This simple strategy will help you achieve great success

Short-term Forex trading strategies must include some type of technical component. This simple strategy uses moving averages as entry and exit points whether they are for a short or a long position. You can also use this strategy to catch big market moves. Although this is a strictly technical strategy you can combine it with fundamental analysis to greatly increase your rate of success.

Time Frame: Use a 30 minute or hourly chart to increase effectiveness. You can, however, change the time frame to one the fits your trading style and this strategy should still work.

Indicators setup on close: 9 SMA and 100 SMA

To Enter a Trade: When the 9 SMA indicator line crosses over the 100 SMA enter LONG. Conversely, when the 9 SMA indicator line crosses under the 100 SMA go SHORT.

To Exit: Close your trade or you can also reverse your position when the 9 SMA and the 100 SMA cross back.

Although extremely basic, this trading strategy have been effective for a long time. As you can see, trading does not need to be complicated to be highly effective.
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The Equilibrium Chart will make you a better trader

The equilibrium chart also known as the Ichimoku Kinko Hyo is an extraordinary trading technique that will certainly enhance your trading. This technique isolates higher probability trades by illustrating where the prices are more likely to go and when to enter the trades. This is possible because the Ichimoku chart displays a clearer picture by showing more data points, thus providing a more reliable price action. Once you master this chart and technique, it will certainly become an integral part of your trading toolbox.

Understanding the Ichimoku chart

In the most basic of explanations, the chart consists of three lines that are usually color coded for easier readability and what the developers call a “cloud”. All this lines create multiple tests on the price action and show higher probability trades.

How are these lines and the “cloud” plotted

Conversion line or Tenkan-Sen (apply first color here) – is calculated as follow: highest high plus lowest low divided by 2. Calculate this formula over the past 7 to 8 time periods.
Base line or Kijun-Sen (second color) – Calculated by adding the highest high to the lowest low and dividing it by 2. The difference from the Tenkan-Sen is that the Kijun-Sen uses the past 22 time periods as base of calculation.
Lagging span or Chikou Span (third color)- Calculated by using the most recent closing price and plotting it 22 time periods behind.
Senkou Span A (fourth color)- Is calculated by adding the Tenkan-Sen and the Kijun-Sen and dividing them by 2. Plot the resulting value 26 time periods ahead.
Senkou Span B – (fifth color, although I prefer to use the same color as Senkou Span A for clarity) Calculated by adding the highest high and lowest low and dividing the result by 2 over the past 44 time periods. You should plot this 22 periods ahead.

The space between the Senkou Span A and the Senkou Span B creates what is known as the “cloud” or Kumo. Tip: Although days is the preferred time period measurement, you can modify this to be any time period as long as it is consistent throughout all calculations.

How do you use the resulting 3 lines and “cloud”

1. Look for the Kijun / Tenkan Cross – The crossover of these 2 lines are similar to the more commonly used moving average crossover. This crossover intends to isolate moves in the price action.

2. Use the Chikou to confirm a Down or Uptrend – The Chikou helps confirm that the market sentiment is in agreement with the crossover. This confirmation greatly increases the probability for profits. Look at the Chikou is as if it was a momentum oscillator.

3.Wait for the price action to break through the cloud – When the price makes a clear break through of the cloud which shows your resistance and support levels, the probability of a profitable trade increases dramatically.

As you can see, This technique will help you to determine when to buy and sell, which are the support and resistance levels, where are the trends moving, and how strong is the signal. Although not one single chart is without flaws, this technique is often used by traders worldwide and can prove to be an asset to you.

Always remember to make sure that you follow your money management strategy and you will see success implementing this technique.

How to "Fibo" yourself to amazing results

The Fibonacci strategy should be an integral part of every Forex trader toolbox.

This strategy is based on a number sequence (1,1,2,3,5,8,13 etc) invented in the 13th century by Leonardo of Pisa, also known as Fibonacci. This number sequence creates what is commonly known as the Golden Mean. The Golden Mean is calculated by is using the ratio of every number to the next number which is 0.618. When using every alternate number the resulting ratio is 0.382. The Fibonacci strategy uses these ratios to calculate Retracements and what is commonly known as the Fibonacci Profit targets.
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Now, the question is, how do these retracements and profit targets are applied to a chart? What you want is for these numbers to be plotted between the Swing High and Swing Low. A Swing High is the highest point on your chart for the time-frame you chose/setup. Conversely, the lowest point on your chart for the time-frame you are using is called a Swing Low. Once you know where these points are, you can plot the Fibonacci traces on them. By plotting it this way, you will get the most likely support and resistance levels of a trend. These “plot” results on your chart are called a ‘trace’.

