How to develop effective forex trading strategies ~ the forex daily trading system course
First of all you are going to need indicators in your currency trading strategies, readily available through the MT4 platform for free you will have no problem finding mathematically worked out signals hinting on the direction of a currency pair. There are too many of them to go through in one article but all you need to know is that there is plenty of information on the internet explaining how to use each one; all you have to do is seek and one will find answers. In this article we are going to go through the indicator categories so you can compile what will work with what.
Trends
One of the most common Forex trading strategies is trading with the trend, which you can establish using indicators such as Moving averages, Bollinger bands, ADX, Parabolic SAR, Commodity Channel Index and standard deviations. Do not panic if all that sounds complex, because the truth is it is complex but all you need to know is when each one gives you a buy or sell signal, you dont need to know the inner workings and calculations.
Oscillators
Oscillators are an indicator that show the range of a currency, for example a range between 0 and 100. If the indicator is at the top of the range or near the "100" mark then it is an indication that the currency pair is overbought. If the opposite is in effect and the currency is near the "0" then it is an indication that the currency is oversold. There are many different Oscillator indicators such as Average true range, Bulls power, Bears power, Envelopes, force index, MACD, RSI, Relative Vigor Index and many more custom designs from programmers.
Volumes
Volumes give an indication of the buying and selling power of a security. The money flow will be displayed through an indicator that will show as a trend either up or down. An uptrend would suggest that there is more money flow through the buying market and a downtrend would indicate there is more money flow through the selling market. The indicators to look out for that will give volume to your trading strategy are Accumulation/Distribution, Money flow index, On balance volume.
Putting it all together
So this is where you start to see how indicators can make up your strategy. Imagine you have a chart with a couple of moving averages on the price and maybe a Bollinger band giving you an indication of an uptrend. You add an Oscillator to the chart that gives you a signal of overbought. So you are not going to buy off the result of the trend indicators because your Oscillator indicates it is overbought. You could wait until your moving averages cross over and take a sell trade or get in early when the price moves through your mid Bollinger band. Either way you have just developed your first strategy. You could even get more technical and add a volume indicator and see when that buying power starts to decrease and take the sell even earlier.
Experimenting is the key to success and it could take years to get it right. There are some really good strategies out there for free but you will often find they only work in a certain type of market. A good way to start developing your own strategies is taking one of these methods and adding another indicator to tell you when it will stop working and switch to a strategy that will. As stated at the beginning of the article nobody in their right mind is going to give you a mega winning strategy for free. You can either pay a subscription to use the strategy or buy it outright in the form of an EA.
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