Strategies for beginners of Forex trading using simple indicators

In the previous article we have described some simple Forex strategies for beginners using popular indicators that are already embedded in most of the trading platforms. We are ready to offer you some interesting strategies to master which it will take a maximum of 20-30 minutes.

Simple strategies in Forex

1. The use of Stochastic and RSI

   These tools we have already used in other strategies, and even combined these indicators on a single chart. Recall that RSI is the relative strength index, which is used as a subsidiary indicator, stochastic oscillator showing point of reversal. The original settings for the indicators:

   • stochastic – (5, 3, 3);
   • RSI- (7).

   The easiest way to master this strategy on the hourly chart e.g. GBP/JPY. The essence of the strategy is to determine what will be a break of a level and then using candlestick patterns to identify entry point and the closing point of the position. For this you need to put indicators on a candlestick chart (of the transition function with a line chart to a candlestick chart or bars which are present in each platform). Then follow these rules:

   • in the case of a strong (fast) uptrend check in which zone are the stochastic and RSI . If it is in the overbought zone (see Glossary) and the last black candle, the closing of which occurs in the middle of the previous one, you can open a sell position (short). Overbought area – the value of the stochastic and the RSI above level 75;
   • open a buy position (long position) when the indicators RSI and stochastic are in oversold zone and a white candle appears on the chart, closing of which is above the previous;
   • exit point – change the color of the candles and the exit of the indicators of the corresponding zones.

   A strategy is used with the stop loss of 100 points. Simple strategy in Forex are always insured against possible force majeure!

   2. The strategy of the tunnels

   Simple strategies in Forex can be based on the use of the same indicator with different parameters. An example is the following strategy based on the indicators:

   • 18EMA, 28EMA – exponential moving average;
   • 5WMA, 12 WMA – weighted moving average. Gives more weight to recent signals precisely manifested on a sharply upward or downward trend;
   • RSI 21.

   As you can see, the RSI is used quite often as a warning indicator, and most of the strategies are based on mathematical values of moving averages of different type. Recommended time interval – 30 minutes. Although this interval is more false signals, it is the optimal amount for training and understanding of the principles of moving averages.

   18EMA, 28EMA is the red lines forming a tunnel (the corridor), which can be used to define the beginning and end of the long-term trend. 5WMA, 12 WMA help to determine the strength and the end of the short-term trend. The essence of the strategy:

   • the position is opened only when the tunnel with the red lines is relatively narrow or is traversed;
   • a long position is opened when the 5WMA, 12 WMA cross the red tunnel upwards. And if the 5WMA crosses the 12 WMA, the signal is strong, the RSI must be above the 50 level;
   • short position is opened, provided the crossing of the red tunnel weighted moving average down. Strong signal is the intersection of 5WMA WMA and 12 with a value of RSI is below 50;
   • a long position is closed when the chart price reaches the upper boundary of the tunnel, and goes below 5WMA 12WMA;
   • short position is closed when the price reaches the lower border of the tunnel is above 5WMA 12WMA;
   • any position is closed when the red tunnel cross each other, or much closer to each other.

   The strategy is simple and complex at the same time. The difficulty is that the signals can be false, because the price depends on the volatility of the market.

   3. Strategy for moving averages

   Simple strategy in Forex is often based on different moving averages. This strategy uses indicators, about which we already told earlier:

   • 6EMA (open), 5EMA (close);
   • ADX (14).

   The strategy is for any currency pair on the hourly time interval. The essence of the strategy:

   • open a long position when the 5EMA crosses the up-trend 6EMA with a difference of 1 point, ADX above the 20 level.

   It is possible to add other EMA (with another parameters) for more accurate analysis.

   We think this Arsenal of tools will be quite enough for you to understand the essence of Forex trading. In our next article we will move on to more complex strategies that will help to predict the right point of entry and exit from the market more accurately. The use of more complex instrumentation gives even greater assurance of successful transactions, and the functionality of such trading platforms as MetaTrader 4 allows to program the new tools yourself, or to download and install more indicators. Practice, develop more complex tools, and luck will be 100% on your side!

   Learn simple strategies in Forex along with financial services Investb.com!