Easy Forex Strategy: Many Wins, Keep It Simple

Today I'm going to share with you, an easy Forex Strategy that anybody could follow and implement into their daily trading plan. If you're reading this, you've likely embarked on a journey to unlock the potential of Forex trading or are seeking a more straightforward and profitable approach to this dynamic arena.

In this comprehensive guide, we'll introduce you to an easy and effective Forex trading strategy that weaves together simplicity and profitability.

At Elite Forex Partner, we understand that the Forex market can be overwhelming, with complex charts, numerous indicators, and endless strategies vying for your attention. But here, we advocate for a different approach—keeping it simple.

Our easy Forex strategy is designed to demystify the trading process, making it accessible to both beginners and experienced traders looking for a refreshingly effective approach. We'll walk you through every aspect, from setting up your indicators and charts to identifying trend reversals and entering positions with precision.

But simplicity doesn't mean sacrificing profitability. On the contrary, this strategy has the potential to yield consistent wins when executed correctly. We'll discuss risk management techniques, stop loss and take profit targets, and even introduce you to the concept of trailing stop losses to maximize gains.

So, whether you're a newcomer to Forex trading or a seasoned trader in search of a more straightforward path to success, fasten your seatbelt. By the time you finish reading, you'll have a clear understanding of a strategy that aims to provide you with many wins in the Forex market—while keeping it elegantly simple.

Let's embark on this journey together, and remember, disciplined trading is the key to success. Now, let's dive into the world of easy and profitable Forex trading.

Setting Up Your Forex Indicators

Indicators are your guiding lights, your navigational tools amidst the sea of market data. The success of our easy Forex strategy hinges on a carefully chosen set of indicators that have proven their worth time and again. In this section, we'll illuminate the path ahead by introducing you to these key indicators and guiding you through their setup.

Before diving into the setup process, let's shed some light on the indicators that power our strategy. These indicators have been chosen for their simplicity, effectiveness, and ability to reveal critical insights into market trends and potential entry points.

- 200EMA: We use the 200 expediential moving average strictly on the hourly time frame only. This 200EMA is just a guideline to identify trends. Although we don't just buy if the price is above or sell just because the price is below the moving average. We also use price action to determine the trend as we will demonstrate in this article.

- 50EMA: We use the 50 expediential moving average for the 15-minute timeframe to help us determine if the trend on the hourly chart is holding on to the lower timeframe.

- 3LWMA: Our third indicator is the 3 linear weighted moving average. It is the only moving average indicator where we change the shift input to 3. The 200EMA and the 50EMA shift are kept at the default setting of 0.

- MACD: The final indicator for our easy Forex strategy is the MACD (Moving Average Convergence Divergence). The parameters are the following;

Fast EMA = 6

Slow EMA =17

MACD SMA AKA Signal line = 1

This indicator we will use in the 15-minute timeframe but only as extra confluence in our trade bias.

Please note this strategy works best on an ECN account account. Check out our article where we compare a standard account to an ECN and see which account is better suited for your trading needs and personality.

Our top broker to use this trading strategy is FP-Markets on a RAW account type.

The Use of Indicators

Remember, the choice of indicators is paramount. While we advocate for simplicity, it's equally crucial to select the indicators that align with your trading goals and personality. Not all indicators are created equal, and their effectiveness can vary depending on market conditions.

As we progress through this guide, you'll discover how these indicators work together harmoniously, but are secondary to price action and only provide confirmation to our trade directional bias.

By the time you've completed this section, you'll not only have a well-configured set of indicators but also a deep understanding of their roles in your path to profitable Forex trading.

Ready to bring these indicators to life on your trading platform? Let's dive into the heart of our easy Forex Strategy.

Chart Setup for This Simple Forex Trading Strategy

Your chart is your canvas, and the way you set it up can significantly impact your trading success. To ensure you're equipped with the best tools for our simple Forex trading strategy, let's delve into the art of chart setup.

Optimal Chart Settings

The foundation of our strategy lies in simplicity, and this principle extends to our chart setup. We advocate for a clean and effective chart layout that minimizes distractions and maximizes clarity. Here are the optimal chart settings:

- Time Frame: Select the hourly time frame for precision in executing our strategy.

