Make Money From Forex With Ease

1. Moving Averages: Essential Tools for Trend Identification

Moving Averages are used to identify trends and confirm reversals.

Smoothing price action. Moving Averages help traders filter out market noise by smoothing out price fluctuations. This allows for clearer trend identification and more accurate trading decisions. By plotting Simple Moving Average (SMA) 20, Exponential Moving Average (EMA) 10, and EMA 21 on your chart, you create a powerful tool for trend analysis.

Support and resistance levels. Moving Averages also serve as dynamic support and resistance levels. In uptrends, prices often find support at Moving Average lines, while in downtrends, these lines act as resistance. This dual function makes Moving Averages invaluable for both trend identification and trade entry/exit points.

2. The Power of Simple and Exponential Moving Averages

The longer the Simple Moving Average the longer it lags and slower to react to recent price period.

SMA vs. EMA. Simple Moving Averages give equal weight to all periods, making them slower to respond to recent price changes. In contrast, Exponential Moving Averages place more emphasis on recent prices, making them more responsive to current market conditions.

Timeframe selection. The choice of Moving Average type and period depends on your trading objectives:

• Short-term trends: 10-20 period EMAs
• Mid-term trends: 50 period MA
• Long-term trends: 100-200 period MAs

For this trading system, we use SMA 20, EMA 10, and EMA 21 to balance responsiveness and reliability.

3. Determining Bullish and Bearish Trends with Moving Averages

When price is above the Moving Average line, we can say the instrument is in up trend. Conversely when the price is below the Moving Average line. We can say the trend is down trend.

Bullish trend identification. A bullish trend is confirmed when candles cross and close above all three Moving Averages, especially the SMA 20. Candles should consistently stay above the Moving Average lines, with the EMA 10 (red line) closest to the price.

Bearish trend identification. Conversely, a bearish trend is established when candles cross and close below all Moving Averages, particularly the SMA 20. In this case, candles remain below the Moving Average lines, with occasional retracements towards them.

4. Breakout Strategy: Capitalizing on Trend Changes

Break Out occur when the candle cross and close above all the Moving Average lines especially 20 SMA.

Bullish breakout. Enter a long position when a candle closes above all Moving Averages, particularly the SMA 20. Place your stop loss below the previous candle's low and set your take profit at the nearest resistance level.

Bearish breakout. Enter a short position when a candle closes below all Moving Averages, especially the SMA 20. Set your stop loss above the previous candle's high and target the nearest support level for take profit.

5. Pullback Strategy: Entering Established Trends Safely

Pull back in an Up trend occurs when price hit a resistance or is overbought and is retracing towards the nearest support to find a base before continuing its upward movement.

Bullish pullback entry. In an uptrend, wait for price to retrace to a Moving Average line. Enter a long position when a bullish candle closes above any Moving Average, signaling the end of the pullback. Place your stop loss below the previous candle's low.

Bearish pullback entry. In a downtrend, wait for price to rally towards the Moving Averages. Enter a short position when a bearish candle closes below any Moving Average, confirming the continuation of the downtrend. Set your stop loss above the previous candle's high.

6. Risk Management: The Key to Sustainable Forex Trading

As a trader, the first job you have to do on your chart is to draw your Support and Resistance.

Position sizing. Never risk your entire trading capital on a single trade. Implement proper position sizing to ensure sustainable trading. A common rule is to risk no more than 1-2% of your account balance on any single trade.

Stop loss placement. Always use stop losses to limit potential losses. In this system, place stop losses below the previous candle's low for long trades and above the previous candle's high for short trades.

Take profit targets. Set realistic take profit levels based on support and resistance levels. This helps lock in profits and maintains a favorable risk-reward ratio.

7. Combining Moving Averages with Support and Resistance

Don't ever buy into a Resistance even if the signal indicate so, and don't ever sell into a Support whenever you see a trade set up.

Confluence of indicators. Enhance the reliability of your trades by combining Moving Average signals with support and resistance levels. This approach helps filter out false signals and increases the probability of successful trades.

Avoiding unfavorable entries. Never enter a long trade at a strong resistance level or a short trade at a significant support level, even if the Moving Average signals suggest doing so. Wait for a breakout or a pullback from these levels before entering a trade.

8. The 80% Success Rate: Realistic Expectations in Forex Trading

This system is guarantee to give you 80% success rate.

Realistic expectations. While the system claims an 80% success rate, it's important to maintain realistic expectations. No trading system is perfect, and losses are an inevitable part of trading.

Continuous improvement. To build confidence in the system:

• Backtest the strategy on historical data
• Keep a trading journal to track performance
• Regularly review and refine your approach
• Stay updated on market conditions and economic events that may impact currency pairs

Remember that consistent profitability comes from disciplined application of a well-tested strategy, proper risk management, and continuous learning and adaptation.

Last updated: July 29, 2024