This simple 5-step strategy helps you to simplify your trade and make consistent profit at the same time. Trading strategies do not have to be complicated to be extremely successful. In fact, simple trading strategies have proven over time to be more successful than very complex strategies. The reason for this paradox is that a simple strategy is easier to follow and easier to implement.
The 5 step strategy follows:
1. Check the trend using your daily graph. The graph should tell you whether the market has an upward or downward trend.
2. Once you know what the trend is, check for basic news items that can affect your trade. Do not go to any of the following steps if there are important news items within 2 hours of your transaction. You can receive the current economic news via a news feed of your choice.
3. If there is no news within 2 hours of your transaction, execute your trading plan. If the main trend has risen, look for "buy" signals from your technical indicators and vice versa if the main trend falls.
4. This is the most important step and your decision to enter into a transaction is here. A common strategy is to use the intersection of 4 EMA (Exponential Moving Average) and 23 EMA on the 30-minute graph to decide whether you want to buy or sell. You must use other indicators, such as the weekly pivot, Stochastic and MACD (Moving Average Convergence Divergence) to confirm your transaction. These indicators must also follow the trend and not look flat. You can further improve trading to your advantage by trading only during high liquidity sessions and confirming the trend by using a 4-hour chart. If everything looks good, you're done!
5. The final step to manage your money by setting up the transaction with a tight stop loss of around 35 pips while using one of the 2 methods to make a profit. The first method is to use a healthy risk / reward ratio of at least 1: 2 and the second method is to use your daily support and resistance.
As you can see, a good trading strategy does not have to be complicated to be successful. By simplifying your trading strategy, your chances of successful transactions increase considerably. This five-step strategy should help you to achieve consistent profit with your trade.