In this article, another forex strategy is taught. Undoubtedly, each of these trading methods is the result of thought, practice and testing on the market. Therefore, another goal in presenting and teaching these methods and trading methods, including the highly efficient five-step trading strategy, is that a new trading method can be created. The more you pay attention to the behavior of the market, the more knowledge you will gain and the better results you can get in the next trades. The result of paying attention to the behavior of the market may be the creation of a new trading strategy.
Five steps to open a deal
Each trading method has its own rules. By observing these rules and monitoring the market, the trader can enter and exit on time. Of course, adhering to the rules and avoiding any emotional decisions accelerates success in trading. Any creativity and changes in the trading strategy should be tested in the demo account. After its yield in a long time, it becomes a trading strategy in the rail account
first stage ; Trending market detection
There are times in the market that offer huge profits if you open a trade. But sometimes the market fluctuates a lot. In these situations, the market changes hands between buyers and sellers, and there is no clear trend in the market. Of course, some traders have a special skill in making profits in the suffering market. But in general, most of the financial market participants are looking for trade in the directional market. In other words, they avoid trading when the market is highly volatile.
Analysis with 200 EMA
When the 200 EMA becomes flat and the price chart or the rate repeatedly interrupts it, you should avoid trading.
When the chart is below or above the EMA 200 for some time and the EMA 200 itself is sloping, the market is trending. Buy positions are created in an uptrend and sell positions in a downtrend.
In the above image, the rate or price is below the EMA 200 for some time, and the EMA 200 itself has a downward slope. By finding resistances, you can take advantage of selling positions.
second stage ; Multi time frame analysis
In multi-time frame analysis, the goal is to find levels where there is a high potential for trend reversal. If only the lower time frame is considered, a buy deal may be opened where there is a resistance. This resistance has been recognized in higher time frames. Likewise, a sell trade may be opened where there is strong support on a higher timeframe. Therefore, it is suggested to pay attention to higher time frames.
For example, we want to trade in a 5-minute time frame. You can check the higher four-hour and daily times to draw support and resistance. First, the daily time frame is considered to determine important support and resistance levels.
After that, the four-hour time is referred to and the important levels of this time are also determined.
The third step, time frame trade
Now we refer to the time frame of entering the transaction, i.e. 5 minutes. At this time, the conditions for entering the transaction should be checked first. If the position is ready, open the trade.
Powerful MACD indicator
Makdi indicator includes a histogram and two lines, one with fast movement and the other with slow movement. The entry signal in this trading strategy is issued by crossing two fast and slow lines. However, it is necessary to wait until the candle in which the two-line cross is created ends and the cross is stabilized. So far, a significant support or resistance has been detected on the higher time frame and the cross indicator has been signaled on the lower time frame.
In the above image, the cross of two lines in the Macdi indicator was used to enter the transaction. There was a cross in three points 1, 2 and 3. In point 1, the rate decreased a little, but then went up again. In such a situation, the transaction should be closed or the stop loss should be activated before the rate or price rises and before the transaction goes into the loss range. But in colon 2 and 3, the transaction was opened and a lot of profit has been created. The amount of rate reduction can be seen in the image related to the four-hour and daily time frames.
Break the trend line
You can use price action instead of using the cross in the MACD indicator. Here he drew a trend line and after its failure and pullback, he entered into a sell transaction.
The fourth stage
To enter the transaction, the amount or size of the transaction must be specified. To determine the volume of the transaction, the distance from the entry point to the stop loss should be used. Many beginner traders make mistakes in choosing the place of stop loss and choose the wrong place. If the stop loss is too close to the entry point, then their trade will be closed too early with a small loss. The meaning of early closing is that after touching the stop loss, the trend moves in the same analyzed and expected direction. If the stop loss is far away from the appropriate distance, the transaction has suffered a large loss and is still open, and the capital management has not been observed.
The location of the stop loss must be determined before opening the trade. By determining the location of the stop loss, the size or volume of the transaction is determined. Previously, in another article, how to use the ATR indicator to determine the location of the stop loss was explained.
To learn about the ATR indicator, click on
After determining the location of the stop loss and after entering a maximum of 3% of the capital in this transaction, the volume of the transaction can be determined.
The fifth stage
At this stage, the location of the target or profit limit (Take Profit) is determined. For this purpose, the risk-reward ratio must be certain. The lowest ratio for risk to reward is one to one. Some consider a risk to reward of at least 1 to 1.5 for their trades. Therefore, the location of the profit limit is also determined.
Profitable trading is not that difficult. Just being disciplined and following the principles of trading strategies that have been tested and practiced before is enough to earn profit. In this trading method, it seems to delay the steps four and five of entering the transaction. Practice and repetition will make these two steps take only a few seconds.