Currency Trading Basics - A Simple System Anyone Can Use For Big Profits

Currency Trading Basics - A Simple System Anyone Can Use For Big Profits

by kelly Price

I have been a trader for 25 years and have seen all types of market and seen lots of innovations - but my forex trading strategy has NOT changed, it's still the same as it was 25 years ago and still works. I will share the logic of it with you here.
First - we have seen lots of changes in the last 25 years but understand this being clever and trying to make your trading strategy complicated is a mistake. Simple systems work best and always will.

Despite all the advances in technology over the last 25 years, the ratio of winners to losers still remains the same 95% lose 5% win, this shows technology has nothing to do with forex success.

You need a simple system, because its very robust complicated ones fail because they have too many elements to break.

Here is the logic of my system:

1. Look for Valid Support and Resistance

Yes good old trend lines then, check for a valid level - lots of tests, in lots of time frames. Next I wait for the level to break and new high or low to be made.

All the big trends come from breakouts and these are the moves to go for.

Most traders like to wait for the pullback but they never get in. By waiting for a better price they miss the move. Losers don't go with breakouts winners do.

2. Confirm the Trading Signal

You then need to see if the odds are on your side with the breakout so you check price momentum. There are lots of momentum indicators to help you time your move and get the velocity of price on your side. The ones you choose are a matter of personal preference but I like the ADX, RSI and stochastic. If my momentum calculation adds up I go with the break.

3. Stops

Stop below the breakout point and then trail the stop up behind random volatility not to get clipped out I like the 40 day MA.

That's it! Simple yes of course but it works for me. The real trick is being patient I only trade 1 - 2 times a month with this method and to take short term draw down trailing the stop.

Adapted to Swing Trading

If the market is not trending, I adopt the strategy to look for shorter term moves and swing trade i.e using momentum to trade the moves between support and resistance. When doing this there is no trailing stop, just a target.

This method was simply one I picked up from a commodity trader in the late seventies and after trying all sorts of methods, it's the one I settled on in the mid eighties and have used ever since. It works on commodities currencies and stock indexes.

Is it perfect? No, does it make money longer term - Yes and good money for the effort of 30 minutes or less a day.

I always get amused by people saying you have to keep updating your forex trading strategy and keep a journal of losses and why they occurred etc. To complicated for me! If I lost that's fine you have to have losses to make gains and if the system isn't broke don't fix it.

I have the confidence to follow it, as know its logic and therefore have the discipline to follow it.

You can do it!

The above currency trading basic plan for profit will work for you, if you want it to.

You just have to learn the logic, settle on your indicators and you're all set to lock into the exciting world of global currency trading.

If there is one area of life where you can keep it simple its currency trading and the real key is to have the confidence and discipline to follow your plan.