1. Pick the right trading platform for Your Forex strategy!

Every Forex Broker have their own platform to trade, the problem is they don’t have useful indicators which you need to build Forex Strategy. The solution is MetaTrader platform because there is a lot of useful Forex Indicators for it. Even if you trade on other platform for real you can use MetaTrader Platform for strategy set up, so when you get signal on MetaTrader demo you can open real position on yours broker platform. That is such cute solution isn’t it!?

2. Use your prior Forex Trading experience.

Before you time anything in google.com you should know that you need search for strategy based on your trading experience. That mean your favorite time frame, currency pair, indicators should be part of that strategy. That is really important because you are familiar with those parts of strategy. Remember that!

3. What is your favorite trading style?

Are you intra-day, scalper, swing or long term trader? If you have a lot of experience with intraday trading the best thing is search for intraday Forex Strategies.

Once when you know “How To Find Forex Strategies That Work” three steps above you are ready for search, great place to start is: Forex Strategies Mentor (www.ForexStrategiesMentor.com)

We have developed a very simple idea, as we get on further to place the MAs on the 15-Min chart. For the benefit of day-traders, we’ll be placing all three MA on a 15-min chart. The three MA of choice when using this system is the 5, 55, and 200. I’ve decided to use this due to their speed. I’m applying a MA that aligns itself very close to price action, and it moves along with the speed of intraday trend. At the same time the motive is to have the moving average move along with the overall market trend. The main feature allows the 5 MA set to the price action, with the 55 aligned to intraday price action and finally the 200 MA gives investors an overall feel of the market trend.

I’ll represent each MA with a specific color in order to foster understanding when looking at the chart used for the illustrations:

5: Green
55: Yellow
200: Red

The 3 MA Cross Forex Strategy Signal
We are “BULLISH” when we have the green and yellow MA above the red. It is “BEARISH” when we have the green and yellow MAs below the red.

Image clearly shows the various MAs on the activity chart with the specified colors,
We’ll be employing the trade strategy to the chart (EUR/USD) and historically look into its trade successes and failure in live market scenario.

We initiate the trade at the point where the 5 MA crosses above the 55 for the buy trigger shown on Fig. 1.1. We get the 5 MA crossing below the 55 for a bearish trend. Our take profit is set thrice the distance of our stop loss to our current price action. Our stop loss is allowed on the very most recent zone where the trend started as shown by the horizontal red line above.

Conclusion
It should be noted that any strategy that requires the employs an indicator for entries is sure a risky ride. This is because technical indicators are price dependent, and as such lag a whole lot. We find the MAs trying to cross most times and most times they give false alarm

This article would deal with sideways moving market and how investors can trade these market directions and make money off it.

• Range Trading: Range Trading is one of the most suitable ways of trading a sideways market. You are expected to map out major resistance and support level that price is expected to move within, this would make up what is known as a trend wall or a trend channel.

A good knowledge of where price is moving towards (sideways direction), can help you take a BUY decision when price hits the support level and a SELL when price hits the resistance. Well as a matter of fact, it is necessary for you not to forecast the market based on the support &resistance levels alone as the use of oscillators should be vital in your exit and entry.

As a matter of fact, I employ the use of stochastic and sometimes I use the RSI in a situation like this. You can SELL when the RSI and stochastic are in the overbought regions and BUY when they are align in the oversold region.

• Scalping: Scalping is a method of trading that entails the investor taking a position and exiting within a short timeframe. When scalping it is important that you make use of resistance and support levels (Fibonacci or Pivot Point) in a bid to better utilize your open and close.

To be comfortable with this type or trading style, you’ll be required to spot out the range of price actions before triggering a buy or sell position. Spotting out entry point is very vital as it helps investors plot out the various pivot points or Fibo levels once they have successfully established the range.

It is wise to take a position when the pivot level or Fibonacci level coincides with the support and resistance channel and exit the position when it touches the level.

Let’s say we have a BUY order at the S1 level, it is okay for you close your position when it touches the next pivot level. If you got into a trade at the 0.382 level you can exit your position when it reaches 0.236 levels.
The above mentioned methods are a viable way for investors to trade sideways markets and make gains off it if duly applied.

