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Simple forex strategy for beginners primarily used to buys dips in bullish markets while selling rallies in bearish markets. It's a universal trading strategy that works on every time frame and currency pair. Let's have a closer look how it works.
The Purpose of This Strategy
- Buying dips in up trending markets.
- Selling rallies in down trending markets.
How it works?
The strategy consists of two moving averages. A buy zone is created when the short term moving average crosses the long term moving average from below. On contrary, a sell zone is created when the short term moving average crosses the long term moving average from above. See picture below.
The buy zone will be used to trade long signals and the sell zone to trade sell signals.
Buy and sell signals
BUY Signal: Buy zone + Laquerre crosses from below 0.15 back above 0.15
Sell Signal: Sell zone + Laquerre crosses from above 0.75 back below 0.75
Stop loss
BUY Signals: Place stop loss 1 pip below the most recent support level.
SELL Signals: Place stop loss 1 pip above the most recent resistance level.
Profit Target Levels
Total trading risk x 1.5
Trading Example
In the above example, a sell zone was created by the two moving average system – the 5EMA has crossed the 200 SMA from above thus creating a sell zone.
In this case, we will be looking for sell trades only. As you can see, the Laquerre indicator crosses back from above 0.75 back below and we immediately sell the EUR/USD at 1.3127 (at the open of the new candlestick).
We place our stop loss above the most recent resistance level at 1.3191. Total risk (pips): 64
Calculating Target: 64 pips (risk) x 1.5 = 96 pips (TP @ 1.3031)
You can download the Laquerre indicator here >>> |
