Forex Strategies

Introduction

This collection of forex strategies and techniques is dedicated to help traders in their
research and development of trading techniques.

This e book is divided in 6 sections: Simple and advance. The first part are techniques that
can be perform for anyone regarding their skill level. The second part are for those traders
that have more experience trading in Forex. Remember start with the basics and simple
strategies until you develop a more confident trading and maybe you can do your own
strategies. The third part is all about learning about scalping, techniques and analysis, the
fourth part is about the Elliot Wave Theory. The fifth part is about how to trade using
Fibonacci and the Last part but not least important Money Management.

The examples are for showing purposes so please don´t look at the number just see them
as what they are, examples.

We hope you enjoy the book and will help you achieve your forex goals.

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW.
NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR
TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE
RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH
THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO
HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL
TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN
SPITE OF TRADING LOSSES IS MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS.
THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION.
OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF
HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS. Any
opinions, news, research, analyses, prices, or other information contained on this website is provided as general market commentary,
and does not constitute investment advice. The Megaforex group will not accept liability for any loss or damage, including without
limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance contained in the trading signals, or in any
accompanying chart analyses.

Sincerely yours,

Jack Vineda
CEO Fx-Megaforex
 Table of Contents

The book is divided in 6 chapters:

CHAPTER # 1
Trading Strategies for Beginners and Intermediates
• Simple Balance System:
• Parabolic SAR + ADX:
• EUR/USD Simple System:
• Simple 1-2-3 swings:
• Trend Line Tunnel:
• H4 Bollinger Band:
• Trend Line simple trading:
• Simple Breakout System:
• Stochastic Lines crossover:
• RSI High and Low:
• Fast Moving Averages Crossover:
CHAPTER # 2
Trading Strategies for Intermediates and Advance
• 3 White Soldiers/3 Black Crows:
• Multi Conditional:
• Fibonacci trading:
• Trend trading with EMAs:
• Bollinger Band Breakouts:
• Trading MACD consolidation:
• Trend Lines Breakouts System:
• Fibonacci Trading:
• Neat entry: RSI + Full Stochastic:
• Big Ben Trading Strategy:
• Daily 10% Breakout:
CHAPTER # 3
Scalping System
• ADX and Bollinger Bands:
• Economic News Release:
• Morning Scalping:
• Tops and Bottoms:
• Pivot Points:
CHAPTER # 4
Elliot Wave Theory
• Moving Waves
• Extension Waves
• Waves in Action
CHAPTER # 5
Fibonnacci Trading
• Retracement Levels
• Extension Levels
CHAPTER # 6
Money & Risk Management
• Trading Sequence:
• Free Trades:
• Lot size management:
• Risk/Reward Ratio:
A successful trader know when to trade and when to stay out, so educated yourself and
live the life you deserve, You are one step closer to your financial freedom.
www.fx-megaforex.com

Forex Strategies

Part 1
Simple Forex Strategies

1. Simple Balance System:Current Forex system represents a well thought

and very simple combination of indicators. Knowing what signal to look for
with each indicator, provides a good tip for good entries and exits.
• Time Frame: Any
• Currency: Any
• Indicators: 5 Ema, 10 Ema, Stochastic (14, 3, 3), RSI (14, 70, 30)
• Entry Indicator: Buy when 5 EMA crosses above 10 EMA and stochastic
lines are heading up and stochastic is not in overbought position (above
80.00 level) and RSI is above 50.
• Entry Indicator: Sell when 5 EMA crosses below 10 EMA and stochastic
lines are heading down and stochastic is not in oversold position (below
20.00 level), and RSI is below 50.
• Exit: when 5 EMA and 10 EMA cross in the opposite direction or if RSI
crosses the 50 mark again.

In the graphic below the blue line is the EMA 5 and the Aqua line is EMA 10. The
yellow line is the trend.

Advantages: allows filtering entries and this is more accurate.

Disadvantages: 5 and 10 EMAs can give very early exit signals.
 Forex Strategies

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 Forex Strategies

2. Parabolic SAR + ADX: This 2 indicators are found to work really well side by
side.
• Time Frame: Any
• Currency: Any
• Indicators: Parabolic SAR (0.02, 0.2) ADX 50 (with +DI, -DI lines).
• Entry Rules: SELL when the +DI line is below the -DI line, and Parabolic SAR
gives sell signal. When the +DI line is above the -DI line, all Parabolic Sar sell
signal should be ignored.
• BUY when the +DI line is above the -DI line, and Parabolic SAR gives buy signal.
When the +DI is below the -DI line, all Parabolic SAR buy signal should be ignored.