Developing a profitable Forex strategy/strategies requires lot of TA, price action, and indicators knowledge. There are many Forex strategies online, so what about finding profitable one? Unfortunately you can’t find magic strategy, what can you do is find the best Forex Strategies sources and start to learning what works the best for you. Every strategy in general have some great points.

We are going to show you really great place for start. You need easy to understand examples with images and strategy explanation. Forex Strategies Mentor (ForexStrategiesMentor.com) is place where you can find great Forex Strategies based on MetaTrader indicators and templates (free for download).

Read more about Forex Strategies

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The 200-Day Moving Average is a vital forex trading system that’s taken seriously by every professional trader out there. As a trader myself, I find this tool a valuable one that’s reliable and competent in doing what it says it does. It performs quite a number of functions simultaneously. I’ll elaborate some of the ways this valuable tool can be integrated into your trading system.

As a matter of fact, I do employ the 200-Day Exponential Moving Average instead of the Simple Moving Average as I find the Exponential Moving Average more versatile and responsive in comparison to the Simple Moving Average. Find herein some ways you can employ the 200-Day EMA to your trading.

Trend Finder: Looking at some of our previous blog posts, you’ll discover that moving averages can be used as trend finders. It is required of you to closely monitor the slope and you’ll be able to determine the market trend.
If you get to detect a 200-EMA surging downward, then you are in a downtrend, if on the other hand it goes upward, then you are in an uptrend.

Trend Strength: Not minding the direction of the trend that you are in, you can describe a trend as being quite or noisy. We basically have 2 types of trending market; the ‘Trending and Quite’ & the ‘Trending and Volatile’.

For a 200-EMA that’s steep, that’s a trending and volatile market, while a gradient of the 200-EMA that’s gentle shows a market that’s trending and quite.

First image below shows a trending and volatile 200-EMA and second image illustrates the trending and quite 200-Day EMA.

Support or Resistance Level: Amidst all the different values of moving averages that are employed by investor, the 200-Day moving average remains most useful. If you take a look at your trading chart, you will find the market respecting it more than any other EMAs. Therefore it can be used as a strong support and resistance level.

Now that you are fully aware of how powerful the 200-Day EMA is and how it can be to trading, it is important to start its integration to your trading system and make huge gains from it.

It then does not beat our imaginations that a series that’s found on natural occurring processes, can also be of valuable interest to the study of price movements and the markets. We would be concerned with how the markets react to certain suggestions of the Fibonacci Series when it is merged with trends and range patterns.

The Golden Ratio

We find a lot of investors out there who use the Fibonacci Series for making trade decisions, in all of these the raw figures become less important. To make our analysis firmer, investors employ the ratios between the numbers found in the Fibo Series in a bid to determine methods like resistance levels, retracements and extensions of trend found in a price range. The Golden Rule is a ratio that is derived from two successive numbers in the series found in the Fibonacci. For instance, 5/8 is approximately 0.62. While 8/13 is approximately 0.61, if we subtract this number from 1, we would get 0.38, which is also the ratio of two numbers in the series with one number in between.

Application of the Fibonacci indicators

When applying this rule to currency trading, it is known that in the market we have resistance support levels for a trend that’s developing or a ranging condition is determined by the Fibo ratios. If we have a trend that is measured in length as 3n, the retracement would be expected to be 0.38*3n, or 0.61*3n. At the same time, the extension of the trend will be at 5n, or 8n, as shown in the series.

Fibonacci Retracement

For a trending market, we can employ the Fibonacci retracement to determine the retracement. The most important ratios are 0.38 and 0.61. We can also find use for the 0.50 Fibonacci ratios. Potential support areas are tagged as the levels that match the multiplication of the size of the main price action with the ratios. For instance, if the price moved from 1 to 1, 3 in its major leg, the retracement levels would be at (0.3*0.61= 0.183) and (0.3*0.38=0.11), that is, at 1.18, and 1.11. Here 0.3 is (1.3-1), that’s the length of the main movement, and the factors are the Fibonacci Ratios. Our chart on Fig. 5.0 shows a Fibonacci Retracement on a EUR/USD chart.

