There is much Forex trading method for beginners just as
there are as many strategies as traders. This is hardly a surprise considering
the number of factors involved in creating an effective forex strategy. A few
of the factors which you must put into consideration while creating a trading
strategy include:
·
Market and economic details,
·
Analysis theories and tools
·
The actual abilities of traders to understand
the behaviour of other market players
First of all, what makes a simple and effective Forex
trading method? The first element or determining factor must be to have
criteria easy to understand and at the same time enough detail so that any
trader can put the winning short-term Forex trading method into practice
without any hesitation in its execution.
Being able to understand market trends is fundamental to any
financial trader. Fortunately, the following trend strategy is one of the
simplest forex trading strategies. The movement of markets in the same
direction for an extended period, but the challenge in this Forex trading
method is the speed and certainty to which a trader can identify a trend, and
therefore be one of the first to get on the bandwagon.
Step 1 - Implementation Of The Beginning Forex Trading
Method
In this Forex trading method, an exponential moving average
200 is applied to the hourly chart to help traders differentiate the range
periods from the trend periods. If the candles close near the exponential
moving average, the market consolidates. If the price closes relatively far, we
are in the trend so we can move positions.
Step 2 - Entering Position Of The Forex Trading Method
To go into folds in the details of the forex trading method
entry points, we use Bollinger Bands, which are a dynamic standard deviation
indicator. The Bollinger Bands in this Forex trading method confirm if the
market is expanding and help traders identify the impulses - the perfect place
to get into a trend.
When the market is on the upward trend, you will see the
Bollinger Bands above the 200 exponential moving average, so you can take a buy
signal following the contact between the price and the lower Bollinger Band,
marking a reject.
On the contrary, a sell signal is produced when the market
is on a downward trend and when the bands are below the exponential moving
average. However, the price must also hit the upper band - again indicating a
rejection.
Step 3 - Position Output Forex Trading Method
An exit signal for long positions as sellers is produced
when the price hits the opposite Bollinger Band - the upper band as part of an
uptrend and the lower band as a downtrend. This allows a trader to exploit
trend movements without losing time on retracements.
This is a good example of a simple Forex trading method.
However, as with all trading methodologies, it is not without weaknesses.
Similar to the breakout strategy, it has good results in a directional market
but produces losses in a range and consolidation market. Unlike some other
Forex trading method, this one is a bit more dynamic being on hourly charts.
My Special Advice On The Forex Trading Method
These are the simple and effective forex trading strategies
that are relatively affordable for all but at the same time vary enough to suit
the different types of novice traders. As a trader you should be able to see
this Forex trading method as combinations of different logic, constituting
different tools and following different rules.
While these trading strategies provide good methods to start
forex, they are by no means perfect. There is out there a lot of room for
adjustment as well as improvement. If you really want to succeed in forex, you
must be able to think for yourself and develop your own Forex trading methods.
Finally, you want to use only a simple Forex trading method
as a starting point; do not hesitate to put the strategies to test with our
demo account that allows you to trade safely. And do not forget to check our
education section regularly for an overview of best practices.
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