Types of Forex Trading and Strategies

The foreign exchange market, or forex, being the largest financial market in the World has been the domain of government central banks as well as for commercial and investment banks in a scandalous manner and it exists wherever one currency is traded for another. But recently more numbers of individuals are handling the forex market as it offers trading 24-hours a day, five days a week, and the daily dollar volume of currencies traded in the currency market that exceeds $1.9 trillion daily, making it the largest liquid market in the world.


"Foreign Exchange" is the place where the money of one nation is traded with the other nation. The most popular pair of exchange in the forex market is "Euro Dollar". You can view these pairs in all forex display screens as "EUR/USD". Forex trading strategies are the key to triumphant forex trading or online currency trading. The management team of One World Capital Group bid proficiency in both Forex trading and internet technologies and proven track records that deals with large, global trading and brokerage operations as well. Forex made easy is as simple as you would want it to be.


Forex trading is different from trading in stocks entirely and it uses Forex trading strategies that will give you lot of advantages as well as help you to comprehend greater profits in the short term. There are wide ranges of forex trading strategies that are available to investors. It is one of the most useful of these forex trading strategies called as leverage. Knowledge of these Forex trading strategies can imply the difference between profits along with a loss and so it is essential that you fully grasp the strategies that are being used in Forex trading. The world of Forex trading is highly complicated and success requires education and familiarity with terms, charts, signals and indicators.

As you can be able to access it from home or office from any parts of the country, Global Forex trading is the most profitable and attractive internet income opportunity. And you do not need to do anything or there is no need of internet promotion for getting succeeded. Forex Capital Markets are nothing but foreign exchange markets where the currencies are been bought and sold continuously for profits. These capital markets of forex are present globally and their transactions are always non-stop in this forex cash market. A managed Forex account is forex made easy. Many different companies offer these accounts to their clients. The foreign exchange market is a worldwide market and as per to some estimates is almost as big as thirty times the turnover of the US Equity markets. 

By: usharani

Continue Reading »

Strategy 3: CounterTrend 1 (“Gann OFR”)

Trading against the trend is difficult and risky, and yet, when properly controlled, can be profitable. That is why the setup for a Gann OFR trade requires several conditions. First, price must be testing key support or resistance. A pattern used in the “OFR 30” system needs to develop, then price must break the Gann HiLo line. When a position is taken, Gann OFR employs two profit targets as well as a trailing take-profit stop.

Gann OFR uses these Indicators on the 30-Minute Chart:

Pivot Calculator - Daily
FXS Adaptive Mvg Avg (5,2.0,0)
Gann Hi/Lo Activator - Gann HiLoA(7)

Chart 1: This CounterTrend Strategy uses three indicators.

Trend

An UP Trend is shown when price stays above a rising black Gann HiLo line, testing the Hi Band and sometimes exceeding it.

A DOWN Trend is shown when price stays below a falling black Gann HiLo line, testing the Lo Band and sometimes dropping below it.

Trade Entry

The steps for a Gann OFR buy or sell trade are listed below. Trade entry occurs when the currency retests the Gann HiLo line. After buy entry conditions occur, Gann OFR will buy if the market drops to the Gann HiLo line. When sell entry conditions occur, then GannOFR will sell if the market rises to retest the Gann HiLo line.

CT1 Gann OFR Buy Entry Rules:

1. Price tests key pivot support level and
2. Closes outside of the Lo Band and
3. Followed by a Close back inside the Lo Band.
4. Price must then close above the Gann HiLo line.
5. Buy on a retest of the Gann Hi Lo line.

In Chart 2, on October 10th a Sell Entry occurs at #5 in the EURJPY at 166.13.

CT1 Gann OFR Sell Entry Rules:

1. Price is trading near key pivot resistance and
2. Closes outside of the Hi Band and
3. Followed by a Close inside the Hi Band.
4. Price must then close below the Gann HiLo line
5. Sell on a retest of the Gann HiLo line

Trade Exit

It is not possible, in advance, whether a small or larger profit will develop. So two profit targets are used. Half profit can be taken at or beyond the FAMA Band (Hi Band for Buy Trades; Lo Band for Sell Trades). The second profit target is the next key support or resistance beyond the FAMA Band. The Gann HiLo line is used a trailing stop to keep losses small and also to let profits run, per below exit rules.