The Trading software (MetaTrader 4) does all the calculations stated above and displays them without you having to pen down any single number. Please bear with us if you find this topic a bit complicated, as it becomes easy after drawing a couple of Fibonacci on a currency chart.

On the indicator any level between 0.7 and 0.3 is termed to be neutral level depicting a continuous phase. When we have a bullish trend and the indicator surges as well, we tend to believe that the bullish trend would continue on its way upward. If we get a bullish trend, along with a falling indicator value, then we have a divergence around the corner. What this explains is that the bullish signal is losing momentum and we could witness a swift reversal. On the other hand, when we witness a bearish trend, and we see the indicator value surging upward, we can assume that the downtrend is weak. There’s a convergence of the oscillator and the price movement, meaning that we would be seeing a reversal. When we find the indicator and the price in an uptrend, what this means is that the prevalent price pattern would keep up.

Trading with the Demarker Indicator

This indicator is an oscillator and as such can be sued on almost all common styles that are applicable to oscillators. The regions of overbought and oversold are 0.7 and 0.3 respectively. When we find the indicator beyond the 0.7 (overbought) marks, then we should be expecting price to fall pretty soon. On the opposite, we get ready for a bullish signal when we find the indicator beyond the 0.3 (oversold) regions.

Most of you who are conversant with the Relative Strength Index (RSI) would be fully aware of the fact that it is constructed similar to that of the demarket indicator. The one difference is the fact that the Demarker employs the Simple Moving Average of the prices, while the RSI uses an Exponential Moving Average most of the time.

Image above shows the Demarker indicator on a 1-Hour EUR/USD chart. It shows the overbought levels and the corresponding selloff. We also had the Demarker indicator on the oversold region and the corresponding buyoffs we saw that followed. This is an indicator that is suitable for ranging market, and if it must be used on a trending market, it should be a backup to a trend indicator, and we should look out for divergence/convergence interpretations alongside.

Conclusion

The Demarker indicator is a firm, simple and dependable indicator that can be substituted for the Relative Strength Index when an investor decides in that vein. It does not show any outstanding difference from the latter and as such we should not have a system that combines both.

In the first part of this article I had explained what Moving Averages are and had also delved into some of the types of Moving Averages. You should check on your listings to find the Part 1 of this article before proceeding. I’ll continue in this part to explain further more types of Moving Averages;

Linear Regressed Moving Average

The Linear Regressed Moving Average is similar to the MA as its weighting factors are linear and not exponential. A good example is shown when the product of the price of the most recent period (x) and 1, and the product of the next in line period (x-1) and 2, with the next product being 3, and it continues until we get to the most recent timeframes. Here, we get the most recent price receiving much emphasis, with the latest fluctuations, ups or dips are represented with definitive clarity, thus helping in trade decisions,

Applying the Moving Averages

You’ll find a number of trading strategies that traders apply the moving averages on, most notable we can classify them all into three sub-groups that every other strategy falls under.

Crossovers

The Crossovers are noticed when we have a price hike or slump below the moving average, alerting the end or the start of a new trend. As a technical trader, you’ll discover that Crossovers are most used in technical trading and as such do not offer investors a firm outlook of the market’s direction. We use the Crossovers better in combination with other technical tools and styles in a bid to define the price action with greater precision.

Moving Average Trends

The Moving Average does have its own trend sometimes asides the trends in price movements. These trends can be used in determining entry/exit points. Yes, this is not as dependable an entry/exit signal system as the price action in itself when applied alone. This can possibly be a veritable tool in confirming the trend of a price action when combined with the price action itself.

Divergence/Convergence

We experience divergence when we find the trend in a jump and the moving average spikes downward. A convergence on the other hand explains the market in a bear’s trend, but the moving average opposes it by registering higher highs. When we have events like this, we are thought to be having a future reversal. Investors believe that the market could be running out of strength when we see price action going against the indicator value and this could be a wise time to get into a counter-trend position. During formations like this, we are not always sure of the timing and as such may never occur. Normally, during strong trends, we could get divergence/convergence occurring frequently without having a real reversal. This is usually one of the most uncommon technical configuration and yet most popular when inventors try to decipher a moving average.