• Exit: When the +DI line and the -DI lines have crossed again.

• Advantages: allows filtering entries and predicting good exits.

• Disadvantages: Both Parabolic SAR and ADX are follow up indicators. Although
they complement each other very effectively, the weakest is the ADX because
during trading it can give a signal and then change to the opposite. Once giving a
signal from ADX, waiting for the current price bar to close to avoid such misleading
advise.
In the graphic below Parabolic SAR are the white dots. The ADX 50, +DI is the
white line and the -DI is the green line.
Forex Strategies
 Forex Strategies

3. EUR/USD Simple System: This strategy is only for this specific pair the
EUR/USD.
Currency Pair: EUR/USD
Time Frame: 30 min.
Indicators: MACD (12, 26, 9), Parabolic SAR (0.02, 0.2)
Entry: When Parabolic SAR gives buy signal and MACD lines crosses
upwards-buy.
When Parabolic SAR gives sell signal and MACD lines crosses downwards-
sell.
Exit: exit at the next MACD lines crossover or if the market start trading
sideways for some time.
 Forex Strategies

4. Simple 1-2-3 swings: This method is based on defining support and

resistance levels and trading upon the fact of their violation.
Time Frame: Any
Currency: Any
Entry: Once the market make it trough the pivot line and closes above (for
uptrend) or below (for downtrend) the line buy/sell accordingly.
Exit: not set. However exit can be found using Fibonacci method: or traders
can measure the distance between point 2 and point 3 and project it on the
chart for exit.
Additions: as additional tool traders ca use MACD (12, 26, 9). The rules for
entry then will be next, lets see an example for SELL
When MACD lines cross downwards you look for the 1-2-3 set up form.
When the price is attacking the pivot line you checked the MACD is still in
SELL mode (2 lines are heading down). Once the prices closes below the
pivot line place sell order.
Advantages: gives 100% profitable entries.
The yellow line represent the Pivot, in this case 1.3625
 Forex Strategies

5. Trend Line Tunnel: Creating a support and resistance tunnel on the price
congestion and trading on the break of this tunnel is a milestone strategy.
Time Frame: Any
Currency: Any
Entry: Find consolidation the chart and draw 2 horizontal trend lines-support
and resistance. Once the price breaks trough one of the trend lines and a
current price bar closes outside the tunnel buy/sell in the direction of the
breakout. (If prices pierces the trend line but did not close outside the tunnel,
cancel the previous trend line and draw another one according to the
conditions).
Also very often happens that once the price makes it through support and
resistance it rocks down/up very quickly and so more more aggressive entry
 Forex Strategies

can be adopted without waiting for the current price bar to close.
Exit: not set, however, it is believed that the price after breaking the tunnel
will travel the distance equal to the width of that tunnel.
Advantages: very simple and extremely effective. It can provide
100% profitable entries if short profits are taken usually with the close of the
first candle right after the entry.
Disadvantages: very accurate and wll thought entry point should be
picked. Orders place very close to the tunnel can be triggered by sudden
whipsaw early before real breakthrough occur.

Go to Fx-Megaforex.
 Forex Strategies

6. H4 Bollinger Band:
Time Frame: 4hrs.
Currency: Any
Entry: If you open an H4 EUR/JPY chart and you insert the Bollinger Bands
(20) indicator, if you observe the chart you will see that the bands are simply
a resistance and Support. The Upper Band is the Resistance and the Lower
Band is the Support. If you pay attention to the chart you will see that most of
the time the price hit the upper band then it retraces back to the lower band.
The strategy is very simple: Wait until the price touches´s let´s say the upper
band and closes under it (not above it) and wait until the candle is formed,
when it finishes and the next candle opens under the previous upper band
then I enter a short trade with target =100 pips or until it touches the lower
band. Look at the bollinger band upper and lower, if they are both opened
which means upper band is UP and lower band is DOWN then is a
confirmation of a trade.
 Forex Strategies

7. Trend Line simple trading: Trend line place and named. Trade opened
automatically in direction of trend line once price has move 5 points above
trend line in a BUY or 5 points below the trend line in a SELL. This provides a
degree of safety should the trend not go as planned.
Stop loss automatically set at 5 points below entry for a BUY and 5 points
above for a SELL.
Trade will stay active until trend line is broken by X number of points or if the
stop loss is triggered.
 Forex Strategies

