X Signals
Forex strategy
When starting to trade in Forex, a trader is faced with the question “What strategy should be used to trade?”. Consider in the article strategies for different timeframes
If you are just starting to study Forex, there may be a problem of information "chaos". It's hard to know where to start. Which is better than candlestick or technical analysis? Which indicators to learn first? Can you immediately install an automatic Expert Advisor or use trading signal services? Our advice: look at the basic technical indicators and create your strategy.
There are different options for classifying strategies. For example:
- By the type of opening transactions: trend, countertrend, channel, on corrections, etc.
- Trading time: by Forex sessions (Europe, America and Asia), publication of fundamental news and statistics.
- Automatic and semi-automatic (with manual confirmation of opening a deal), etc.
In this article, examples of strategies are divided by the main time frames (timeframes). Each of them has its characteristics and methods of market analysis.
You can use strategies not only on the recommended timeframes. For testing, choose historical data for the last 2-3 years. Forex is changing rapidly; more "long" intervals will not give the correct information on the current market. Indicators used in strategies are included in the basic set of technical tools in all trading terminals!
M1 (scalping). We profit from the “chaos” of the market
The youngest and, accordingly, the most "noisy" timeframe. Transactions last no more than 2-3 minutes, profit 5-7 points. It is for M1 that the most automatic Expert Advisors are offered.
Indicators. Only a brief description, look for more information about the indicators in books on technical analysis and Internet.
- Simple (SMA) and exponential (EMA) moving averages. Trend indicators by which we determine the opening point of the option. The strategy is not intended for trading during flat periods. We trade only if the range is between at least 15-25 points!
- ADX (Average Directional Movement). Confirmation of the trend by the Moving Average. The indicator goes up and above the level of 20-uptrend, the movement down below the level of 40 – downtrend. The movement between the levels is flat.
Signals:
- BUY. The "fast" EMA crosses the "slow" SMA from the bottom up. ADX rises above level 20.
- SELL. Opposite conditions: ADX down from level 40. EMA is below SMA.
- Take Profit/Stop Loss. At the level of 5-6 points from the opening price. In scalping, a trader earns on a large number of transactions. It is important to quickly open/close a position here; complex money management is not needed.
Important! The simplicity of M1 is deceptive – it requires a nervous system that is naturally inclined to fast trading, and if there is no such thing, choose more calm options.
M5. Less "noise" and conservative scalping
"Noise" is less than a minute, but still quite a lot. It is usually used as the lowest timeframe confirming the entry point on the M15 and for trading on the news. It can be used as a working timeframe if you follow the rules of scalping: profit/loss 10-15 points, we close in 10-15 minutes.
If there is a strong trend in profit, we keep the position under control. You can give profit to grow, close at the first reverse candle!
Indicators:
- «Round» price level. Levels whose quotes have the last two digits of the quote 00 or 50.
- Parabolic SAR. Determine the direction of the short and medium-term trend. Indicator points are below the price and directed up - an uptrend. Higher prices and directed downward - a downtrend.
Signals:
- BUY. Bounce up the price from the "round" level. P-SAR is below the price.
- SELL. Opposite conditions: The price is down from the "round" level. P-SAR is above the graph.
- Take Profit/Stop Loss. For the next "round" levels or the last local max/min.
Important. Almost any indicator can be turned into a "scalping" indicator on M1-M5, the main thing is to regularly monitor the market and adjust the parameters, especially in automatic Expert Advisors! Strict money management: small volumes of positions and no 1:500 and 1:1000 in leverage.
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