- Candlestick Type: Use Japanese candlestick charts for their ability to convey price action effectively.

- Indicators: Incorporate the indicators discussed earlier in this guide (200EMA, 50EMA, 3LWMA with a shift of 3 and the MACD indicator).

Go to the settings of the indicators and edit the visualization for the 200EMA to only be visible in the 1-hour timeframe. The rest of the indicators set the visualization for 15 minutes.

- Color Scheme: Opt for a clean and uncluttered color scheme to make price movements and indicators easily distinguishable. We go for a simple clean look with these colour settings.

They say a picture is worth a thousand words, and when it comes to chart setup, that rings especially true. To help you configure your charts with precision, we've included a screenshot below.

Emphasizing the Importance of Clean Charts

Why do we stress the importance of a clean chart layout? Because cluttered and confusing charts can lead to indecision and costly mistakes. Our "Simple Forex Trading Strategy" thrives on clarity, enabling you to identify trends and potential entry points with ease.

By the end of this section, you'll not only have your charts set up to align with our strategy but also understand why this clean and effective chart layout is essential for your success. Now, let's move forward and explore the intricacies of identifying trend reversals and continuations—a crucial element of our strategy.

Identifying Forex Trend Continuation and Reversal Signals

Recognizing trend reversals is akin to having a compass in a vast and ever-changing landscape. Our simple Forex trading strategy relies heavily on identifying these pivotal moments in the market. In this section, we'll delve into the specific signals and patterns that act as signposts for potential trend reversals or trend continuation.

Understanding Trend Reversals

Trends in the Forex market can be likened to ocean waves, with price movements ebbing and flowing. While riding the wave of an established trend can be profitable, knowing when the tide is about to turn is equally crucial. This is where trend reversal signals come into play.

Specific Signals and Patterns

In our strategy, we focus on a set of specific signals and patterns that have proven reliable in signaling potential trend reversals:

- Trend reversal: Look at the 1-hour timeframe. In this example, we have a strong downtrend. We can easily identify the higher lows and the lower lows of each wave of the price.

Eventually, the bears/sellers lose some steam and the price comes back to test the higher low.

It is rejected once as marked by the red circle in the image below. Notice after this point. Price fails to reach a new lower low but instead, it eventually breaks through. Identified by the green circle in the image below. This is a clear sign that the possibility of a trend reversal is developing.

- Trend Continuation: We can't catch every reversal and they certainly don't present themselves every day. For that reason, we also look for trend continuation setups.

The way a trend continuation is determined is presented by price creating a higher high, then a lower high followed by a breakout of the higher high.

This is illustrated below with the green circle. With this established, we can look for buy set-ups

The same rules apply for sell set-ups only we look for a lower low followed by a higher low then a break of the lower low.

- 200EMA: After we have identified the trend we can use the 200EMA to confirm our bias. The two previous example images illustrate this.

The Significance of Identifying Reversals

Why is identifying trend reversals crucial for profitable trading? In Forex, the ability to pinpoint potential trend shifts allows you to:

- Enter trades at optimal reversal points, maximizing profit potential.

- Hold positions to preserve gains and minimize losses.

- Adapt to changing market conditions, ensuring your strategy remains effective.

By the end of this section, you'll have a solid grasp of the specific signals and patterns to watch for, as well as their importance in the context of our simple Forex trading strategy." The ability to identify trend reversals is a key element of our path to success, so let's continue our journey.

Entering Positions with Our Easy Forex Day Trading Strategy

Now that we've covered the essentials of setting up your charts, identifying trend reversals, and understanding key indicators, it's time to put our easy Forex Day trading strategy into action.

In this section, we'll guide you through a step-by-step process for entering positions using our strategy.

A Step-by-Step Process

Our Forex day trading strategy is designed for simplicity and effectiveness. Follow these steps to enter positions with confidence:

Step 1: Identify the Trend

- Refer to the 1-hour chart.

