4-Hour MACD Forex Trading Strategy
Forex traders can look to earn money in a variety of ways. One means is to trade on longer term frames i.e. 4-hour and above.
This method demands a sheer amount of patience, but the good thing here is that you can have a win/loss ratio of below 50% and still be in the profits.
The 4-Hour MACD forex trading strategy is built around the highly popular MACD indicator and delivers great entry and exit signals for any currency pair.
MetaTrader4 Indicators: forexsignals.ex4 (Inputs Variable Modified; period=14, Stoplosses=false, ShowInformation=false), Trend_Mirror.ex4 (Inputs Variable Modified; MovingPeriod=40.0, MovingShift=2.0), MACD (Default Setting)
Preferred Time Frame(s): 4-Hour
Recommended Trading Sessions: Any
Currency Pairs: Any pair
Buy Trade Example
Long Entry Rules
Initiate a buy entry if the following indicator or chart pattern gets put on display:
1. If the yellow upward pointing arrow of the forexsignals custom indicator pops up below the candles as seen on Fig. 1.0, price is said to be pressured higher i.e. a trigger to go long on the designated forex pair.
2. If the red line of the Trend_Mirror custom indicator cuts through its blue line to hover above, bulls are said to be pushing price to the upside, as such a buy alert is imminent.
3. If the green histograms of the MACD MT4 indicator break above the 0.00 level as exemplified on Fig. 1.0, a buy signal is said to be in the offing.
Stop Loss for Buy Entry: Place stop loss 5 pips below trading support.
Exit Strategy/Take Profit for Buy Entry
Exit or take profit if the following rules or conditions takes precedence:
1. If a red downward pointing arrow of the forexsignals custom indicator pops up during a buy alert somewhat above price bars (see Fig. 1.0), it is a trigger to exit or take profit at once.
2. If the red line of the Trend_Mirror custom indicator intersects the blue line to stay below while a bullish trend is ongoing, a bearish reversal is said to be looming, as such an exit or take profit will suffice.
3. If the MACD MT4 indicator displays a green histogram that is placed below the 0.00 level during a buy signal, bulls power is said to be weaning, as such an exit or take profit will do.
Sell Entry Rules
Enter a sell order if the following holds sway:
1. If the red downward pointing arrow of the forexsignals custom indicator pops up above price bars as depicted on Fig. 1.1, price is said to be pressured lower i.e. a trigger to go short on the fx pair of interest.
2. If the blue line of the Trend_Mirror custom indicator cuts through its red line to hover above, bears are said to be pushing price to the downside, as such a sell alert is in the cards.
3. If the green histograms of the MACD MT4 indicator dip below 0.00 level as illustrated on Fig. 1.1, a sell alert is said to be looming.
Stop Loss for Sell Entry: Place stop loss 5 pips above trading resistance.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following takes to the fore:
1. If a yellow upward pointing arrow of the forexsignals custom indicator pops up during a buy alert slightly below the candles, it is a trigger to exit or take profit immediately.
2. If the blue line of the Trend_Mirror custom indicator intersects the red line to stay below during a sell trigger, a bullish reversal is said to be pending, as such an exit or take profit will do.
3. If the MACD MT4 indicator displays a green histogram that is aligned above the 0.00 level during a sell signal, bears power is said to be halting, hence a trigger to exit or take profit forthwith.
Sell Trade Example
About The Trading Indicators
The Forexsignals.ex4 custom indicator is a trend indicator that delivers buy and sell signals via its yellow and red arrows respectively.
The arrows come with an attached star that is filled with the same color as the arrow.
The Trend_Mirror.ex4 is an important custom indicator that delivers buy and sell signal when the red line red line crosses the blue line.
The Moving average convergence divergence (MACD) is a trend-following momentum indicator that reveals the connection between two moving averages of price.
forex four hour trading strategy
Friday, April 23, 2010
Forex London Breakout Strategy
This London Breakout Strategy was based on price breakout of the trendline. Using no basic indicators but trendline. This strategy using 1 Hour chart timeframe and recommended pair to trade were GBP/USD and EUR/USD. Other pairs may also be used to tested. This London Breakout strategy was claimed has a win ratio of over 90%. Before you go with live account is recommended to use a demo account until you are familiar with this strategy.
For this Forex system to work properly a trader needs to know the basics of drawing trend lines and be able to identify support and resistance lines.
Our working range includes 5 candles: from midnight to 04:00 EST (including the 04:00 candle). Optional: draw a midnight vertical line for visual aid.
With those 5 candles look for valid swing high and swing low of the price. Draw a downtrend trend line connecting a found swing high to the most recent swing high of the previous days (make sure the last one is a valid high to draw a downtrend trend line through it). Do the same for a swing low: connect it to the most recent swing low of the previous days, make sure you are putting in the right trend line using the rules of drawing uptrend trend lines.
