Let's get down to the tutorial below.
When you open a trading platform most likely the popular mt4 trading engine. All you see is something depicted as shown below.
The above picture shows a candlestick chart of a currency pair for example lets assume a EURO/AUD pair.
The chart shows movement of the price between EURO and AUD.
Now, its difficult to predict the movement of the price that is whether the chart will go up or it will go down.
So we need a strategy to solve this problem.
A strategy will give us a cue to what is about to happen to the price. This way, we can place our trade rightly.
CAUTION: A strategy is not always 100℅ accurate.
PART A
Now let's set up this strategy:
(1) Go to your indicators in your trading platform, add SMA (Simple Moving Average) or MA (Moving Average). You will likely see one of the two.
Set period = 4
(2) Add another SMA or MA as the case may be but with a different colour from the first in case (1).
This time set period = 60
The chart should look like the one below
A blue line representing the SMA/MA 60 and a red line representing the SMA/MA 4
Lets take a look at the signal.
When the MA 4(red line) crosses upward the MA 60 (blue line), that is a buy or call signal and when the MA 4 crosses downward the MA 60 that is a sell or put signal.
Take a look at the image below. The right and the left part of the chart showing the signal as discussed above.
Another image is shown below showing these two MAs crossing or giving a signal below
You can sit with your trade and close trade whenever you feel you have made enough.
Lets have a look at an incorrect signal below.
You would see the SMA 4 in red line crossing downard the SMA 60 in blue line but rising upward almost immediately after crossing downwards.
Whenever this happens, kindly close the trade to avoid loss.
Another way to avoid this problem is to study past trends of the charts..
In subsequent trades you can double your investment to cover for previous losses if there was any.
PART B
To crown up this strategy explained above or perfect it.
Let us add another strategy to it and then combine it together.
This way we cover up for errors plus or minus (+-).
(1) Go to your indicators, add BOLLINGER BANDS
(2) Add SMA/MA 10
Let's take a look at how to take a signal.
Look at the image below.
The green lines represent the bollinger band while the purple line represents the SMA 10.
Look closely at the image above. When the middle bollinger band in green crosses the SMA 10 in purple and both moves upward parallel to each other as shown in the image above, then that is a buy/call signal..if it does otherwise that is a sell/ put signal.
Have a look at the otherwise case (sell signal below)
To get magnificent result we combine PART A and PART B strategy of this post together.
In simpler term have a look at the image below.
The chart chart of tbe combination looks like the one above.
Now lets take a signal. A buy/call signal for example.
Look at the two arrows in red in the picture above.
That is where both signals of both strategies take place.
Patiently wait for both strategies to give same signal at the same time then place a trade.
Here is another buy/call signal
Lets have a look at a sell/put signal below.
Here is another sell/put signal.
There you have it guys. If you found this helpful teach your friends this strategy and flog the asses of those brokers.
Till next time. Do trade safe and smartly!!