8. Simple Breakout System: This strategy tries to capture an early move of

the price when it starts to establish its new direction/trend of the day.
Time Frame: 1hr.
Pair: GBP/USD (prefer)
Entry: The price range we are going to focus on is from 1:00 am to 2:00 am
EST. Look for the highest high and the lowest low of the price range and
simply draw a parallel horizontal lines trough those extremes that
will create a tunnel. Now move to a smaller time frame 5 min. And wait for the
whole 5 min. Candle to close outside the tunnel which will provide a signal for
us to enter with the open of the next candle. Use a 20 pips stop loss or the
other side of the tunnel, whichever you loss less.
We are looking at at least 20 pips profit. After that lock the profit,
 Forex Strategies

start chasing the price with a trailing stop by placing the stop just below the
lowest low of the previous 5 min. Or simply exit within 3 consecutive
hourly candles from the moment the trading order was filled.

9. Stochastic Lines crossover:

Currency: Any
Time Frame: Any
Indicator: Stochastic (14, 3, 3)
Entry: Buy when the faster stochastic line crosses above and up over slower
moving stochastic line.
Exit: Sell when the opposite situation occurs and right after that open an
opposite position. It is agian recommended, once the first touch of
Stochastics Lines (possible future crossover) has ben spotted, to wait until
the following price bar on the chart has closed and only then take actions.
Advantages: can give entry and exit rules, easy to use.
Disadvantages: Stochastics is a lagging indicator with this lines crossover
system it can create a lot of false signals. Traders may want to change
Stochastics regular settings for each particular pair to eliminate as many
false signals as possible. Stochastics crossover system is good when used
in combination with other indicators.
 Forex Strategies

10. RSI High and Low: If you combine the RSI with other indicators and with a
proper technical analysis can bring a new edge to your Forex trading.
Currency: Any
Time Frame: Any
Indicator: RSI (14) with levels at 70 and 30
Entry: Buy when the RSI has crossed below 30, formed a bottom, and then
crossed back up through 30.
Sell when the RSI has crossed above 30, formed a top, and then crossed
back down through 30.
Exit: Not set.
Advantages: RSI is a good indicator to refer for confirmation for any entry in
 Forex Strategies

any simple or complex trading system. For current trading method it advises
well on entries, but opportunities occur not that often.
Disadvantages: monitoring is needed, still false signals take place. Strategy
is suggested to be in combination with others.

11. Fast Moving Averages Crossover:

Currency: Any
Time Frame: 15 min. o 1 hr. chart
Indicators: 10 EMA, 25 EMA, 50 EMA
Entry Rules: When 10 EMA goes through 25EMA and continues through 50
EMA, BUY/SELL in the direction of the 10 EMA once it clearly makes it
through 50 EMA. (just wait for the current price bar to close on the opposite
site of 50 EMA. This waiting helps to avoid false signals).
 Forex Strategies

Exit: option: 1: exit when 10 EMA crosses 25 EMA again.

Option: 2: exit when 10 EMA returns and touches 50 EMA (again is
suggested to wait until the current price bar after so called touched has been
closed on the opposite side of 50 EMA). Brown: 10 EMA, Yellow 25 EMA,
green 50 EMA.
 Forex Strategies

12. 3 White Soldiers/3 Black Crows:

Time Frame: Any
Currency: Any
Indicator: Bollinger Band (20)
Very simple system, just watch for 3 consecutive bullish candles for a buy or
3 consecutive bearish candles for a sell.
Note: On the larger moves, the price will retrace. Best thing to do in this
situation is when you see this happen (typically 1 or 2 candles in the
opposing direction) simply close the trade and re enter when the price has
returned to the point where the changed started.
Exit Strategy: A lot of time you can count on approx. 2-3times the value of
the retracement (e.g. If the price retraces 10 pips, then you are looking on
the re entered trade of a TP between 20-30 pips).
You can use any 3 consecutive bullish or bearish candles, however this
works best when the price has just bounced off the Bollinger Bands.
 Forex Strategies

Part 2: Advance and Complex Strategies

1. Multi Conditional:
Currency: Any
Time Frame: 1 hour+30 min+5min
Entry: On 5 minutes charts.
On 5 min. chart, for uptrend: if 14 EMA is above 21 EMA, then if both 14 EMA
and 211 EMA are above 50 EMA, then if 50 EMA is within the bollinger
bands borders, then go and check the 30 min. chart; if price bar is a up-close
bar and sitting on 14 EMA or 21 EMA and same again if 14 EMA is above 21
EMA, then if both 14 EMA and 21 EMA are above 50 EMA, then if 50 EMA is
 Forex Strategies

within the bollinger bands borders, then go LONG.