Profit Targets

1st Profit Target: Opposite FAMA Band
In a buy trade, exit half the position at the FAMA Hi Band or above.
In a sell trade, exit half of the position at the FAMA Lo Band or below.

2nd Profit Target: The Next Key Pivot Line
A buy trade can target the next key Pivot Resistance above the Hi Band.
A sell trade can target the next key Pivot Support below the Lo Band

Price Closes beyond Trailing Stop

The Gann Hi/Lo Activator (‘Gann HiLo’) is used as a Trailing Stop. If the strategy position is long, then the strategy exits if price closes below the Gann HiLo line. If the strategy is short, then it exit the position if price closes above the Gann HiLo line.

Chart 3. A Sell Trade takes half profit at the Lo Band, then exits the other half on a strategy Buy signal.

The example in Chart 3 shows a sell trade at 166.13, near R2(Daily) Resistance. Half profit was taken at 165.63, at the Lo Band. The second half of the position was closed at 165.61, when a Gann OFR buy trade occurred. Profit on the trade was 51 pips (166.13-165.62 [average exit price]).

Gann OFR Buy Exit Rules:
Exit a BUY Position if

1. A Profit Target is reached OR
2. Price closes below the Gann HiLo line

Gann OFR Sell Exit Rules:
Exit a Sell Position if

1. A Profit Target is reached OR
2. Price closes above the Gann HiLo line

Initial Stop Loss Order:
Controls trade risk. Establish before the trade. (See "Risk Controller".)

Risk Control

Go to Risk Controller. Input risk preferences to determine:

1. Stop Loss Order
2. Maximum Position Size

Use the Trade Strategy Worksheet to control, monitor and record the trade.

Continue Reading »

Strategy 2: Two Timeframes ("TC Experts")

This strategy uses the TC Expert indicator in Two Timeframes. The 1-Hour TC Expert is used to determines trend. The TC Expert on a 10-Minute Chart is used for Trade Entry and Exit.

When the 1-Hour TC Expert is bullish, for example, then Trend is UP, and the strategy will buy when the 10-Minute TC Expert turns bullish. The strategy exits a buy trade when the 10-minute Expert turns bearish, or when price closes below a Gann Hi/Lo line that is used as a trailing stop.

Indicators used in this strategy & their inputs:

1-Hour Chart: TC Expert (7,18,36,7)
10-Minute Chart: TC Expert (7,18,36,7)
Gann Hi/Lo Activator - Gann HiLoA(7)

Chart 1. The TC Expert is composed of two separate indicators.

Trend

Trend is the direction of the TC Expert on the 1-Hour Chart. When the Schaff TC Expert is applied to the chart, two indicators appear, both a black Schaff Trend Cycle (‘STC’) and a green Schaff Trend RSI (‘STR’).
Chart 2. Trend changes are highlighted by the the red and blue vertical lines, after which the TC Expert indicator turns bearish and bullish, respectively.
Trend is UP when the TC Expert is bullish. The TC Expert is bullish when both the black STC and the green STR are rising above the lower red-dotted Buy line shown in Chart 2.
Trend is DOWN when the TC Expert is bearish. The TC Expert is bearish when both the black STC and the green STR are falling below the upper red-dotted Sell Line.

