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These can be your buy and sell points. This strategy is very simple and can be used in conjunction with other indicators to gain further confirmation of buying and selling points. This strategy uses volume indicators to look for price action. It is based on the theory that changes in volume are usually followed by price action. When volume is low, it can be a sign that a trend is dying and may reverse, or that it is taking a break before continuing.
To use volume, forex scalpers need to be patient during a ranging market, spot volume spike alongside price action, and buy before prices go up. Once they are high, sell. Be sure to wait for confirmation of a bullish trend before relying on volume! The exponential moving average strategy will require you to use exponential moving average indicators intensively.
Using the moving average indicator is very simple, simply look at the current price levels. If they happen to be above the exponential moving average then that is a good time to sell. Similarly, when the price can be seen hovering below the exponential moving average then it is seen as a good time to buy. The trend line and stochastic scalping strategy are also reliant on indicators which in this case is the stochastic indicator complimented with trend lines.
Stochastics measure if something is overbought or underbought. A stochastic reading of 20 or below is classified as an underbought condition whereas a stochastic reading of 80 or above is classified as an overbought condition. This is a good strategy because you have two conditions met. Trading on a trend is one and the overbought, underbought condition from the stochastics acts as the second.
Traders generally use Bollinger Bands to check for volatility on the market they are currently trading in. Bollinger Bands work by measuring the highest as well as the lowest points of a currency pair and indicate the result using its bands which helps its user in determining when to avoid or jump into the market. The implementation of this strategy is rather simple, if the prices are reaching the upper band then that is considered to be an indication to go short. Similarly, if the prices are reaching the lower band, then it is time to go for a long position.
Trading is an activity that rewards patience and discipline. While those successful in scalping do demonstrate these qualities, they are a small number. Ensure that your strategies are working by either using a demo account to practice or using a significantly small amount to invest and try out your strategies on the foreign exchange.
Market makers are not advised because prices fluctuate less. Forex scalpers thrive on volatility. Be sure to check them out and look at the reviews of their service. Bear in mind, some brokers do not allow forex scalping and you need to first be sure you can forex scalp with them before signing up!
Your platform should also be able to keep up with your orders, or at least get as close as possible to them. Fill or kill orders are a way to get the exact price you want. The number 1 thing forex scalpers need is volatility. Big movements in price, whether bull markets or bear markets. Environments where there are explosions in price, short pauses, and then more explosions, are the best.
Great times to find volatility are when certain markets overlap , such as when the London market is open at the same time as the Tokyo or New York market. You should also be able to identify trends and use them to your advantage. Whatever strategy you choose, you will likely need to spot key points where you can enter and exit the market. Forex scalpers also use charts, ranging from one minute to an hour.
Charts bigger than an hour will not be useful as you need to focus on very small price movements, usually around 10 or so pips per transaction. It is advised though that before starting a trading session, scalpers should look at daily charts to spot the highs and lows the currency pair may reach in that day. Some forex scalpers avoid scalping up to 30 minutes before big news events. Others try to scalp it directly.
This will rely on if you use fundamental or technical analysis or a mix of the two. Many of the best forex scalping strategies use indicators to tell traders when to trade. As a forex scalper , you may use a combination of the strategies mentioned. Ideally, whatever strategy you decide to use, look for confluence , which is where you get at least two signs that you have found an opportunity to buy or sell. By using at least two signs, you are more likely to get results.
That said, finding confluence is very subjective and depends on what indicators you are using. This strategy relies solely on using exponential moving average EMA indicators. EMAs are very easy to use and basically show the underlying trend behind a forex pair by showcasing the average price over a period of time, instead of the current price. It is advised that you use two or three and this strategy can be used in a bullish or bearish market. When the current price is above the EMA, it can be seen as a signal to sell; when the price is below the ema, it can be a signal to buy.
By using more than one EMA, we can be more accurate when identifying crucial buy or sell points. In a bearish market, when the price reaches the lowest EMA, it is a sign to sell. The opposite is true in a bullish market. When the price meets the highest EMA, it can be a sign to buy. Set a stop-loss a bit before or after the meeting point.
