Forex Methods - Two Methods That are Most Commonly Used
For this methods tutorial we shall look at two methods that are most commonly used to trade currencies
- Forex Strategies & Systems
- Forex News Method
Forex Strategies - Forex methods
Trade strategies like the ones on the forex strategies section of this website are all based on indicators. These forex strategies all show different methods that a trader can use to trade forex.
For example the main forex strategies are
Moving Average Forex Strategies
As a trader you might want to combine these forex strategies to form a good forex method. A forex method can also be referred to as a system.
For Example as a trader you may want to combine the following forex indicators, based on the strategies methods of these indicators to form a method.
RSI
MA Crossover System
Stochastic Indicator
By combining the above forex indicators you can now come up with following forex method
Forex Method
To generate forex signals to trade with, a trader should create simple rules which define the method and specifies how signals are generated.
For the above forex method to generate a trading signal then the following rules are used:
Buy Signal
- Both Moving averages heading up
- RSI above 50
- Both Stochastics moving up
Sell Signal
- Both Moving averages heading down
- RSI below 50
- Both Stochastics moving down
Exit Signal
- Moving Averages give an opposite signal
- RSI gives an opposite signal
As a forex currency trader you can use the above method to trade any chart & generate signals that you can trade with.
Forex News Method
To trade forex news as trader all you need is a news calendar. On this website a news calendar is provided at the top navigation menu.
Forex News Method Strategies
To trade the above forex news the first thing a trader need to look at is the volatility of the news, this is represented as a series of exclamation marks.
One ! - low volatility, no market movement
Two !! - medium volatility, 20 pips - 50 pips market movement
Three !!! - high volatility, 100 pips - 300 pips market movement
So as a trader you only want to trade the 2 exclamation and three exclamation forex news.
To trade the news you a trader should follow the following forex method:
The forex calendar will show three values
- Previous value
- Predicted Value
- Actual Value
A trader should look at the previous value of the news, compare the value to the predicted,
- If predicted value is better than the previous value a trader should buy the currency if they decide to trade the currency a few hours before the news
- If predicted value is worse than the previous value a trader should sell the currency if they decide to trade the currency a few hours before the news
Once the news actual value is released if the value is same as predicted value there will be no much movement after news release, a trader can even take profit, some traders may even decide to profit take and close their trade a few minutes just before the actual news is announced.
If the Actual value is much better than a better predicted value(if actual value is better than predicted value and predicted value was better that previous value), then the movement will continue further in the same direction.
If the Actual value is much worse than a worse predicted value(if actual value is worse than predicted value and predicted value was worse that previous value), then the movement will continue further in the same direction.
If the actual value is opposite the predicted value, then the currency trend will reverse immediately and rally in opposite direction.
The above method is the method used to trade forex news, but before forex news a trader needs to execute their trades very fast, because sometimes the market can move faster than a trader can trade, making forex news method a rather difficult method.
