Basic Forex Strategy Part 2
Using given priority and having tested it, I have developed some simple rules of trade.
Trade key rules on currency pair EUR/USD.
Strategy of price action
In the forex market trading day proceeds from 07.00 EST (east standard time) to 17.00EST.
1. if the previous day maximum has been crossed to perform input in the long party.
2. The exit on profit is carried out after price promotion upwards approximately on 10 points from an input point. The stop warrant takes place approximately on 30 points below an input point.
3. An input in the short party to perform if the previous day minimum has been crossed.
4. To close a short position if the transaction brings approximately 10 points of profit. To liquidate losses at price movement approximately on 30 points against your position.
5. To conclude the bargain only at the first crossing of a maximum/minimum of day.
For this strategy as however and any another, I recommend adhering to a rule of 2 %. The rule of 2 % should be above any rule of trading system. This rule means that in any separate transaction you never should risk more predetermined percent from the account. This percent is equal in my case 2 %, but some traders suppose its increase to 5 %. Excess of 5 %-s’ levels, in my opinion, is extremely risky.
The approach described here, is only base on which basis you can develop own trading strategy. Unfortunately, there are certain moments which I, for the clear reasons, can’t open completely. Inclusion and testing of some additional rules can essentially improve system operation.
For example, if to take the conclusion of transactions only in a direction of a general trend. We have tested one strategy very similar to those that is described here, and the overwhelming majority of our unprofitable transactions was necessary on short positions while a significant amount of our advantageous transactions were in the long party. Not casually that the trend during the period of our testing was mainly ascending. I suggest using as the filter the trend indicator, like moving average, trend lines or Parabolic.
For those who want to participate in forex trading should start from learning the basics of this market to make sure you do not experience problems with this industry.