Most short-term foreign exchange trading strategies involve the use of either a pair of moving averages or a trio of moving averages. Use of a pair is more efficient; use of a trio is more conservative. If you deploy a trio of moving averages, there’s net loss of about 20% “pips per profitable trade”. Some traders swear by “smoothed moving averages”; others will only use “exponential moving averages”. Use a “demo account” to see which one you prefer. Pay particular attention to whether or not the pricing of the foreign exchange currency pair you are trading is relatively volatile or not. Many connoisseurs of this subject believe that exponential moving averages give better signals in relatively highly volatile markets.
A number of charting indicators can be used in conjunction with moving averages to confirm a trade signal. Some of the best are an “Awesome Oscillator”, a “Fisher Transform”, a “SMI Ergodic Indicator”, “Linear Regression Channels”, a “Relative Volatility Index” and a “De-trended Price Oscillator”.

How Quickly Can You Make Profits Trading Foreign Exchange?

You can make profits, trading foreign exchange, very quickly. Provided that you have a broker capable of giving you relatively cheap trade executions, you can “scalp” your way to 10 -20 pips in profits during 1 morning trading session. This requires you working off of a 1- or 5-minute chart with a currency pair that is really moving – not an impossible requirement, given recent volatility levels in the AUD/USD, AUD/JPY or GBP/AUD. The more important consideration is whether you can do this consistently, while keeping your losses relatively low. The mark of an expert trader is someone who repeatedly wrings as much profit potential out of a pricing situation as possible while keeping his/her losses as close to zero as possible.

Useful Short Term Strategies For Foreign Exchange Trading

The EUR/AUD weekly chart shows a year-old “inverted head and shoulders” (bullish) pattern on it. Since a traditional long position in this pair would be expensive (due to the AUD’s positive interest rate carry situation), making a profit in trading this pair boils down to a day trading proposition. Using a pair of (10-period and 20-period) exponential moving averages plus an “Awesome Oscillator” (“AO”), a “SMI Ergodic” indicator, a “Fisher Transform” and a “Linear Regression Channel”, on a 30-minute chart, with a leverage ratio of 50:1 or less, you should be able to pluck a pile of pips fairly easily. Some would say that using a “Fisher” is overkill, but when the AO gets near zero, the “Fisher” substitutes very nicely.

Timing Foreign Exchange Strategies Correctly

A very opportunistic forex trader would only trade, in London, on the mornings of Tuesdays, Wednesdays and Thursdays, when volume is good and order fills are usually excellent. In order to get his/her trade entry/exit time right, he/she might use any of the following combinations: 1) for the AUD/USD, a pair of 8-period and 34-period exponential moving averages (“EMAs”) on a 15-minute chart; 2) for the AUD/JPY, a pair of 8-period and 34-period EMAs” on a 5-minute chart; 3) for the USD/JPY, a pair of 8-period and 20-period “EMAs” on a 30-minute chart; and, 4) for the EUR/USD, a pair of 10-period and 20-period “EMAs” on a 5-minute chart. Signal confirmation can be done by a “Fisher Transform”.

If you are searching for a semi-automated system with user-friendly instructions, we highly recommend Zenith Harmonic Pattern Scanner created by Mike N. Necessity for all traders, Zenith Harmonic Patterns Scanner offers a financial trader ideal set-ups for the trade. As well as control risk for the trader by identifying failed pattern.

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