This is a guest post by Mark Richard
So you just want a simple Forex strategy to trade? Okay, let’s see what we can do…
Firstly, you want to get the probabilities in your favour; this means making sure you’re trading WITH the trend. Yes, I know, you’ve heard it before – but it’s true; trading with the trend will increase the probabilities for you.
The first thing we do is place two moving averages on the chart. The first moving average is a 50 Period Exponential Moving Average of the Highs; and the second is the same, a 50 EMA, but this time of the Lows.
You should have something that looks like this:
Now, we add another Moving Average, this time it’s a 15 EMA of the Close:
Now, there is an indicator for Metatrader4™ to download with this article (you should find it at the end) called ‘QFF-MACDv1.ex4’. Leave the default setting on this indicator. Once you drag it on your chart should look like this:
The first rule is:
We only BUY when the 15-EMA is ABOVE the 50-EMAs.
We only SELL when the 15-EMA is BELOW the 50-EMAs.
This chart should help give you a better idea:
The second rule is:
We only BUY when the MACD bars are green.
We only SELL when the MACD bars are red.
Here’s a chart of how this rule works:
Combining the first and second rules we are almost there with our strategy:
Although very simple, the core of the moving averages is just to keep you on the right side of the market; In other words, the side that is with the trend.
The specific entry:
(for a BUY) – If any part of a candle is BELOW the 15-EMA and that candle CLOSES ABOVE the 15-EMA… we BUY when the HIGH of that candle is broken by a few pips.
(for a SELL) – If any part of a candle is ABOVE the 15-EMA and that candle CLOSES BELOW the 15-EMA… we SELL when the LOW of that candle is broken by a few pips.
Here’s a trade to show a typical setup:
Now, this is just an article, I don’t really have time go into every detail; I just wanted to give you an idea of a way get probabilities on our side with a solid strategy.
I’m not going to go into exits for this strategy. I recommend you take a look back through your charts with this strategy – I’m sure you’ll like what you see.
One last thing – yes, it can be traded on any timeframe.
Mark Richard is the developer of the Quick Fix Forex™ system. Quick Fix Forex™ is based on the same logic and principles as the above strategy but is a lot more detailed and powerful. Learn more about Quick Fix Forex™ here.