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Basic Forex Strategies





Advanced Forex Strategies
  • Carry Trade i.e. - buy the highest yielding currency against a low yielding currency and profit from the interest or swap fee. Cross currency plays which allow longer term strategy and less volatility ie EUR/JPY, EUR/GBP, AUD/NZD.
  • Price Gap - Most currencies after the weekend have a price gap(gap varies), if the opening price is higher then the closing price of the last bar, then short sell. If the opening price is lower then the closing price of the last bar, buy. 80% of the time, the market will move to fill the gap. Place your stop 20-30 pips away from the opening price of new bar.
  • Hedging -  exchanging risk against a known future foreign currency receipt or payment. Depending on your view of the currency you can 'partially' hedge (less than 100% of your risk) or over hedge (greater than 100% of your risk) to protect or enhance that risk.
  • Model trading - trading with the use of 'technical' or mathematical based systems which give buy/sell signals or entry/exit points based on historical price data.

Some of these technical indicators are:
  • Trendlines
  • Moving averages
  • Oscillators
  • Bollinger bands
  • Relative strength index (RSI)

Most Expert Advisers or Automated Trading Systems rely on technical Indicators.

Spread Trading
  • Traders use spread trading, also known as "hedge trading," because of its lower margin rates, lower price volatility, and reduced exposure to severe market events.

    This FREE guide provides you with information on what spread trading is, its mechanics, types of spreads, how to chart spreads, and much more to help you decide if spread trading is right for you.


Other Trading Ideas/Strategies
Attach first Moving Average Indicator to Chart
  • Settings = Period 13, Shift 0, MA Method is Exponential, Apply to Close.
Attach second Moving Average Indicator to Chart
  • Settings = Period 26, Shift 0, MA Method is Exponential, Apply to Close
Attach third Moving Average Indicator to Chart
  • Settings = Period 20, Shift 0, MA Method is Simple, Apply to Typical Price(HLC/3)
  • Is almost identical to the Middle Bollinger Band

Entry Conditions

For Short Term Trade
 T/F = H1 or less
 A Long Position: When the MA 13 line has crossed above the MA 20 line
 A Short Position: When the MA 13 line has crossed below the MA 20 line
 *If the MA 13 line crossed above/below the MA 26 line, that can be a confirmation.

Set a T/P or S/L to exit the market

For Long Term Trade
 T/F = H1 or more
 A Long Position: When the MA 13 line has crossed above the MA 26 line
 A Short Position: When the MA 13 line has crossed below the MA 26 line.
 
Set a T/S to exit the market.


Positives: Works great for a trending market.
Negatives: Can be a lagging indicator, and not the best to use in a ranging market for a long term trade.