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Finding the best forex trading system is no easy task, many people have spent thousands of dollars looking for a good forex trading system. You may be one of them but do not despair I will now show you a easy stress free way to trade the forex market.
The first thing I want you to do is get all those ideas about making millions quickly out of your head. This is a business like any other and it takes time to build up to a point where you will be making a decent income.
It is a fact that in the forex market it is very hard to trade on the intraday charts. The Higher the time frame you choose to trade then the easier it will be fore you to make consistent profits.
The majority of my profits come from trading the daily charts or higher, why? Because it's easier! I am going to explain a profitable way to trade daily charts that anyone with a little patience can put to use straight away. Let's get started.
Choose a daily candle/bar chart for your favourite currency pair and plot the key support/resistance areas with horizontal lines and trend lines.
When price approaches these areas we are looking for a certain candle formation that will give us the opportunity to get a very high probability trade. The formation we are looking for are pin bar's (also know as shooting stars) , for it to pass as a reliable pin bar it must have a nice long body that touches or gets very close to the support/resistance area. This formation is a very strong signal that price may change direction.
I have manually tested hundreds of pin bars back over past data on 11 pairs and I found that when a pin bar is formed at one of these key levels then price retraces the pin bar by 50% at least 75% of the time before taking off in the direction of the trade. This gives us a great low risk high reward trade.
Once you spot a good pin bar at a key support/resistance level and everything looks in place you entry order at the 50% retrace level of the pin bar. To find this measure the total size of the pin bar for example 70 pips, then divide it by two. You may often notice that the previous bar to the pin bar also stopped at the 50% mark of the pin bar, this gives us even more confidence in your trade. Once you have placed your order make sure you set your stop 5 pips above the pin bar, if price ever breaks the pin bar then the probability of the trade being profitable is low.
During the next days trading price will generally come back to the 50% level of the pin bar and open your position, usually not long later price will take off in the direction of your trade. Sometimes I have pinpointed the entry to the pip! It is important that you move your stop to break even once you are in profit by the same amount that you risked.
These trades can easily catch 500 pip moves as you are trading on the daily charts. Each pair will have around 2 good setups a month so if you want to trade more simply add more pairs.
This is the best forex trading system for those who have a full time job, all you have to do is check the charts once every evening for possible trade setups and enter your orders with stop losses and take profits. Take a look over your charts I think you will be pleasantly surprised how affective this system is.
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Article added to SearchWarp.com on Saturday, September 29, 2007 View other articles written by Dean Saunders(218)
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