If a trader sees, for example, no swings high in the 5 candle range, that means there will be no downtrend trend lines this morning.
The Entry is on the break of either one of the two trend lines and is immediate without waiting for a current candle to close. A protective stop is placed just above/ below the candle that broke the trend line.
Usually the whole trade will unfold within the next three candles (count in the candle that broke the trend line).
So, after the actual breakout we have 3 hours or 3 candles to trade, after that we will exit the trade with whatever profits are made.
Main rule - Using S/R + timing:
Profit target is going to be the nearest level of support or resistance according to the S/R lines.
If, however, after only one candle this target is reached, it suggests a very strong market, we would therefore stay in the trade and set our goal for the next support/ resistance level. We would also choose the second S/R level as our profit goal if the first S/R level appears to be close to our entry point.
We have three candles to trade after the breakout, thats why we can trade calmly and allow our goal to shift to the next S/R level.
It is at the traders absolute discretion whether to set the target at the nearest S/R level and exit the trade once the target is hit or use 2 or 3 consecutive candles.
Another simplified option would be with fixed targets and timing. For example, EUR/USD target = 20 pips - spread. GBP/USD = 40 pips - spread. These are only suggestions. For other currency pairs you will need to back or forward test. Thats it! Properly applied this London breakout strategy is more than 90% effective.
Forex simple trading and success
What is Forex?
Foreign Exchange or Forex is a globally trusted market used for the trading or exchange of currencies of different countries. It is the world’s largest financial market. Millions of people from different walks of life are an active part of Forex or foreign exchange market. With the passage of every year, the Forex market is growing in size and becoming more accessible to common people. It is the market of 21st century and million of people from all over the world are relaying on it to achieve their financial goals. With the advancement in the technology and communication science, Forex has become a huge market but still it has more potential of growth and rise. In the years to come, it may become the trade of choice for many traders. The new generation of traders and investors is seeking exciting opportunities in Forex trade.
Forex or Foreign Exchange Education
Forex or foreign exchange trading is a very tricky and risky task. Without having proper training and education, one has very limited chances of success. The most important cause for the failure of Forex traders is their lack of Forex training. A quality Forex Education or Training helps the Forex traders to improve their trading abilities and skills. Only a well educated or trained Forex trader understands the complexities and subtleties of Forex trade. Proper Forex training teaches the trader a sound trading strategy and an effective approach to currency trading. A qualified Forex trader can explore the opportunities much easily and extensively.
Performing a daily analysis on London open is a handy way to improve the Forex trading skills. There is no hard and fast rule for Forex education. Success with Forex trading comes with experience, practice and learning new skills. With getting experienced, a trader get more disciplined and controlled in his emotions which is a must trait for Forex trader.
Learning and being familiar with the foreign exchange basics is one of the most important things you need to consider if you wanted to dig in to the world of currency trading. At its most general sense, it is necessary to get into Forex with the right mindset and skills. Having a natural mentality for conducting this kind of business because once you have this it will be a lot easier for you to know how you will play the game.
To get yourself familiar with the Forex Trading, let me discuss the basic things you need to know.
1. Discover how to maximize your profits – Do not be too confident with knowing just one method of trading. It would be best to try various forex trading methods so you will also become more familiar with how other traders run their business. Check the market for other possible trades. Don’t focus on the individuals but you must also try to get the market share of big businesses because these financial institutions are the ones which need a continuous flow of currencies.
2. Be a smart trader – No matter how much you know the all the technicalities that come with trading currencies, this will not be enough once you start dealing with different personalities in the market. You should also aware of proper timing of when it is okay to take a risk and when would it be best to just let it pass you by. In the Forex market values and rates are constantly changing and in a matter of minutes, prices may fluctuate so you need to keep your instincts on alert.
3. Impart discipline in trading – You must have a system which you follow throughout the whole period of your trading. Using a system can help you figure out your strength and weaknesses so you can address them accordingly. You should also budget a specific time for trading. You have to make sure that when you trade you give full attention and you doing anything that is unrelated to it because you will need a lot of focus. Always trade according to the set rules and regulations. Most importantly, you have to keep your word should you opt to do business with other traders on a set date or on pre-agreed rates.
4. Don’t stop learning! – The Forex trading basics still develops and gets furnished through time. So trader must be open minded and should consider the fact that you will need to educate yourself through constant learning regarding the trade. Keep yourself updated of the latest technologies and methods being used. Allot some time to do research about foreign currency trading and read some related news on this industry. Take advantage of the free learning materials that you can conveniently obtain online.