These plot results create the Fibonacci Retracements and Fibonacci Profit Targets. In essence, Fibonacci Profit Targets are mini resistance levels and the Fibonacci Retracements are mini support levels.

To chart the Fibonacci Retracements just choose a Swing High and a Swing Low. your charting software will do the rest showing you the Fibonacci levels or mini support levels if you will. If you are a new trader, the recommended directional move is 25-30 pips or a little more and, in an uptrend, your buy signal is in the 50% or the 61.8% level.
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The Fibonacci Profit Targets are, by default, an extension of the Fibonacci Retracements. The profit targets are most of the time above the retracement levels. Treat these levels as mini resistance levels and get out of the trade when these levels hit. If you are using a 15-minute chart, the trend will stop progressing at the 1.362 level.

Tip: The 1.362 level is not accurate if the trend is really strong. Use oscillators to determine the strength of the trend.

When you combine the Fibonacci strategy with oscillators and other indicators, you will be profitable 50-60% of the time. As a rule of thumb, risk 10-15 pips on a Fibonacci trade, and take 40-50 pips as your profit. This simple strategy can generate great profits for you.
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How to make more profits by eliminating over-trading

Many Forex traders are unsuccessful for one reason: they over-trade. If you are not having success trading, you must first determine whether you are over-trading before adjusting your trading strategy.

The 3 questions that follow will help you determine whether you are over-trading.
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Are you using too many strategies?

Many unsuccessful traders use between 5-10 different strategies and, of course, they do not make any money. The main reason for that is that, the more strategies you use, the less you can focus on the market itself. I am not saying that you shouldn’t know the market or master your strategy. Those are essential to become consistently profitable. However, this may be an impossible task if you are trying to master 3, 5, or 10 different strategies at the same time.

Are you risking too much on every trade?

Understanding the amount you risk is of more importance than knowing/setting the amount you are going to make. Money management is the most important step of your trading strategy. Many traders go from being unsuccessful to being extremely successful by simply implementing a sound money-management strategy.

What do you do when you are making money?

Greed is your worst enemy. It is human nature, we often get greedy when profits are running high. I’ve been there, done that, but, at the end, ended up losing it all. Greed leads many traders to reckless acting and committing mistakes.
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After asking yourself these questions you probably know whether you are over-trading. Over-trading is really as harmful as using a strategy that has a low ROI (return on investment).

Now let’s discuss how you can prevent yourself from over-trading.

Establish a trading plan: Before you enter a trade you should always know where you are going to exit. You should also have a set of rules to gradually take profits, where your stop loss will be if the trade goes against you, and, as you gradually take profits, where your trailing losses will be.

Your trading style should fit your personality: this is very important because your money management strategy should emulate your personality. Every trader has a different tolerance for risk and, while higher risk may lead to high rewards, it may also lead to bigger losses. As a scalper you will probably set small percentages for profit in each trade (0.5% to 2%) and, as a swing trader, a bigger percentage like 3% or 4% is the norm.

Your trading style and personality should be the driving force behind the Forex strategy you implement.
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These 5 techniques will make you a successful trader

The top five techniques that successful traders use to identify where support and resistance lie are Fibonacci Levels, Pivot Points, Moving Averages, Trend Lines, and Chart Patterns.

Fibonacci Levels: Set your Fibonacci to 23.6%, 38.6%, 50.0% and 61.8% as support and resistance levels. These levels will help you determine when the price swings low to high or high to low. Tip: Many traders only trade when the price breaks out of the 61.8%level, which means a reversal of trend.

Pivot Points: This indicator is commonly used by breakout traders or range-bound traders and is based on the previous period. Simply put, prices above the pivot are bullish and prices below the pivot are bearish. To use pivot points, identify the upper resistance or lower support levels and target profit at S1, S2 or R1, R2 respectively.
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Moving Averages: This is the most commonly used indicator. A good setup for this indicator is to set your EMAs (Exponential Moving Average) at 200, 100, 62, and 23. Under this setup, you will see the price bouncing off the EMA support and resistance. When the price breaks through the EMA channel, most of the time that means that the price broke through the resistance of support level and you can enter a trade.

Trend Lines: As the name suggests, trend lines show in which direction or trend the market is moving. By drawing trend lines, you can determine both how long to stay in a trade and, also, when to exit or reverse your trade.

Chart Patterns: Knowing chart patterns and how they can help you predict price direction is critical to every trader. Chart patterns come in many different shapes. Some examples are triangles whether they are ascending or descending, double top or bottom, head and shoulders, and reverse head and shoulders.

Once you master these techniques, you will start making more profits when you trade.
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