Or go and check if 1 hr. chart meet same conditions as for 30 min. charts and
then go LONG. If at least one condition is violated stay away.

Go short if:
Go to 5 min. chart for the downtrend. If 14 EMA is below 21 EMA then if both
14 EMA and 21 EMA are below 50 EMA, then if 50 EMA is within the
bollinger bands borders, then go and check the 30 min. chart; if price bar is
down close and touching in 14 EMA or 21 EMA, and same again:
If 14 EMA is below 21 EMA then if both 14 EMA and 21 EMA are below 50
EMA, then if 50 EMA is within the bollinger bands borders, then go short.
Or go an check same rules in the 1 hr. chart and then go SHORT. Of at least
one condition is violated stay away.

Exit: when one of the conditions is violated or the profit is high enough to
close the trade.
 Forex Strategies

5 min. chart

30 min. chart

The purple line is EMA 50, white line EMA 21 and the yellow one EMA 14. Green Bollinger
band (20, 2).
 Forex Strategies

2. Fibonacci trading: This strategy works with a small time frames (5 min., 15
min. 30 min. even and 1 hr.) thats because with the smaller the time frame
the risks of being wrong is always bigger.
Time Frame: over 5 min. and less than 3hr.
Currency: any
Indicators: 5WMA
Look at the price waves. Find the most recent swing high and the most
recent swing low = so called Fibonacci A swing and B swing.
Pull Fibonacci from A to B.
To know which direction to pull (down or up) simply look at the trend; if its
unclear, find appropriate AB swings and set Fibonacci in both directions.
Once set, wait and watch the retracement from AB swing to unfold. During
the retracement there are 3 conditions to be met in order to consider trading:
* The price must touch 5WMA.
* The price must at least touch 0.382 Fibonacci retracement level.
* The 0.618 Fibonacci retracement level must not fail. Here it means the
price should not close below (uptrend) / above (downtrend) 0.618
retracement line. It can touch or poke it but the level withstand the attack.
When all 3 criteria are met, enter once the candle is clearly closed to 5 WMA
for LONG entry, below for SHORT Entry.
Stop order is always placed 4-5 pips above (downtrend) / below (uptrend) the
0.618 Fibonacci retracement level.
Profit target is set to 1.618 Fibonacci expansion level derived from point A.
 Forex Strategies

3. Trend trading with EMAs:

Time Frame: 1 day, 1 hour or 30 min.
Currency: Any
Indicators: 80EMA, 21EMA, 13EMA, 5EMA, 3EMA, RSI (21)
Entry:
80 EMA suggests major trend direction. When market trades above 80 EMA-
uptrend, opposite for downtrend.
21 EMA and 13 EMA give a current trend direction. While 13 EMA stays
above 21 EMA- uptrend, opposite for downtrend.
RSI (21) above 50 mark suggests an uptrend, below downtrend.
Entries are made on a cross of 3 and 5 EMA in the direction of the trend:
 Forex Strategies

Buy when 3 EMA crosses 5 EMA upward in an uptrend market and both 3
and 5 EMAs cross a channel of 13 and 21 EMA and RSI is above 50.
Sell when 3 EMA crosses 5 EMA downward in a downward market and both
3 and 5 EMAs cross a channel of 13 and 21 EMA and RSI is below 50.
Note that additional entries are possible when 3 and 5
EMA cross back and then shortly after make a signaling cross again.
Note: that we get the signal to enter we always wait for the current price bar
to close and only then (if conditions have not change) open a position.
 Forex Strategies

4. Bollinger Band Breakouts:

Time Frame: 4hr.
Currency: Any
Indicator: Bollinger Band (20)
Insert the Bollinger Band indicator and be sure that its center line is
appearing.
Identify 2 valid lower points or 2 valid higher points in the Bollinger Band and
draw a line from the first to the second line; it will be our break line.
Now when a candle closes above the break line issued from the higher
points and in case the center line of the Bollinger band in the 1 hour chart
crosses the break line then we have a LONG trade.
If the candle in the 4 hour chart closes under the break line issued from the 2
low points and in the same time the center line of the Bollinger band crosses
the break line in the 1 hour chart then we are in a SHORT trade.
 Forex Strategies