Conclusions

The most interesting thing about this indicator is the fact that it is simple to deploy on charts. Making it simple to have on any strategy and also use exclusively on as a standalone technical tool. The Moving Average has remained a very versatile tool for any technical trader, not minding the strategy he/she employs alongside the preferred market.

Understanding the importance of moving averages is vital to every trader, as they are one of the most valuable tools employed in gauging price actions during a trending market. We find traders using Crossovers, divergences, alongside trends of the Moving Averages to define and analyze the alerts that can be drawn out of the market’s price movements. This invariably can be used in keeping us abreast with markets forecast.

I. Types of Moving Averages

We have quite a number of moving averages out there; we’ll discuss a few of them:

Simple Moving Average

The simple moving average also known as the SMA is one of the simplest moving averages. It employs adding up the closing prices within a given period of time and divides it by the time spent, getting to the value of the indicator. There are no smoothing or weighting factors applied.

As seen on image, we have a EUR/USD chart with a Simple Moving Average shown by a red line cutting across the price chart. By default, it is a 14-Period Simple Moving Average.

Exponential Moving Average

When traders want to get a clearer picture of the value of the most recent prices, they tend to the EMA or Exponential Moving Average. Traders have discovered that the EMA has more weighting being computed into it exponentially and as such when we move our charts to the left in the direction of historic price actions, we find a decrease in the computation of the Moving Average. The decrease seen is normally noticed to be faster than it is in a linear progression and the most important prices are the recent ones. Invariably, this is shaped into determining the value of the indicator.

Image above shows the Exponential Moving Average in a blue line. The red line is our Simple Moving Average and we can see from the chart how the EMA reacts faster to price changes.

Smoothed Moving Average

The Smoothed Moving Average has a lot in common with the EMA, unless that it takes in consideration all available data. The value of the indicator is not determined in a lot of ways by the earliest price values. The Smoothed Moving Average is used in smoothening price action, eliminating short term volatility, and giving us a better understanding of the forecast for the market’s momentum.

It should be noted that the moving average is a lagging indicator and as such we find some of the signals already exhausted in the market. It takes note of market movements or a developing trend after it has been well established. In the second part of this article, we’ll come across more types of moving averages.

Read Moving Averages: What Do They Mean to Investor? Part 2

The commodity Channel Index (CCI) Indicator was designed by Daniel Lambert, who based it on the mean of the deviation between the Moving Average and the Real Price (Mean of high, low and close). We find traders use this indicator to identify instances in the market where price is hitting outer lower or upper bands (overbought or oversold conditions) – with price moving away from the Moving Average. Sometimes investors apply the CCI in gauging trend direction by trying to determine if it is positive or negative.

Technical traders around the world have continued to see a spike in increase of the CCI, as we find traders use this technical indicator in determining cyclical trends in not just commodities, but also in forex and equities.

Applying the CCI with other oscillators can be a valuable hybrid. Traders are able to use it when identifying potential peaks and troughs in the price of a financial instrument, and making it possible for investors to get concrete evidence to gauge alterations in the direction of price action of a financial asset.

It is known that smaller values of CCI shows that price is near its Moving Average, and huge CCI values are indicative that price is more distance than its Moving average.

Trading the CCI Zero-Line-Reject

This is a very interesting method that was developed by Ken Wood. He did this by trading the various patterns found on the CCI. This pattern is traded when the CCI gets close to its zero point on the line, and reverses to its previous direction.
This system is basically parallel to the price getting closer to a MA (moving average) – and reversing off it. This is how we determine our entry – MA’s that is identified as support areas. Fig. 1.0 is a EUR/USD 1-Hour timeframe example of the CCI Zero-Line-Reject system. The chart below clearly shows the system making a bullish turn after the CCI gets close to the zero line and bounces off, triggering a buy signal.

Zero-Line Cross
You can also trade the CCI indicator using this simple system known as Zero-Line Cross. It’s based on the following processes:

Go BULLISH when the CCI line crosses its zero-line from below.
Go BEARISH when the CCI crosses its zero-line from above.
Image below shows a 1-Hour chart EUR/USD with the CCI line crossing the zero-line from below, hence triggering a BUY signal.