Forex strategies

March 30, 2013 at 4:01 pm

Three screen strategy for trading on Forex market

The three-screen Forex strategy is one of the most comprehensive and relatively simple techniques for technical trading.

First screen

It defines the main trend.

First screen is Based on MACD histogram. If the histogram fall, we examines only options for sale. Sell signal would be stronger, if the histogram is less than zero.

When the direction of the histogram is to increase – buy. The purchase will be more reliable, when values in the histogram are above zero.

The trend of the first screen is similar to the tide and against waves of the tide is not good to swim, especially if they are on the Forex market and question is about money!

Second screen

It defines the medium-term trend by using oscillators. Oscillators are stochastic, RSI built on the daily chart.

If the first screen indicating a bullish market and the oscillator are in the area of oversell, then this is a good signal to buy .

Conversely, a weekly bearish trend in overbuy level in the oscillator – signal to sale.

Signals of the second screen are waves. The three-screen Forex strategy examine only waves that do not conflict with the tide.

Third screen:

It defines short-term trend in your Forex trading strategy.

If the price formed a new high, compared to the previous day, weekly trend is growing, and daily oscillators have gone into the area of oversell, this is a  signal to buy.

If the price makes a new low in comparison to the previous day, the weekly trend is decreasing and the daily oscillators have risen in the area of overbuy it comes time to sell.

If you perform a currency transaction using the three screen Forex strategy, but you are not in profit is possible to have some changes in the fundamental conditions. In this case is recommended to quickly get out of the market to clarify the situation.

Conservative Forex traders are advised to keep winning positions open, while the weekly trend reverse.

For aggressive Forex traders is possible further opening of currency position on each new buy or sale signal from the second screen  -  until the deployment of the weekly trend.

Mandatory requirement here is the risk management. Protect yourself from losses

There is another version of the three screen Forex strategy.

- Screen 1 – 4 hr
- Screen 2 – 1 hr
- Screen 3 – 5 min

Open position

The idea is to trade in the direction of EMA 20 – screen 1.

On the main screen (screen 2) look for signals at the intersection of 5 wma, 10 wma and 15 wma, and also the crossing between 10 wma and 15 wma.

If screen 2 signals for opening of a short position, which is confirmed on screen 1, then we look at the screen 3 and search:

- Price touch on the top line of the Bollinger Bands (if the price is above the EMA and below the top of the line) or touch to EMA (if the price is below the EMA and above the lower edge of the BB).

For long position, the rules are reversed.

Closing positions.

Straight after the 5 wma crosses the 10 wma in reverse direction.

The Forex trading strategy of the three screen is one of the most comprehensive for traders who are familiar with the basics of Forex market.

Here are some other rules in the Forex trading:

- It is good, trade to be made between 8:00 and 16:00 hours. Asian currencies – when open the Japanese market.

- Close all positions 30 minutes before the publication of important news.

- Do not open new positions before the market has not cool down after the release of important news.

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