Forex trading is very stressful for many traders, especially for beginners. Constant market monitoring, studying new strategies and indicators, and of course, unsuccessful trades, inevitable for any trader. All this causes stress, but there are strategies, which make a nervous breakdown impossible. Trading according them is calm and easy.
They don’t include a large number of complex indicators, and what is important for many, you don’t have to be at your computer screen all the time. “Calm position” is one of such strategies, it will be described in the article.
Indicators and search for entry points
In “calm position” strategy, there are only two indicators from a standard trading platform set. First of all, it is a usual moving average with period 21. It will indicate the trend direction and any changes. This indicator will provide trading signals.
The second indicator is Stochastic oscillator, with standard settings 5,3,3. In this case, it doesn’t provide signals or confirm them, it filters false signals.
Trading is only in one timeframe, a daily one. Using a shorter timeframe will cause quite many false signals, impossible to filter out. One may monitor the market only once a day, when the new candlestick is closed.
According to the strategy, the trend reversal should be indicated. In the chart it will be indicated as the moving average outbreak by the price. Once it happened, we should wait until a new candlestick is opened. According to the strategy, it shouldn’t touch the indicator line. Simply put, we wait until the price outbreaks the indicator line and open the position in the direction of the outbreak, provided that the candlestick opens on the other side of the moving average and doesn’t touch it.
Besides, we need to pay attention to Stochastic. Its lines should be located correctly in relation to each other or start changing their places. It is important, that they shouldn’t be in overbought or oversold zones. If when the signal candlestick is opened, Stochastic is below or above levels 20 or 80, this signal is ignored, as the risks increase significantly.
The situation will be ideal, when as the signal candlestick appears, Stochastic left the overbought/oversold zone, and its lines started to change their places. Such signal is the strongest.
Closing the position and protection orders
Stop loss order is set when the position is opened. It is put either at the high or at the low of the last three candlesticks, depending on the direction, the position is opened. Simply put, when a sell position is opened, we should identify the highest point of the three candles, which preceded the outbreaking one. The order is put at this level.
Take profit in the strategy is not used, and the position is closed manually. To identify the exit point, we should wait until a candlestick appears, which is closed higher or lower than the previous one, depending on the position.
That is, if we sell an asset, the exit signal will be when the new candlestick is closed at a higher price than the previous one.