5. Trading MACD consolidation:

Time Frame: 1 hour
Currency: Any
Indicator: MACD (12, 26, 9)
Entry: Place a buy stop and a sell stop 5 pips during the MACD
consolidation with a stop loss of 10 pips from entry and a profit target of 30-
50 pips.
Note: the MACD should be very close, in fact it should become a straight line
only then you should enter the positions.
 Forex Strategies

6. Trend Lines Breakouts System: Wining rate 90% of the time.

Time Frame: 1 hour.
Currency: GBP/USD, EUR/USD – tested. Other pairs may also be used.
Indicators: none.
Things you should know to use this strategy:
*Identify swings high and low.
*Rules of drawing a trend line.
*Be able to use Pivot Points.
Entry: Our working range includes 5 candles; from midnight to 4:00 am EST
(including the 4:00 am candle).
 Forex Strategies

Within those 5 candles look for a valid swing high and swing low of the price.
Now, draw a downtrend line connecting your swing high to the most recent swing
high of the previous day. (make sure the last one is also a valid high to draw a
downtrend line through).
Do the same for the swing low.
If a trader sees, for example, no swings high in the 5 candle range that means there
will be no downtrend lines in the morning. Same for a swing low.
The entry is done on the break of either one of the trend lines and is immediate
without waiting for a current candle to close. A protective stop is placed just
above/below the candle that broke through the trend line.
Profit Target:
Usually the whole action is unfolded within the next 3 candles (count the candle that
had violated the trend line but only if it closed on the other side of the trend line).
So, after the actual breakout we have 3 hours or 3 candles to trade after that we will
exit with whatever profits is made.

Using pivot points and timing

Our profit target is going to be the nearest level of support or resistance according
to the pivot points. If however, after only 1 candle (or 1 hour) this target is reached it
suggests a very strong market, thus we would stay in a trade longer and set our
goal for the next support/resistance level. We would also choose the second pivot
point level of support/resistance as our profit goal if the first pivot point level appears
to be too close to our entry point. We have 3 candles to trade after the breakout in
total, that´s why we can trade calm and allow our goal to shift to the next pivot point
level.
 Forex Strategies

7. Fibonacci Trading:
Time Frame 3 hr. or 4 hr.
Currency: any
Indicators: Fibonacci Tool, EMA 100-green, SMA 150-red, RSI 14 on a daily
chart.
Fibonacci retracement levels.
Stop Loss: 100 pips but adjust according to the most recent swing high and
low.
Profit Target: No set.
Trading Rules:
Find the closest to the current price wave with a distance from high to Low
over 100 pips.
Apply Fibonacci on it no matter if the wave is going up or down, only size
matters.
The corridor between 0.382 Fibonacci retracement level and 0.618
retracement on the chart will be called a ¨must channel¨.
Fibonacci retracement level will be numbered always from bottom to top no
matter whether it is an up or a down wave. At the bottom we will always have
0.250 and so on and finally on top 0.750 Fibonacci retracement level.
Entry:
Always enter only according with both:
*EMA and SMA trend suggestion (ex. Green on top-uptrend, red on top-
downtrend.
*RSI suggestion (ex. Reading below 50 only sell, above only buy orders).
Now, after applying Fibonacci on a wave bigger than 100 pips we wait for the
price to go inside a ¨must channel¨area, at least to make 1 pip into the
channel. Only then the next rules will be valid:
*If a full candle (including shadows) is closed below 0.250 Fibonacci r
retracement, we go short. If we are currently long, it is time to close long
position, it is an exit rule as well.
*If a full candle (including shadows) is closed above 0.750 Fibonacci
 Forex Strategies

retracement, we go long. If we are currently short, it is time to close the short

position, it is an exit rule as well.
Important: once another wave greater than 100 pips occur, set a new Fibonacci on
the new wave. Retracement levels will change and so we will follow new
retracements.
That´s it. Stay in trade, resetting Fibonacci with each new wave and moving a stop
loss according to the last swings high or low (in simple words the stop loss will
always be just below the Fibonacci 0% line) until its time to close the position
according to the rules.
This strategy prevents a lot of bad entries, eliminates early exits and allows to
staying in trade for a long period of time helping to take everything a current move
can offer. Traders may close all good winning positions on Friday evening if they
prefer not to hold them over a weekend.
 Forex Strategies

