Forex Methods - Two Techniques That are Most Commonly Used

This course covers two key ways to trade currencies.

Forex Strategies and Systems
Forex News Method

Forex Strategies - Forex methods

All of the methods listed in the forex strategies section of this website are based on indicators. These forex strategies each demonstrate a unique way for a trader to trade forex.

For example the main forex strategies are

Moving Average Forex Strategies

Forex Trading Approaches Incorporating the MACD Indicator

Forex Strategies Utilizing RSI

Bollinger Bands Strategies

Trading Tactics Based on the Stochastic Oscillator

You can mix and match different forex strategies to create your own trading method - some call it a system or technique.

For instance, as a trader, you might combine various forex indicators along with strategy techniques to develop a personalized trading method.

RSI

MA Crossover System

Stochastic Trading Indicator

By integrating the aforementioned forex indicators, a trader can construct the following forex trading methodology:

Forex Method

To formulate forex signals for trading, a forex trader should establish straightforward rules that delineate the method for generating signals.

To create a trade alert with this forex strategy, apply these basic rules.

Buy Signal

Both moving averages MAs heading up
RSI above 50
Both Stochastic heading up

Sell Trade Signal

Both moving averages MAs going downward
RSI below 50
Both Stochastic moving downward

Exit Signal

MAs gives a signal in the opposite trend signal
RSI provides an in the opposite trend signal

As a trader in the forex market, you can use the method above to trade any chart and make trading decisions that you can act on.

Forex News Method

To trade based on news, you need a news calendar. You can find one on this website in the top navigation menu.

FX News Method Strategies

To trade based on the forex news mentioned, the first thing a trader should check is how much the news is likely to affect the market, shown by 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

Therefore, as a discerning trader, your focus should be exclusively on trading forex news events classified with two or three exclamation marks.

To trade the news you a forex 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 fx 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 forex 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 significantly outperforms the predicted value, especially when the predicted value was already better than the previous figure, the movement is likely to continue in the same direction.

If the actual figure is far worse than a bad forecast, the trend keeps going. This happens when the forecast was already below the prior value.

If the actual reported economic figure moves in the opposite direction to the forecast, the currency's prevailing trend is expected to immediately reverse course and accelerate in the contrary direction.

The above method is the method used to trade forex news, but before forex news a trader needs to execute their trade transactions very fast, because sometimes the market can move faster than a trader can trade, making forex news method a rather difficult method.

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