This will prevent you from getting stopped out early, just in case the price dips below before rising. Give the Stop-loss some space from the lowest price. By looking for EMA meeting points in conjunction with the current price, we can more certain or buying and selling points. A crucial thing to point out about exponential moving averages it that what they show you is past prices.
They always lag a bit behind the real trend. Because of this, they cannot always be relied upon. This strategy uses volume indicators to look for price action. It is based on the theory that changes in volume are usually followed by price action. In a sense, volume is your signal and the price action is your confirmation. When volume is low, it can be a sign that a trend is dying and may reverse, or that it is taking a break before continuing.
Typically, low volume is followed by high volume and then price action in the short term and not necessarily in the long term , which makes it highly useful for forex scalpers. To use volume, forex scalpers need to be patient during a ranging market, spot volume spike alongside price action and buy before prices go up. Once they are high, sell. When it comes to trading volume in the forex market, traders need to be careful where they are getting the information from.
Most brokers who offer this feature will likely just offer the volume they see from trades they are fulfilling. This is because the forex market is decentralised and because of that it is almost impossible to gain a complete picture of where money is moving.
One last thing to remember about trading volume is to never trade one movement! Look for a series to be sure the environment is good to trade. This strategy uses the stochastics indicator in conjunction with a trend line.
Stochastics measures if something is overbought underbought. If it is above 80 it is classed as oversold and below 20 is underbought. Ideally, to implement this strategy, you need to have an uptrend or a downtrend as it will be hard to use this strategy in a ranging market. On your platform, draw your uptrend using the trendline tool. What you are looking for is where the trend line is met or crossed over.
This acts as a signal to potentially buy or sell. After this, you need to look for either an overbought or underbought condition in the trend. Then, use the stochastic as a guide to enter or exit on pullbacks. You can tweak this strategy to use a channel pattern instead of a trend line to more clearly mark support and resistance levels. This is a good strategy because you have two conditions met. Trading on a trend is one and the overbought, underbought condition from the stochastics acts as the second.
This strategy focuses almost entirely on support and resistance levels. As a rule, three or more points can indicate a line of support or resistance. Static support and resistance are the levels from the beginning of the day , the highest and lowest points. This must be identified when you start trading. Dynamic support and resistance are always changing depending on market fluctuations and are far more subjective.
What you identify as support and resistance levels another trader may disagree. Look for areas where static and dynamic support meet. These can be your buy and sell points. This strategy is very simple and can be used in conjunction with other indicators to gain further confirmation of buying and selling points. Bollinger bands are used to see volatility. The further they are from the centre, the more volatile they are.
They measure the highest and lowest points of an instrument and can be great for knowing when to avoid the market if it is ranging. In which case, the bands will be close to each other. This strategy is very simple. When prices reach the upper band, go short and when prices reach the lower band, go long. Despite the above, this strategy can also be used in a ranging environment as well as a volatile one, though it can be more difficult.
Whatever strategy you decide to use, keep it simple. Simplicity in trading forex is underrated and will always earn you far more than a complicated strategy.
Related Articles. Indicators Best Forex signals indicator-Xard Grail. Comment: Please enter your comment! This is usually one of the things that beginner traders do not consider important when they are first learning how to trade Forex. They think that following the popular way to trading regardless if they are able to commit to the hours involved is the way to go. It is self-explanatory why this is a foolish way to trade. If you cannot dedicate yourself to sitting diligently at your charts daily for extended periods of time, then short term trading may not be the right option for you.
Scalping strategy and day trading strategy requires long periods of focus. If you cannot give it, then you may want to consider trading the longer time frames like the daily, weekly, or monthly charts. The best forex strategy for consistent profits, for any trader, will be a simple profitable forex strategy. There are many different strategies that Forex traders can find on the internet to suit their tastes. The ones that work the best however are the ones that are the simplest to understand and to follow.