Trade Entry

The strategy uses the TC Expert and a Gann HiLo line on a 10-Minute Chart to time when to enter a trade. When Trend is UP the strategy will buy when price is above the Gann HiLo line and the 10-Minute TC Expert turns bullish. If Trend is DOWN the strategy sells when price is below the 10-Minute Gann HiLo line and the 10-Minute TC Expert turns bearish then the strategy sells.
Chart 3. With a DOWN Trend in place, a Sell Entry occurs on the 10-Minute Chart at 9:20 at 2.0387.
TC Expert Strategy: Buy Entry and Sell Entry rules:
BUY when 1-Hour Trend is UP and

1. The 10-Minute TC Expert turns bullish and
2. Price is above the Gann HiLo line

SELL when 1-Hour Trend is DOWN and

1. The 10-Minute TC Expert turns bearish and
2. Price is below the Gann HiLo line

Trade Exit

Various exit tactics are used, depending on how price could develop.
Trend Indicator Changes Direction
If the 1-Hour Trend changes direction then exit the trade.
Trade Entry Indicator Changes Direction
If the 10-Minute TC Expert changes direction then exit the trade.
Price Closes beyond Trailing Stop
The Gann HiLo line is used as a Trailing Stop on the 10-Minute Chart. If the strategy position is long, then exit if the 10-Minute price closes below the Gann HiLo. If the strategy is short, then exit if price closes above the Gann HiLo.
The chart below follows the GBPUSD trade shown in Chart 3.
Chart 4. The sell position exits when the 10-Minute TC Expert turns bullish.
The sell trade entered on October 3 at 9:20, at 2.0387, exited at 16:40, at 2.0313, when the 10-Minute TC Expert turned bullish (with both the STC and STR rising above 25). The result is a profit of 74 pips.
TC Expert Strategy: Buy Exit and Sell Exit rules:
Exit a BUY Position if one of the following situations occur

1. Trend changes to DOWN, or
2. The 10-Minute TC Expert turns Bearish, or
3. Price closes below the Gann HiLo on the 10-Minute Chart.

Exit a SELL Position if one of the following situations occur

1. Trend changes to UP or
2. The 10-Minute TC Expert turns Bullish or
3. Price closes above the Gann HiLo on the 10-Minute Chart.

Initial Stop Loss Order: Controls trade risk. Establish before the trade. (See "Risk Controller".)

Risk Control

Go to Risk Controller. Input risk preferences to determine:

1. Stop Loss Order
2. Maximum Position Size

Use the Trade Strategy Worksheet to control, monitor and record the trade.

Continue Reading »

Forex Trading Strategies And Systems

I've been trading the forex markets for several years now so I've developed quite a few different systems in my time. However there are some that are more profitable than others, so let me share you with you some of my most profitable forex trading strategies.

4 Hour Trading Strategy

I created this trading strategy myself and have been using it for several years now. This one system has generated more profits that any other system I have ever used, and yet it's surprisingly simple.

I simply look at the daily trend for a particular currency pair (usually the GBP/USD, EUR/USD or USD/JPY pair) using a very simple but effective technical indicator, then I wait for two EMAs (exponential moving averages) to cross over in the same direction on the 4 hour chart.

I will then enter a position (usually after a slight pull-back) and will employ a two-part exit strategy to maximise my profits. One half of the position will be closed out early for a safe profit, and the other half will be left to run for as long as possible in order to capture those really big price moves.

As I say, this particular forex trading strategy is highly effective, as regular readers of my blog will know because I share my trading results every week in my 'Weekly Trading Updates'.

Anyway if you would like to read all about my 4 hour trading method, you can access it (for free) by filling in the short form to the right and subscribing to my newsletter.

The only problem with trading this strategy is that there will always be quiet periods and particular days where you know you are not going to get any set-ups on any of the major currency pairs. Therefore at times like these I will often employ some of the other trading methods that I keep in reserve:

CCI Divergence Trading System

This is a forex system that I've recently created and it basically uses the popular CCI indicator with two different settings. The key here is to wait until there is divergence between both of the CCI indicators at the same time because this will give you a set-up with a very high success rate.

You don't get that many good set-ups per day using this trading strategy, but when you do, you are likely to make some decent profits because it is a very high probability set-up.

I have discussed this particular strategy elsewhere on this blog so please click here if you want to find out more about this CCI Divergence Trading System.

