With this forex trading strategy, you don’t need to do a lot of technical analysis because it would probably take just a 5 seconds scan of your forex charts to see if you can trade or not, that’s how simple it is when you know its trading rules.
Timeframe: Preferably 15mins and upwards
Currency Pair: Any
Indicators: 5EMA, 12 EMA & RSI 21 (Set RSI setting under Parameters, you have the set the “Periods=21″)
THE RULES OF THE 21 RSI WITH 5EMA AND 12 EMA FOREX TRADING STRATEGY
- When 5EMA crosses 12 EMA to the upside, that’s an indication that the trend has changed to uptrend.
- Next you look at the RSI Forex Indicator and If its above 50, then Buy. I suggest you buy immediately at market Price.
- Place your stop loss at least 2-5 pips below the low of the cross-over candlestick.
- When 5EMA crosses 12 EMA to the downside, that’s an indication that the trend has changed to a downtrend.
- Next you look at the RSI Forex Indicator and If its below 50, then Sell. I suggest you sell immediately at market Price.
- Place your stop loss at least 2-5 pips above the high of the cross-over candlestick.
TAKE PROFIT TARGETS
Here’s two options you can use to set your take profit target:
- Set profit to 3 times what you risked. For example, if you risked 30 pips then set your take profit target at a price level that when the market reaches it, you will get 90 pips.
- Or if its a buy trade, look to see if there a previous swing high which the price can reach easily and just make sure its at least if price reaches that level, you will have 2 or more times the risked you put for that trade.
Nothing is certain in the forex market, it is full of unexpected turns and its really unpredictable. So you need to protect your profits on profitable trades. And how you do that is by managing your trade that is profit and locking in profits as the trade moves in favor by using trailing stop loss.
Here are two options on how you can trail stop your profitable trade:
- If price moves in favour and you are in profit, move your trailing stop and place behind “bottoms” in a buy trade and above the “tops” in a sell trade. This is the best trailing stop technique. The chances of you trade being stopped out prematurely are minimized using this technique.
- The next option is to move trailing stop by certain number of pips when price moves by a certain number of pips. Forex example, if price moves by 20 pips than move trailing by 10 pips. This means for every 20 pips price move, you move your trailing stop by 10 pips.
This chart below shows how to use the option 1 trailing stop technique in a buy trade. Do the opposite for a sell trade. In this way, you continue to lock in profits as price moves in your favor:
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