Because there are different types of trading, it would be difficult to assign one trading strategy as the most profitable forex strategy. As such, we have gathered the most profitable strategies for each major type of Forex trading.
A very profitable forex strategy in scalping, is one which allows you to have many trade opportunities while offering for some amount of stability. The following strategy is fairly easy to follow and will satisfy the scalper who is looking for multiple trade opportunities during his sessions. This scalping strategy is based on the 5 exponential moving averages, on the 5 min chart.
He can choose any currency pair , but it must be noted that this strategy works best on a ranging market. The trade opportunities according to the strategy are indicated by the blue marks. Note that not all the trade opportunities are highlighted, and that a few of the trades would have resulted in a small loss.
This is typical of a scalping strategy. This is where trade volume comes into play. The majority of the trades taken on the chart would have been winning trades, and as a result, the scalper would have closed the day with a profit.
There are quite a few day trading strategies that many Forex traders swear by. They all revolve around the basic three ways of day trading which are trend trading, counter trading and breakout trading, usually being among some of the best Forex strategies. This profitable forex trading strategy can be seen as a classic go to strategy for day traders. It is usually one of the first strategies and most simple strategies that Forex traders learn. For this version of the moving average cross we will be using three moving averages on the hour chart.
To follow this strategy a trader should set three moving averages to the following periods: 20, 60 and The magenta line shows the slow 60 MA. The green line is the trend indicator. As indicated by the area encircled in red, the 20 MA crosses down below the 60 MA indicating a sell signal. The price moves down in a strong bearish movement before tapering off when forming a double bottom pattern, which has been underlined in red.
This is the area where it would have been wise to take your profit. As you can see the market made a sloppy cross over but this formed while the market was moving in a range. Therefore this signal has to be ignored.
Using this strategy, any signals formed in a range formation can be dangerous to follow. They are not as reliable as signals formed in trends. The strong upward movement that followed is further indicated by the yellow arrow.
Another thing to note is that you can tell that the previous signal that formed in the range was not reliable, because the trend line did not change direction. Moving out of a down trend the green trend line was above both the 20 MA and 60 MA. When the signal was a clear one, the trend line dipped below the two moving averages. Transparent price history, tight spreads, fast executions on over 90 currency pairs.
As the name suggests with this type of trading, you will be looking for areas of weakness in the market, where price is more likely to swing. This means targeting areas of resistance, or areas where you think the price will retrace to, before continuing along the trend. Because swing trading is so highly dependent on the peaks and valleys of the market, knowing if the market is trending and the direction of the trend is essential with this type of trading.
It is therefore essential that any profitable forex strategy tailored to this type of trading be based on the support and resistance levels that price action creates, so that you can determine where the market will probably change trend direction, or retrace. Like the above picture suggests this type of swing trading uses the 20 SMA line to determine the trade, and the Relative Strength Index RSI is used to measure the strength of the trend.
It is noted that this type of system like most swing trading systems work best in a trending market. Also, unlike the typical swing trading strategy, it works very well on both the 4H and Day charts. Also put in the 50 RSI level on your indicator as well. There should be three horizontal lines on the RSI. These are the RSI levels. The 50 mark is in the middle, and this is the line we will be using to help relay whether the entries that we observe on our chart are strong enough for us to take.
To determine the direction of the trend we use the 20 SMA line. If the price is above the 20 SMA, then it is in an uptrend. If the price is below the 20 SMA, then it is in a downtrend. With the RSI, we use it to determine when a rally is actually becoming a retracement. When price bounces back. The rules with the RSI are as follows.
As you can see with this chart, the areas circled in orange are viable buys that we identified with this strategy. Each of them would have rewarded about three times the risk that it took to make the trade, had we placed the buys. The areas circled in pink, we would not have taken as they barely touched the 50 SMA line before returning up. The areas circled in orange were retracements where we would have put our sell orders.
Scalping strategy “Bali” This strategy is quite popular, at least, you can find its description on many trading websites. Candlestick strategy “Fight the tiger”. “Profit Parabolic” trading strategy based on a Moving Average.