- Confirm the prevailing trend using price action and 200EMA to identify trend reversals or continuations.

In this example, we have an uptrend on the hourly chart with a short-term downtrend followed by a continuation of the overall uptrend. We can confirm this with the higher low broken by price as shown by the green circle.

Step 2: Determine Entry Points

Jump down to the 15-minute timeframe. Now that we have our trend bias on the hourly chart, we will be looking for long positions in the 15-minute time frame. A buy signal is valid when the 3LWMA is above the 50EMA. For extra confluence, the MACD should be above the zero line. Once these conditions are met.

We need a candle stick closing above the 3LWMA, then a retracement with a candle stick closing below the 3LWMA. Then finally, a push-up in price with the candlestick closing above the 3LWMA. Our entry will be at the close of this candle as illustrated below.

This is important. Once the price closes below the 3LWMA and the price continues to touch the 50EMA, even by piercing it with a wick.

The trade is invalid. We will not consider this trade as the buying pressure is insignificant in volume. Here’s an example of trades to avoid.

Step 3: Implement Proper Risk Management

- Always implement risk management principles to protect your capital.

- Set a stop-loss order at an appropriate level to limit potential losses. Ideally, you want your stop loss to be 2 pips below the recent swing low of a buy trade and 2 pips above the recent swing high of a sell trade.

- Calculate your position size to align with your risk tolerance. Typically 1 to 2 percent of your capital.

Step 4: Monitor the Trade

- Once your trade is active, monitor it closely.

- Consider employing trailing stop-loss techniques as the trade progresses at each swing low

- Be prepared to adjust your take profit and stop loss if necessary.

We found that the best risk-to-reward ratio for this strategy is 2:1. Stop loss averages around 50 for each trade. Sometimes a slightly less and more but our take profit will be double the stop loss.

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Emphasizing Simplicity and Effectiveness

What sets our easy Forex day trading strategy apart is its simplicity. By following these straightforward steps and utilizing our indicators and signals, you'll be equipped to enter positions confidently and effectively.

The emphasis on clarity and precision minimizes the potential for indecision and maximizes your chances of success.

As you continue to explore the intricacies of our strategy, remember that practice and discipline are key. The more you familiarize yourself with these steps and refine your execution, the more adept you'll become at day trading in the Forex market.

Conclusion

As we draw the curtains on this journey through our easy Forex strategy, it's time to reflect on the key takeaways and insights that can empower your Forex trading endeavors.

Simplicity and Profitability

Throughout this guide, we've emphasized the dual pillars of our strategy: simplicity and profitability. By choosing a straightforward approach that streamlines your decision-making process, you not only reduce the complexities associated with Forex trading but also position yourself for potential gains.

Our carefully selected indicators, trend reversal signals, and step-by-step entry process are designed to work together seamlessly, offering you a clear path to successful trading. Remember, it's not about the number of trades but the quality of the setups you identify using this strategy could be the only day trading Forex strategy you need to profit.

Proceed with Caution

As with any endeavor, it's important to proceed with caution. While our easy Forex strategy offers a powerful toolset for trading, it's essential to remember that Forex markets can be unpredictable, and losses are a part of the journey.

Always practice responsible risk management, adhere to your stop-loss and take-profit levels, and consider utilizing a demo account to build your confidence before trading with real capital.

Your Forex Journey

Your journey in Forex trading is a personal one, and our hope is that this guide has equipped you with valuable insights and a practical approach to navigating this dynamic marketplace. Keep in mind that trading is a continual learning process, and there's always room for growth and improvement.

As you venture forth, remember that discipline, patience, and continuous learning are your allies. Use our Forex strategy as a foundation, but don't hesitate to explore and adapt it to your unique trading style. We strongly believe what works for others may not work for you. Due to the psychology of the markets and the mindset of each individual.

With this strategy, simplicity is your guiding principle, and profitability is your destination. The path may have its ups and downs, but with dedication and practice, you can unlock the potential of the Forex market.

Thank you for joining us on this journey, and we wish you many successful trades ahead. May your Forex trading endeavors be marked by clarity, confidence, and consistent gains.