Many people have searched and heard about simple but profitable trading techniques. Before starting there, we can discuss what is the meaning of trading strategy. Trading strategies are a collection of ways to trade in the forex world whether using tools or not using tools. Of course, for most people, they are looking for easy and profitable ways. This is very natural and humane.
From many trading techniques that are simple but profitable, we only need to choose one or two and focus on that. Some trading strategies that can be used are by using indicators such as using Moving Average (MA), Bollinger Bands and so forth. Or those who do not want to use indicators can also use such as Price Action, Candlestick Patterns, Chart Patterns and so on. Everything is up to to the trader to choose which technique is appropriate.
Bollinger Bands on the Chart
Take the example of Bollinger Bands. Trading techniques using this indicator are actually quite easy. By using the upper band and lower band guidelines, aka upper and lower limits of Bollinger Bands, we can place sell and buy positions. Sell when touching the upper line and buy when touching the lower line. This trading technique looks simple but the profit can be quite a lot.
Look at the picture above, you can see the dynamics of prices up and down when approaching the upper and lower boundary line of the indicator. This indicator looks very easy to use, especially for beginners.
Moving Average on the Chart
Another example is using Moving Average (MA). As you know, there are many types with different periods and different MA characters. Typically, traders use two MAs to see the intersection of the two. A crossing of the MA towards the bottom will indicate that it is likely that the price will go down. Conversely, an MA intersection towards the top will indicate the price will rise. Easy enough to be applied on and seen on the trading screen.
Some use the RSI indicator or Stochastic Oscillator (SO). Unlike the Bollinger Bands and Moving Average, the RSI and SO indicators are not on the currency movement chart but occupy a separate column outside the main chart. The use of these two indicators is also easy, if the pointer line is above 70 means the price has moved too high and there is a possibility of correction. Conversely, when the pointer line is below 30, then there is a possibility the price will reverse direction to strengthen. Easy to use for traders who are just starting forex trading.
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Display of RSI (middle column) and Stochastic Oscillator (bottom column) on the Chart
From the non-indicator side, there are also some materials for those who learn various candlestick patterns. This pattern that keeps repeating makes a branch of analysis called Price Action. From many candlestick patterns that are commonly known, usually traders only focus on 2 or 3 types that most often appear and the highest level of accuracy in predicting prices. For example, an engulfing candlestick pattern where one candle is longer than the previous candle but in the opposite direction. This shows that the price is likely to turn around from the current trend.
There is also something called Chart Pattern. Trading by analyzing the appearance and pattern of candlesticks in a broader scope is a continuation of trading strategies using candlestick patterns. If previously you only analyzed candlesticks individually, from the Chart Pattern (or often also called Harmonic Pattern) then you will see the possible direction of a forex pair. While it is different from other analyzes, analysis with this kind of strategy is like drawing a pattern of “animals” or “constellations” in future price predictions.
Various types of candlestick patterns / candlestick patterns (raboforex.blogspot.com)
Some of the examples above show the many possibilities for profit trading with a simple method. In fact, it is not impossible to trade forex with consistent profits if it is done correctly. Things that are called correctly is using indicators or analyzing non-indicators on a larger time frame, the minimum is H1. Why? Because basically what appears on the screen is a collection of data in a span of time. And like a statistical analysis, the more input data , the more valid the results will be obtained. In forex, the data is related to time, so that the longer the time you have, the more data that can be processed.
Another thing to remember is about the number of lots traded and the limit of loss that can be tolerated. This loss limit is set usually 2-5% of the total balance. For example, if it turns out you have balance of $ 100 then your risk of loss should not exceed $ 5. Do not be too hasty to pursue large profits because it will damage the trading rhythm that you have. Then, adjust the lot that be used and the spare affected by loss. If you want a loss that not exceed than 30 pips, then you set $ 5 divided by 30, which is 0.16. That is, the lot we need to use is 0.01 or 0.02 (for normal lot trading trading accounts) or 0.16 (for mini lots) when we are going to trade.
By risking this amount, psychologically it means that you are prepared with the possibility of loss as determined. This will make your psychology calm because there is nothing to worry about in the form of continuous losses and even ends with a margin call later.
Forex trading techniques are consistent profit does not also mean there are no losses when trading. Because, consistent is the accumulated profit generated far exceeds the losses obtained. It is worth remembering that for example in 10 transactions, a maximum of 4 times fail and loss. This is still a simple trading technique but profit because the amount of profit is greater than the loss.
Finally, in conducting forex trading you should have a guide, whether it is a system, mentor or other learning materials. Studying in the forex world is very broad and every day new terms and news will emerge. For example, the term digital currency alias cryptocurrency in the world of forex has only been in recent years. This term has never appeared in the years before 2010.
With the increasingly advanced and diverse products and types of activities in the world of forex, it also provides an opportunity for beginners to be able to get profits from various types of existing transactions. Is the trading technique simple but profitable, or complicated can get results if practiced.
Simple but consistent trading techniques must also require guidance, even if it looks easy. Because the risk of failure and loss is always there and open to anyone who is trading in the forex world. Always remember that trading activities in the forex world have entered a high risk zone, don’t add more risks by doing strategies and techniques that can threaten the security of your money.
Focusing and sticking to the rules is the key to success. Evaluate the trading system if you lose, do not rush to change the new system or technique because it requires a long process and test. Replacement techniques or strategies can be implemented if indeed what already exists really can not be repaired and always losers even though it has been corrected and improved.