Using Bollinger Bands in a Trending Strategy

One of the best forex indicators is Bollinger Bands. They are very simple to use, they are free, and they are extremely reliable. At just a glance, you can tell if the market is trending or stuck in a range. You can tell if the market has hit extreme prices or if it is about to explode.
So I want to show you a simple trading strategy that relies heavily on Bollinger bands. And, oh yeah, it makes pretty good income from forex!
Identifying a trending market with Bollinger bands is very simple. If the market is trending up, price will walk up the upper band. If the market is trending down, price will walk down the lower band.
Bollinger bands plot a moving average in the middle, and the extreme bands are formed by standard deviation lines around that moving average. Now don't be scared by the algebraic term standard deviations. You don't have to know how to calculate them - the indicator does that by itself.
Normally, the standard deviation for Bollinger bands is set at 2. For this strategy, you want to change it to 1. Just go into the settings of the Bollinger indicator and change the number 2 to 1. This will help you identify trading opportunities better.
Now that you have changed the standard deviation, you will notice that the extreme bands are now closer to the moving average. This is exactly what you want.
Now look for any candle that closes outside the bands. When you see this, enter a trade in the direction of the closing candle. Your stop loss will go on the other side of the candle.
So, in an uptrend, you will place your stop below the candle that closed above the upper band. In a downtrend, you will place your stop above the candle that closed below the lower band.
Your take profit should be twice as much as your stop loss. For example, if your stop loss is 25 pips, then your take profit would be 50 pips.
Pretty simple, right? Not hard at all, and that is the way most profitable trading strategies are - simple.

How Successful The MACD Indicator

Regardless of your Forex strategy, have you ever entered trades and shortly afterwards wished you hadn't? The information that follows will hopefully cut down greatly on the number of trades that cause you anxiety!

The MACD (Moving Average Convergence Divergence) indicator can add a degree of certainty to your Forex strategy.

As with any indicator, it is too risky to enter trades on this signal alone. However, as we will see, used with caution on higher time frames, it can help confirm you are going in the right direction and that your trade is higher probability.
Taking MACD Apart
Let's take MACD apart and describe it's component parts.
The default MACD on most charting packages sets 2 EMA's (Exponential Moving Averages) at 26 and 12 days.
This is represented by a colored line (color varies according to charting package) which crosses a different colored 9 EMA often termed the trigger line.
When MACD (the 12/26 EMA) crosses above the trigger line (9 EMA) upward momentum is indicated and vice versa.
A center line, or zero line, often called the water line is also shown in the MACD indicator. When MACD is above the water line an upward trend is indicated, when it is below the water line, a downward trend is indicated.
MACD also includes a histogram, small vertical lines that appear above or below the zero line, not unlike mountains and valleys in appearance.
MACD is a lagging indicator which follows price action.
The histogram is an indicator of MACD. So watching the histogram can give you an early indication of where MACD is going. The height of the histogram can be a good momentum indicator.
Using MACD As A Safety Indicator
How can you use MACD to your advantage?
If you want to be very cautious in your Forex strategy, going only for high probability trades, then pay attention to MACD on the 4 hour and 1 hour charts.
Some traders will only enter a trade when the 4 hour and 1 hour MACD's are going in the same direction. This will mean a lot less trades but the ones you do take are likely to be profitable. (Agreement of the two MACD's is used in conjunction with other indicators, not by itself.)
MACD on the 1 hour chart is particularly powerful. If you want to stay out of trouble and avoid trades you might later regret, NEVER trade against the direction of the 1 hour MACD. To do otherwise is not necessarily foolhardy if you know what you are doing.

But for the newer, less experienced trader, only trading long when MACD has crossed up, or short when MACD has crossed down on the hourly chart when your other favorite indicators line up, will make for a higher success rate with your Forex strategy. It will also save you much anxiety and heartache!