Forex Income Engine 2.0 Methods

At the time of writing (20 June 2009) I've just started using the three day trading methods included in the Forex Income Engine 2.0 course as well. I've always been quite sceptical about many of the short-term forex methods that I come across, but I've been very impressed with these three methods so far because they do actually produce some very good returns.

Anyway if you would like more details about each of these methods you can read all about them on my Forex Income Engine 2.0 review page.

Forex Nitty Gritty Method

This trading method was included in the Forex Nitty Gritty course and although it is a very basic method, it is actually surprisingly effective. The goal is to look for pairs that are in strong upward or downward trends, wait for a pull-back, and then enter a trade if the trend continues.

I've been using this method on the 15 minute charts for quite a while now and it has always performed well for me because these continuation trends occur all the time.

Again if you would like to find out more about this particular trading method, you may like to read my full review of Forex Nitty Gritty.

Long-Term Trading Strategy

I'm not really a long-term trader but I do occasionally open a position if a good trading opportunity arises. I will usually use the daily charts for these trades and will look at a variety of indicators such as the 200 day moving average, the supertrend indicator, established support and resistance levels, fibonacci levels if applicable, and Marketclub's excellent trading signals.

I will regularly post my long-term analysis of the various currency pairs on this blog, but I will only follow this up with an actual trade if I'm really confident about my predictions.

Other Forex Trading Strategies

Finally as well as all of the trading systems and strategies listed on this page, I also have a few breakout strategies that I like to use when a good opportunity presents itself. I'm also constantly testing out new ideas and reviewing the various trading systems that I get sent regularly by product owners who want me to promote their product.

However for the most part it's my 4 hour trading strategy that I spend most time on because this is my core system which generates the most consistent and reliable profits. All of the other forex trading systems are used to boost my trading pot during the quieter periods of the week.

Continue Reading »

EUR/USD likely to remain under pressure

EUR/USD is likely to remain under pressure and the US Dollar expected to remain bid during the week amid signs of waning market confidence according to the Brown Brothers Harriman, Global Currency Strategy Team. “The EUR/USD, in particular, is expected under pressure across as the combination of a potential Greek default, a shift in ECB posture, divisions between policy makers over how best resolve the ongoing debt crisis and funding worries about European banks continue to rattle markets.”

“With the CDS market pricing in an imminent default of Greece amid talks that the German government may be discussing an orderly restructure and press reports over the weekend suggesting that some large European financial institutions are facing the prospect of a credit downgrade due to their exposure to Greece, we suspect that the euro and broader market sentiment are likely to deteriorate further yet,” analysts affirmed at BBH and point out that a break of the EUR/USD below 1.3430 (February lows) could open the door for 1.3360 “and roughly a full retracement of the year’s entire move.”

Continue Reading »

