With this strategy, the main goal is to exploit the popular saying in the trading world “the trend is your friend”. This swing trading strategy uses a combination of moving averages, support and resistance, volatility and a few other tools to maximize profits from the trends in the Forex market. At the same, the strategy aims to keep stop losses and drawdowns to a minimum.
This forex strategy tries to exploit the times when the market is not trending. Since price fluctuations are very unpredictable and irregular while inside of a ranging formation, it’s better and wiser to trade on a breakout of that ranging formation instead of trading it. The breakout confirmation strategy aims to profit on such situations when the price moves out of the range and as a result, usually follows a more predictable path.
Trendlines are probably the most basic technical trading tool and one of the oldest tools used in technical analysis. To this day, trendlines continually form on the charts of financial markets across all the different timeframes providing regular opportunities for traders to jump in and profit on a piece of the action.
The MACD is a technical indicator designed for trend trading the markets and as a result, there are many trend trading strategies based on the MACD indicator. In our strategy here, however, we will use a few other indicators in addition to the MACD in order to ensure a higher rate of profitable trades. So, there is no need to do much price action reading with this strategy, although that is certainly always beneficial. The set of indicators used in this strategy provide all the information needed for it to work.
For any forex trader actively trading the markets, it’s always critical to know what the ongoing trend is, and at least equally so important (if not more) is whether or not a trend exists at all or not at a particular time. This strategy is designed to give all of this precise information based on which any trader can make a better, more informed and more profitable trading decision.
This strategy is designed to profit on joining already existing trends in the market and rests on two indicators developed by Welles Wilder – a great technical market analyst and inventor of technical indicators. The indicators we will use for this strategy are the 14-period ADX and the Parabolic SAR, both widely popular and extensively used in trading the markets.
Trading chart patterns is about profiting from repeated occurrences in the markets that are known to yield a certain kind of results over and over again. As with anything in technical analysis, it’s always good to combine chart patterns with other tools like support and resistance to filter out the best setups. The flag and the wedge are two very popular chart patterns among traders, and they both have their bullish and bearish versions.
Pullbacks are common occurrences in the forex market and they present profit-making opportunities for traders who know how to successfully trade them. A pullback occurs whenever a breakout occurs at a strong resistance or support level (trendline or any chart formation) and then the market moves in a direction that goes against the general trend (and the original breakout) to retest the level of the support or resistance level or chart formation once again.
Triangles are chart patterns that most of the time form in sideways markets as part of the consolidative process. Although triangles tend to be broken in the direction of the previous trend (if there is a strong prior trend), it’s not a definitive rule and triangle breakouts can occur in either direction.
The head and shoulders pattern is a highly reliable reversal pattern that very often, once completed and confirmed will mark a major turning point in the market. The appearance of the pattern faintly resembles a head and shoulders outline hence the name. For trading the pattern in the Forex market the implications, rules, and strategies work exactly the same for both the bullish and the bearish versions of the pattern, so everything can be used interchangeably only, of course in the opposite direction.