Therefore, it's important to first approach forex trading through a careful, medium-term strategy so that you can avoid larger players and becoming a casualty of this market. More specifically, the spot market is where currencies are bought and sold according to the current price. The system does all the analytics for you and will enter to trade and will set the stop loss and take profit.
Now you will be able to monitor every minute whether your broker is stealing from you. It is disappointing to have to close a position which has made good profits in the past at a loss, or worse — when it hits a stop. We know just how disappointing this is. This is why we protect each Forex Ea Trader position with a near-stop level that guarantees minimum profit immediately it becomes possible. Alongside this, a special algorithm monitors optimum closure of each position turning a profit.
This built-in system conceals your stop levels from unfair brokers who trade against their clients. If you choose to use this option, stop levels are executed within the Forex Ea Trader program logic and remain invisible to brokers. This means that you have double protection: Forex Ea Trader employs a Stealth Mode to protect against broker stop hunting. In Stealth Mode, stop loss and take profit levels are not displayed to the broker.
An emergency stop loss is placed with the broker to protect the trade against disconnection, but the Stealth Mode stop loss will be reached before the emergency stop loss. This protection guards you against transactions at times when your broker has broadened the spread above levels acceptable to you. This is most important, for high pay spreads are among the basic reasons why your trade can turn-in a loss.
Why are we focusing on medium-term forex trading rather than long- or short-term strategies? To answer that question, let's take a look at the following comparison table:. Although these two types of traders exist in the marketplace, they are comprised of high-net-worth individuals, asset managers or larger institutional investors.
For these reasons, retail traders are most likely to succeed using a medium-term strategy. The framework covered in this article will focus on one central concept: To do this, we will look at a variety of techniques in multiple timeframes to determine whether a given trade is worth taking. The key is finding situations where all or most of the technical signals point in the same direction. These high-probability trading situations will, in turn, generally be profitable.
We will be using a free program called MetaTrader to illustrate this trading strategy ; however, many other similar programs can also be used that will yield the same results. There are two basic trading program requirements:.
Now we will look at how to set up this strategy in your chosen trading program. We will also define a collection of technical indicators with rules associated with them.
These technical indicators are used as a filter for your trades. If you choose to use more indicators than shown here, you will create a more reliable system that will generate fewer trading opportunities. Conversely, if you select fewer indicators than shown here, you will create a less-reliable system that will generate more trading opportunities. Here are the settings that we will use for this article:. Now you will want to incorporate the use of some of the more subjective criteria, such as the following:.
The key to finding entry points is to look for times all of the indicators point in the same direction. The signals of each timeframe should support the timing and direction of the trade.
There are a few particular bullish and bearish entry points:. It is also a good idea to place exit points both stop losses and take profits before even placing the trade. These points should be placed at key levels, and modified only if there is a change in the premise for your trade oftentimes as a result of fundamentals coming into play.
You can place these exit points at key levels, including:. Let's take a look at a couple of examples of individual charts using a combination of indicators to locate specific entry and exit points.
Again, make sure any trades that you intend to place are supported in all three timeframes. In Figure 2, above, we can see that a multitude of indicators are pointing in the same direction.
We also see that a Fibonacci support provides a nice exit point. This trade is good for 50 pips , and takes place over less than two days. In Figure 3, above, we can see many indicators that point to a long position. We have a bullish engulfing, a Fibonacci support and a day SMA support.
Again, we see a Fibonacci resistance level that provides an excellent exit point. This trade is good for almost pips in only a few weeks. Note that we could break this trade into smaller trades on the hourly chart. Many times fundamental factors can send currency rates swinging in one direction — only to have the rates whipsaw into another direction in mere minutes. So, it is important to limit your downside by always utilizing stop-loss points and trading only when your indicators point to good opportunities.
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