7-Forex Trading Strategies
Strategies for trading the Forex are compared here. Whether it’s a simple candlestick formation or a complex formation that forms over many periods, you need a plan. It is best to keep it simple.
A penant is a formof consolidation. We do not trade penants, we wait for a breakout.
A trading channel occurs when the market is trending but seems to stay within a channel.
70% of the time the market is in consolidation, only 30% of the time is it trending. A trending market is making higher highs and higher lows (uptrend) or lower highs and lower lows (downtrend).
When we are in consolidation we draw lines of support and resistance. If the distance between support and resistance is 60 pips or less, we have small consolidation.
We cannot trade small consolidation. We must wait for a breakout.
When the trendline is broken, wait for the first decision candle AFTER the candle that breaks the trendline.
Make sure this decision candle is large (not small) and the body of the candle is at least 75% of the candle (25% wick). The wick may touch the trendline, but the body of the candle cannot. Then enter at the close of this decision candle.
Place your stop 15 pips above the high (going short) or 10 pips below the low (going long).
Place your limits based on the fibs or support/resistance.
Never forget equity management! Do not risk more than 50 pips in a trade.
You start by identifying the trendline.
If the candles are above the trendline, you are in a buy zone. If the candles are below the trendline you are in the sell zone.
While you are in the sell zone, you will want to enter short (bearish) when you see a high formed and a good bearish candlestick formation (evening star, engulfing bearish, tweezer top, dark cloud).