In this article, we will look at a simple Forex trading strategy which is simple to understand, easy to apply and makes huge gains. This strategy will always work and if you learn it correctly, you will soon be making big trading profits - let's take a look at it in more detail.
The simple Forex trading strategy we are going to use is based on swing trading, so let's look at the logic its based on.
Traders always push prices to far to the upside, when greed is present and to far to the downside, when fear is present. You will see short sharp price spikes on any chart which reflect these emotions. These price spikes never last long and prices soon come back to more realistic levels.
The aim of the swing trader therefore is - to sell into greed and buy into fear and make profits. Now let's look at some simple steps you can follow to do this. We will look at how to do this, by selling into greed but the same principles apply in an oversold market.
1. Look for a short sharp price move to the upside and then check how overbought the market is
To check how overbought a market is look at some momentum oscillators and they will show you how overbought the market is in historical terms. Good indicators to use are - the stochastic, the MACD and the RSI. There all easy to learn so look them up.
2. If the market is overbought, look for a level of resistance above the price you expect to hold and then wait. Wait for the momentum indicators you are following to turn down, while the price continues to rise. This is called divergence and warns of a break back down so, execute your trading signal and go short, with a stop above nearby resistance.
3. Set a target and wait for it to be hit and take profit.
The simple Forex strategy above, will always work because humans will always push prices to far to the upside or downside and these price spikes never last long and therefore, offer the swing trader huge profit opportunities.
You can learn to swing trade quickly and each currency will give you a few good opportunities each month, if you only trade market extremes, you will have the odds on your side and make triple digit profits in around 30 minutes a day. Learn this simple Forex trading strategy and you can enjoy long term currency trading success.