8. Neat entry: RSI + Full Stochastic:

Time Frame: Daily
Currency: Any
Indicators: SMA (150), RSI (3), with horizontals lines at 80 and 20. Full
Stochastic (6, 3, 3) with horizontal lines at 70 and 30.
Rules:
*Entry for uptrend: when the price is above 150 SMA look for RSI to plunge
below 20. Then look at stochastic-once the stochastic lines crossover occur
and it is (must be) below 30 enter long with a new price bar.
If at least one condition is not met stay out.
Opposite for downtrend: when the price is below 150 SMA look for RSI to
plunge above 20. Then look at stochastic-once the stochastic lines crossover
and it is above 70 enter a short with a new price bar.
Protective stop is placed at the moment of entry and is adjusted to the most
recent swing high/low.
Profits are going to be taken next way:
*Option 1: using stochastic with the first stochastic lines cross above 70(for
uptrend)/below 30 (for downtrend).
*Option 2: using trailing stop for an uptrend a trailing stop is activated for the
first time when stochastic reaches 70. A trailing stop is placed below the
previous bar´s lowest price and is moved with each new price bar.
 Forex Strategies

9. Daily 10% Breakout:

Time Frame: Daily
Pair: Any but better results with the USD/JPY
Entry:
*. Calculate previous day’s range.

* Set a Buy and a Sell order 10% above and below current close price.

* Set a Stop Loss at 2 times your Buy or Sell order.

* Set a Target Profit at 10% above or below your Buy or Sell order.
Keeping Equity Management in mind set a new order before each major
session open.
 Forex Strategies

Example:

% of Pair Close High Low Daily Range

Daily
Range
10.00% USD/JPY 96.43 97.27 95.96 131
Buy Buy SL Buy TP Sell Sell SL Sell TP
Order Order
96.56 96.3 96.69 96.3 96.56 96.17

10. Big Ben Trading Strategy: Big Ben is a currency-specific trading strategy designed to
capture the first directional intraday move that often occurs within the first few hours after
the Frankfurt/London market openings, which begin at approximately 1 a.m. ET.
The strategy works best with the British pound/U.S. dollar (GBP/USD) rate.
Because this currency rate trades lightly outside of London trading hours, the surge in
trading every morning in the U.K. gives it a “real” market opening, which the strategy looks
to exploit. Figure 1 shows pound/dollar trading is virtually nonexistent during Asian trading
hours. When London opens, however, the pound/dollar accounts for nearly one-quarter of
all forex trading. Currency rates with more continuous, 24-hour trading will have less of a
distinct open/close as they pass through the different money centers. For example, the
dollar/yen rate (USD/JPY), which dominates fore x activity during Asian trading hours (78
percent of volume), still accounts for 17 percent of trading during European
hours. B e f o re explaining the specific logic behind the methodology, let’s take a look
at what needs to occur for a trade to set up.
The rules
The following rules are for short trades, but the strategy can be reversed to trade
on the long side.
Setup:
1. The pair makes a new range low at
least 25 pips (a pip is the forex equivalent
 Forex Strategies

of a tick, or minimum price fluctuation)

below the opening price after the
early Frankfurt/London trading in the
GBP/USD rate begins around 1 a.m. ET.
2. The pair then reverses and trades 25
pips or more above the opening price.
3. The pair then reverses once again to
trade back below the intraday low established
in step 1.
4. Sell a breakout (at least seven pips)
below the London low.
5. Once filled, place an initial protective
stop no more than 40 pips above the
entry price.
6. After the market moves lower by
the distance between the entry price and
the stop, cover half the position and trail
a stop on the remainder.
These simple rules position you to
profit from common behavior that can
occur in the pound/dollar when the
London/European market opens.
The logic
As mentioned, the pound/dollar rate tends to have lower trading volume outside
European/London trading hours because the majority of GBP/USD spot deals are worked
through U.K. And E u ropean dealers. This gives the European/British interbank
community supplydemand picture.
The Big Ben trade sets up when interbank dealing desks use this intelligence to trigger
stops on both sides of the market, resulting in new intraday highs and lows. Once these
orders are cleared from the books, the market is primed for its first real directional move of
 Forex Strategies

the day, which is what the strategy is designed to capture.

