For traders looking for a trend following strategy, there is nothing better and simpler than using the moving average. One of the commonly used indicator, the moving averages form the basis for many different trend following strategies. In this trading strategy, we make use of the and 50 periods exponential moving average applied to the 4-hour charts.
This strategy does not rely on the moving average cross over but rather enters the trend after it is established and exits on a quick profit. This forms the main basis of our bias. Because the H4 chart interval closely follows the daily charts, trends are well reflected in this hour frame. This moving average will be the key towards managing risks in our trade. If either of the conditions is met, we then wait for the following set up to appear:.
The chart below illustrates how the sell trade set up is identified. The advantage of using this trading strategy can be summarized into the following:. More Posts - Website. Will the impact of the news slow down or even reverse the trend?
Thank you very much for your expertise! News will certainly impact relevant currency pairs and dependant on the release can either disrupt or advance the trend. For example, if we have a bearish EURUSD trend and we have a negative EuoZone data release this will likely speed up the trend. Similarly, if trading have strong US data this again will likely speed up the trend as it will weigh on EURUSD.
Thank you very much for the prompt reply. I find your article very useful. The explanation given to my question was well answered. Hope I set up correctly. Hello James, I find this article exactly what I wanted and the strategy suits me perfectly. Watch our broadcasts hosted by Nour Eldeen Al-Hammouri covering forex, commodities, and indices in addition to exclusive CFD and forex trading opportunities identified by the Orbex research team.
The United States nonfarm payrolls report is probably one of the most important economic releases every month. The nonfarm one or NFP for short has […]. Strategy Price Index, CPI for short is a measure of the change in the weighted average of prices from a basket of consumer goods and […]. Another day with the same one news headlines about Greece Grexit are hovering around, leading to another fresh buying spree across European equities. Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors.
Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. There is a possibility that you may sustain a loss of some or all of your investment and therefore you should not invest one that you cannot afford to lose. Hour should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial trading if you have any doubts.
Trading with the and 50 EMA: H4 Time frame Trading Strategy. Indicators used and their purpose EMA applied to closing prices on the H4 charts: The chart below shows the set up for this strategy. Once the chart is set up, we look for the following criteria: Sell Criteria Price must be trading at or below the 50 EMA Price must make a low and then retrace back to make a high, contained within the and 50 EMA Using the horizontal line tool, mark the low point before retracement Once price breaks this low, wait until a new low is made and price starts to retrace again Place a sell order at the previous low with stops above the low at the most visible intermediary high Measure the distance of the high to the low and project the distance 1.
Price makes a new low at 0. So BE target would be Low or entry — distance 0. We now trading the final target which is 0. Projecting this from the possible entry of 0.
We now place a sell order at the previous low of 0. In the above chart, price makes a high at 1. Stops are placed at the previous low as it is the only visible stop level that we can see. From entry, the projected target is 1. When price travels the same distance as the entry to the low price, the trade is moved to break even or closed partially, with the final target in place The advantage of using this trading strategy can be summarized into the following: Using the two moving averages and entering after the trend is established offers a low risk trading strategy The in-built risk strategy means that all the trades come with a minimum of 1: Trade set ups do not occur that frequently, so traders looking for make quick trades will find this as a disadvantage Sometimes, hour all the criteria being met, price does not retrace and continues to rally, which could result in a missed opportunity.
Impulsive traders will find such scenarios very tempting to jump into the trade, ignoring the rules. Orbex More Posts - Website Follow Me: Jason December 12, at 6: James Harte December 12, at 7: Jason December 13, at 8: James Harte January 18, at Tom January 18, at 2: Web TV View all. What is the US Nonfarm payrolls or NFP?
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