Income Forex Secrets Review

People are always telling tales of income forex secrets strategies and how they have the winning formula, however they seldom deliver the goods. What I am going to disclose to you in this article is a formula that I know the professionals don't want you to know and many have been trying to keep under wraps. It is more of a long term trading strategy with expectations of 500+ pips hence its name system 500.
This so called secret forex income formula requires a degree of knowledge for you to understand its method. Some experience with charts and EMA's is required, the rest you can pick up in the following paragraphs. You are required to set your charts to a 4 hour time frame and have a duplicate chart of a daily time frame.
On the chart this secret forex income formula requires these settings; Bollinger bands set to MA nbr periods 20, and standard deviation 2, for top middle and bottom bands. You should set 4 Exponential MA's on each chart, 1 set to nbr 2 no shift, colour this one blue. The next should be set to nbr 6 and coloured black. The next should be set to nbr 12 and coloured green, finally 1 set for nbr 34 and coloured red.
When the candles have pierced the bollanger bands, either top or bottom, we are looking for the trade to reverse. We now use the EMA's to confirm the change of direction once the black crosses the blue and that both cross the green on the 4 hour chart we can start looking for previous price action. Once pervious price action is suppressed, look on the daily chart to see if the EMA's have started to cross, If so enter the trade on a new high on the 4 hour chart with a 60-100 pip stop loss.
In this secret forex formula the trade should now of crossed the red EMA and heading in the right direction adjust your stop loss so that eventually you are using the red EMA as a stop on the 4 hour chart and then as it progresses look to use the red EMA on the daily chart. Your exit strategy should be for the EMA's to cross back over the red EMA on the 4 hour chart. Good Luck with this monster when it works you will be looking at 500+ pip trades.

200 EMA Forex Strategy - For Beginners

Are you a relatively new trader looking for a solid forex strategy?

A challenge facing many new traders when developing their forex strategy is the ability to identify the overall trend for intra-day trading.
The 200 EMA (Exponential Moving Average) can solve the problem.
The 200 EMA is one of the most popular indicators of all time with Forex traders the world over, and for that reason alone is worth noting due to the psychological effect on the market place price can have when hovering around the 200 EMA.
Using The 200EMA Strategy
To use this very powerful Forex strategy, create charts on 3 time frames:

• 4 hour
• 1 hour
• 15 minute

Now plot a 200 EMA indicator on each chart and, as a suggestion, color it red, for easy visual impact.
Preferably tile the 3 windows containing your 3 charts into a vertical fashion so you can see the 3 time frames next to each other. It will squeeze up the information on the charts somewhat but for the purpose of this strategy that doesn't matter.
Now scroll through the various currency pairs you like to trade.
If you prefer to trade only pairs with a smaller pip spread, they amount to about 9.
They are:

• EUR/USD
• GBP/USD
• USD/CHF
• USD/JPY
• EUR/JPY
• USD/CAD
• AUD/USD
• NZD/USD
• EUR/CHF

What you are looking for is any currency pair that bucks the 200 EMA on the 15 minute chart.
So for example, look at the EUR/USD pair and note the position of price relative to the 200 EMA on the 3 time frames.
If price is well above the 200 EMA on the 4 hour chart, well above the 200 EMA on the 1 hour chart, but BELOW the 200 EMA on the 15 minute chart, price is bucking the trend.
The overall trend is up, price has temporarily gone against the trend and is currently in a retracement.
Using the fundamental trading principle of "buy the dips in an uptrend", "sell the rallies in a downtrend", look for a suitable entry point.
In the example given above you would look for an opportunity to buy the EUR/USD, perhaps watching for a candle signal that price has exhausted it's downward momentum, bucking the 15 minute chart 200 EMA and will soon resume it's upward momentum.
This is an easy exercise and it can be done once or twice a day, taking just a few minutes.
Watch For Price Bucking The Trend
Once you see price bucking the 200 EMA on the 15 minute chart, whereas it is on the opposite side on the 4 hour and 1 hour charts, sit up and take note. Watch carefully and grab the opportunity to get in and make some pips.
After a little practice you will see how extremely powerful this simple Forex strategy is - certainly deserving a place in your trading tool kit.