Fundamental Factors Behind Major Currencies

Every Forex-traded currency is influenced by  a range of internal macroeconomic conditions in its country of origin, as well as by and the global market situation. Economic Indicators (GDP growth, import/export trade accounts), social factors (unemployment rate, real estate market conditions) and the country’s central bank policy are the factors that determine the currency value in the foreign exchange market. Each one of the six major currencies has its particularities, and we are going to analyze the fundamentals that drive the currencies individually.
The US dollar (USD) is the most traded currency in the Forex market. It is also used as a measure to evaluate other currencies and commodities. The USD dominates the foreign reserves held by  all nations – it composes about 64% of the world reserves. Globally speaking, there are several fundamentals that drive the U. S. dollar. Since the largest amount of metallic commodities and the oil are mostly traded with prices denominated in USD, significant supply/demand fluctuations in these markets will have an immediate impact on the currency value, as it  has happened in 2008 when, largely due to the oil prices collapse, the EUR/USD reached 1.60 rate. The dollar also benefits from its status as a safe haven, as investors run to it when economic conditions deteriorate. As a result of a reserve currency status sometimes, USD sometimes profits from problems in the US itself. As for domestic factors, the Federal Reserve and its main interest rate has a tremendous influence on the currency. Decisions of the Fed about the benchmark rate are influenced by inflation, employment and GDP, thus the dollar is also influenced by these factors. Other important factors for USD are the trade balance and the national debt of the US. Usually, a higher trade balance deficit and a growing national debt reduce attractiveness of the US currency. Yet sometimes the opposite can happen as high trade deficit and debt may drive investors to the perceived safety of the dollar.
The euro (EUR) is by far the newest currency traded among the major pairs on Forex markets. It is used by 17 members of the European Union. The fundamental factors that move the euro are often based on the strongest economies using the new common currency, such as: France, Italy and, mainly, Germany. The main factors for performance of EUR are inflation of consumer prices and the target lending rate set by the European Central Bank. The countries’ indicators of the export trade and the unemployment rate also tend to have a high impact performance of the shared currency, considering that countries such as Germany are large exporters of manufacturing goods and technology. Europe still remains an energy dependant from the Russian gas and the Middle Eastern oil, making higher demands for these commodities to have a negative reflect on the EU currency. Another problem for the euro is the difference between its economies, made apparent by the debt crisis in 2011. It’s hard for the EU leaders in times of troubles to find solutions that are equally benefiting to the major economies and the weaker ones. EUR was considered as an alternative reserve currency to USD until the sovereign debt crisis. Unfortunately, the problems with the peripheral economies of the EU undermine the confidence in the euro.
The pound sterling (GBP) is the national currency of the United Kingdom, and the fundamental factors that move it are as complex and variable as the British economy itself and its global influence. The London can still be considered as a world’s financial capital and its commodity market plays a fundamental role in GBP trends. Inflation and GPD tend to influence the pound by the biggest degree, while the housing market is also important for Britain’s currency. Recently, the UK economy was constantly showing signs of weakness, reducing appeal of GDP. Despite that fact, traders sometimes use the sterling as an alternative for the euro in times when problems in the European Union become too severe. GBP also tends to be influence by political event, including elections. Usually, the currency reacts negatively to events that cause uncertainty, like the parliamentary elections in 2010 that resulted in hung parliament.
The Japanese yen (JPY) is the strongest and by far the most traded currency in the Asian market. Japan’s economy is mainly geared towards industrial exports. JPY is greatly valued by traders as a safer currency in periods when risk aversion sentiment hits markets, but also used by carry traders in times of risk appetite. Low interest rates in Japan allow such traders to borrow the currency and invest in countries with higher rates. Japan’s close proximity and tensions with China sometimes has a great impact on the yen. The problems for JPY are constant devaluation in Japan and interventions of the nation’s central bank. The Bank of Japan is concerned that excessive appreciation of the yen (and Japan’s currency tends to gain a lot at present because of economical uncertainty) may hurt nation’s export-oriented economy and, as a result, constantly attempts to weaken the Japanese currency. Deflation has hit Japan in early 1990s, following the burst of the real estate bubble in 1980s, and remains one of the greatest threats to Japan’s future. Growing number of old people compared to youths as well as increasing worries about the future makes it hard for the government to deal with the deflation.
Switzerland is a small country located in the European Alps, yet, its strong international trade and money influx, made the Swiss franc (CHF), one of the main currencies traded on Forex. CHF is another currency that is preferred during risk aversion as Switzerland’s robust economy and huge gold reserves (the country’s reserves is seventh biggest in the world, despite Switzerland’s small size) add to credibility of the currency. Similarly to JPY, CHF suffers from constant interventions of the central bank. The Swiss National Bank has gone as far as pegging CHF to EUR on September 6, 2011, thus creating constant downward pressure for the currency.
The Canadian dollar (CAD) is considered a “commodity currency” as Canada’s economy is export-driven. Most of its exports Canada sells to the USA, making the Canada’s economy and the currency dependent on the nation’s southern neighbor. The main export commodity is crude oil and CAD depends on the price moves of crude as well. The global economic growth and resulting advance of commodities tend to make CAD attractive to investors. On the other hand, problems with the global and the domestic economy can hurt CAD.

Continue Reading »