Target the Pips- Generally, traders target the pips which are very hard to get and very risky. Targeting the pips which are not achievable is very disheartening and as well risking the capital for no good reason. So the traders should target the pips which are realistic. Targeting on the basis of expectations and out of desire which has no connection with reality. It means that traders are expecting that they should get mango from the tree of apples. Reward to risk ratio- Reward to risk ratio is again an efficient strategy to follow.
If for the small reward we are risking our big capital then it is not a good thing to follow. The reward to risk ratio should be in the favor of our trading style it should never be contradictory otherwise it will lead to going all the efforts in the vain. Conclusion — Simple forex trading strategies that work is about trading strategies which can be followed by any trader for better profits. Always remember a planned shot with small steps is always better than the massive shot with no planning as in the planned one there is some scope for improvements but in massive one, there is no way we can understand what to do next.
So try to follow the strategies for winning outcomes. Winning not only means to earn but earning an experience is itself a reward which can be done with planned moves unplanned are not even justifiable. Have any questions? Like any trading strategy, swing trading also has a few risks. Another risk of swing trading is that sudden reversals can create losing positions. Because you are not trading all throughout the day, it can be easy to be caught off guard if price trends do not play out as planned. To decrease the risk of this happening, we recommend issuing stop orders with every new position.
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Bollinger Bands Indicator: This is a technical indicator developed by John Bollinger designed not only to spot overbought and oversold territory in the markets but it also gauges the market volatility. Our swing trading indicator makes it easy to manage the risks of trading and also make use of price changes. Using a candlestick trading chart can also be helpful.
These charts provide more information than a simple price chart and also make it easier to determine if a sustained reversal will occur. When there are higher low points along with stable high points, this suggests to traders that it is undergoing a period of consolidation. Consolidation usually takes place before a major price swing which in this case, would be negative.
Learning about triangle trading and other geometric trading strategies will make you a much better swing trader. This swing trading indicator is composed of 3 moving averages:. The figure above should give you a good representation of what Bollinger Bands look like.
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Most trading platforms come with this indicator in their default list of indicators. The preferred setting for the swing trading indicator Bollinger Bands indicator is the default settings because it makes our signals more meaningful. We reached this conclusion after testing the strategy based on several inputs. Before we go any further, we always recommend writing down the trading rules on a piece of paper. Also, read our Forex success program. This strategy is really just comprised of two elements. The first element of any swing strategy that works is an entry filter.
The second element is a price action based method.
The first element we want to see for our simple trading strategy is that we need to see stock price moving into overbought territory. Any swing trading strategy that works should have this element incorporated. After we have touched the upper Bollinger Band, we want to see confirmation that we indeed are in overbought territory and the market is about to reverse.
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The logical filter, in this case, is to look after a break below the middle Bollinger Band. This break below middle Bollinger Bands is a clear signal in the shift in market sentiment. In this regard, we want to see a big bold bearish candle that breaks below the middle Bollinger Band. The second element of this candlestick based method is that we need the breakout candle to close near the low range of the candlestick. This is indicative of strong sellers, which really want to drive this currency pair much lower.
Every swing strategy that works needs to have quite simple entry filters. Now, we still need to define where to place our protective stop loss and where to take profits, which brings us to the next step of our simple swing trading strategy. We assumed that this candle shows the presence of real sellers in the market.
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If you want to learn more about this breakout technique and how to manage breakout trades, please read our Breakout Trading Strategy Used by Professional Traders article for more insights. The next part of our simple swing trading strategy is the exit strategy which is based on our favorite swing trading indicator. The reason why we get profit here is quite here to understand as we want to book the profits at the early sign the market is ready to roll over.
Reacting quicker allows you to ride a trend earlier in the curve, but may result in following more shorter-term trends. The buy signal is when the price breaks out above the day high, and the sell signal is when the price breaks out below the day low. This is very simple, but there is still a major drawback. Namely, new highs may not result in a new uptrend, and new lows may not result in a new downtrend. So we are going to experience our fair share of false signals.
Using a stop-loss can help to alleviate this problem. To keep things really simple, here's an extremely basic rule for exiting trades: We are going to take a time-based approach. You simply close your position after a certain number of days have elapsed. This time-based exit side-steps the issue of things becoming tricky when the trend begins to break down.
Once you enter a trade, hold it for 80 days and then exit. Remember, this is a long-term strategy. If you find these parameters do not yield enough frequent signals, they can be adjusted to whatever suits you best. For example, you can try using hours instead of days for a shorter strategy. Backtesting your results will give you a feel for the effectiveness of your choices. MT4SE offers backtesting, along with a large selection of other useful tools.
Did you know that Admiral Markets offers an enhanced version of Metatrader that boosts trading capabilities? Now you can trade with MetaTrader 4 and MetaTrader 5 with an advanced version of MetaTrader that offers excellent additional features such as the correlation matrix, which enables you to view and contrast various currency pairs in real-time, or the mini trader widget - which allows you to buy or sell via a small window while you continue with everything else you need to do.
Our second Forex strategy for beginners uses a simple moving average SMA.
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SMA is a lagging indicator that uses older price data than most strategies, and moves more slowly than the current market price. The longer the period over which the SMA is averaged, the slower it moves. For this simple Forex strategy, we are going to use a day moving average as our shorter SMA, and a day moving average for the longer one. In the chart above, the day moving average is the dotted red line. You can see that it follows the actual price quite closely. The day moving average is the dotted green line.
Notice how it smooths out the price movement? When the shorter, faster SMA crosses the longer one, it indicates a change in the trend. This suggests a bullish trend, and this is our buy signal. Rather than solely being used to generate trading signals, moving averages are often used as confirmations of overall trends. This means that we can combine these two strategies by using the confirmatory aspect of our SMA to make our breakout signals more effective.
With this combined strategy, we discard breakout signals that don't match the overall trend indicated by our moving averages. If it is, we should place our trade. Otherwise, perhaps it's better to wait. Our final strategy is essential to know. It's a type of trade that is widely used by professionals too, so it is not purely a beginner Forex strategy.
Best of all, it is easy to implement and understand. The essence of the carry trade is to profit from the difference in yield between two currencies. To understand the principles involved, let's first consider someone who physically converts currency. Imagine a trader borrows a sum of Japanese Yen. Because the benchmark Japanese interest rate is extremely low effectively zero at the time of writing , the cost of holding this debt is negligible.
The trader then exchanges the yen into Canadian dollars and invests the proceeds into a government bond , which yields 0. The interest received on the bond should exceed the cost of financing the Yen debt. Obviously a currency risk is baked into the trade.
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If the Yen appreciated enough against the Canadian dollar, the trader would end up losing money. The same principles apply when trading FX, but you have the convenience of it all being in one trade. If you buy a currency pair where the first-named ''base currency'' has a sufficiently high interest rate, in relation to the second-named ''quote currency'', then your account will receive funds from the positive swap rate.
The amount yielded is correlated to the amount of currency commanded, so leverage is an aid if the strategy pays off.
As noted earlier though, there is an inherent risk that you could end up on the wrong side of a move in the currency pair.