There are hundreds of trading strategies in the currency markets, but there is no need to nnow all of them. Enough to learn the basics of the trade and application of core indicators to begin to develop your own successful trading strategy. We picked up 3 Forex trading strategies for beginners with illustrations that are based on multiple technical analysis indicators. Try your hand at a demo account, try these simple tactics, or ask us questions in the feedback.
Forex strategies for beginners
Stochastic rule.
The tactics is suitable for any currency pair and works on any time interval. The strategy is based on the use of 4 indicators:
- stochastics with the settings (14, 3, 3). The stochastic oscillator is an indicator that allows to determine at which point a reversal of the price trend will be. At the time of the appearing of a new direction of graphics is determined by the possibility of entry into the market;
- 5EMA, 10EMA. An exponential moving average that follows the trend and responds to change. In drawing the moving average takes into account the old rates for previous periods. In the settings exhibited the averaging period of the short EMA too often change direction, complicating the decision. For example, for20 days trend the value is 10;
- Options RSI (14, 70, 30). The relative strength index, is a standard set of most trading platforms do not require downloading and installation). Serves as an auxiliary indicator to help you monitor the strength of the current price trend. The indicator uses a comparison of the absolute value of growth of quotations of currency pair over a fixed period of time with the level of its fall over the same period.
Rules of trading in this Forex strategy for beginners:
- open a long position when the 5EMA crosses the 10EMA up under the condition that the RSI must be above 50, stochastic is below level 80, and its lines are directed upwards;
- open a short position when the 5EMA crosses the 10EMA down RSI less than 50, stochastics pointing down, but is above the oversold area (above 20-level);
- close trade when 5EMA and 10EMA cross in the opposite direction, or RSI crosses the 50 level.
One of the difficulties of this Forex strategy for beginners is the fact that the 5EMA and 10EMA can give too early signal to open position.
The use of Parabolic ADX indicators
The strategy also applicable for all currency pairs and time intervals and uses just two indicators, the individual parameters which should be chosen individually:
- Parabolic SAR. SAR – is a stop of price trend and reversal. On graph, the indicator is shown as a series of points: if the points are above the price the trend is downward, if below it is upward. It is used for determining the trend, determining the entry points into market and setting of moving stop-loss orders. It is a supporting indicator because it can show false signals. The recommended default indicator parameters – (0,02, 0,2);
- ADX 50 (with +DI and-DI lines) – indicator of average directional movement helps to determine the strength of the trend. The maximum value of 50 indicates the peak of price value – opening position is not recommended.
Rules of trading in this Forex strategy for beginners:
- open a short position (sell) when +DI line is below-DI, and Parabolic SAR indicates sell. If the +DI line above, the data from the SAR are not taken into account;
- open a long position (buy) when +DI line above-DI, and Parabolic SAR indicates a buying. If the +DI line is below, the data from the Parabolic SAR are not taken into account;
- closing of position at the moment when DI line cross again.
The use of Parabolic и MACD indicators
This strategy although is applicable for any time period, but only works with the classic currency pair EUR/USD. For perfect operation it is recommended a time interval of 30 minutes. Used indicators:
- Parabolic SAR with similar settings of second strategy (0,02, 0,2);
- MACD settings (12, 29, 9). Convergence divergence moving averages, to determine trend direction, strength, turning points. Is used as a trend indicator and as an oscillator.
Rules of trading in this Forex strategy for beginners:
- purchase – as soon as the Parabolic SAR indicates a buy, while the MACD lines cross up;
- sale – as soon as the Parabolic SAR signals sale and the MACD line cross down;
- exiting the market – at the time of market consolidation or the moment of crossing of the MACD lines in the opposite direction.
We hope that these simple Forex strategy for beginners will help you to learn simple technical analysis indicators and show how to combine them on one chart. Follow our publications in this section and learn more trading strategies of trading on the foreign exchange market!