The logic behind this trade should be familiar to S&Pfutures traders, as it is similar to many
opening-range breakout strategies used to capitalize on the first real move of the day after
the cash stock market opens in New York.
The Big Ben currency day-trading strategy allows you to limit initial risk
and capture good moves early in the London trading session. The product of
years of watching the currency markets, the approach is based on the workings
of the global forex market and attempts to exploit its structure.

<<Open your Forex account NOW>>

 Forex Strategies

Part 3: Forex Scalping

What is Forex Scalping? Can also be called a quick trading. It is a method where traders
allow their positions to last only for a matter of seconds, to a full minute and rarely longer
than that. If the trader holds the position for more than a minute or two it is consider no
longer scalping, but regular trading.
The purpose of scalping is making small profits while exposing a trading account to a very
low risk, which is due to a quick open/close trading mode.
How to do it? Suppose a scalper opens a tradin position of 100 000units with EUR/USD.
For each pip he will now earn $10.. Closing it with only a 3 pip profit brings it up to $30-not
bad for less than a minute of trading.
Tips and Facts:
• The only way to make small account big in a short period of time is through the use
of really high leverage: Start slow: 20:1 or at most 50:1, then move when your
scalping skills improve.
• The only way to trade with high leverage without risking blowing up an entire
account in only 10-15 trades is by trading with a tight stop loss. Trading with no stop
loss will kill your investment in no time.
• It is wise to decide on the size of the trading lot and exposed risk in advance.
• Not every hour is suitable for scalping: 4 major market sessions: London, NY,
Sydney and Tokyo. Learn the behavior of your currency and see with market
session is better to scalp.
• Once in the trade the scalper should manage trading risks by: a) moving stops to
break even as soon as situation permits; b) taking profits at a logical levels; c)
getting out of the trade if the price freezes for longer time than expected.
• Scalp trading is very demanding and requires a lot of concentration, constant
monitoring of the price and very quick decision making.
 Forex Strategies

Scalping involves a lot of risk

A lot of beginners have common problem when trading highly leveraged accounts-they
tend to maximize profits by trading with full capital at once. Don´t do that! The size of
positions opened must be calculated very accurately so that your entire account will not be
wiped out with just one trade.
Another factor that increases risks for scalpers is the spread traders pay when open a
trade. Each time a new trade is open, the spread cost is paid to the broker, thus opening
10 small trades instead of 1 long term trade increases the cost of trading in 10 times. If to
measure risk/reward ratio of such scalping activity may show very risk and potentially
losing trading.

Forex Scalping Systems

1. ADX and Bollinger Bands: Some scalpers receive help by using ADX
(Average Directional Index) and Bollinger Bands. ADX does not show the direction of the
current trend but the strength. Reading below 20 indicates a weak trade, reading just
above 20 gaining new strength and reading above 40 very strong trend.
It is that simple scalping when the market is weak-below 20 or just above 20-keep out.
Bollinger bands can help you determine trends and specially upcoming trend reversals.
When price moves outside Bollinger bands it suggests a continuation of the current trend,
while bottoms and tops made outside the Bollinger bands change to bottoms and tops
made later inside the Bollinger Bands suggests upcoming trend reversal.
2. Economic News Release: Look for the important news to be release. Choose the most
influential ones that are expected to shake market well. Once got news, find out which
currency pair is going to be affected.
 Forex Strategies

1. Now, 15 minutes before the data is released place buy/sell stop orders in both sides 15
pips away from th current price. Half an hour prior to the big news Forex market usually
flats out.
When the big news is release, the currency will move easily producing large pip
movements in either direction. Using this scalping strategy, traders will be able to get in
and out of the trade in seconds at almost zero risk.
Another Strategy wait 15 min. after the news is released: wait for a 15 min. candle to
close. Then place 2 orders -a buy 2 pips above the high of the close 15 min. candle and a
sell 2 pip below the low. Waiting for a 15 min. candle to close allows the market to settle
and move to one direction. Set a 20 pip take profit and 20 pip stop loss. Don´t trade if the
range is bigger than 70 pips and obviously don´t trade if the spreads are too big during this
volatile period.
If your order is triggered and the trade moves against you, let your stop loss kick you out
and watch reached the next order. In most cases if the initial trade goes against you and
the other ones fires you will recover your losses with the 2 trade.
3. Morning Scalping: Place 2 orders: above and below the last candle´s high and low at
8:00 am EST and join morning stretching having your 5 pips daily and safely. Use it with
the currencies pairs: EUR/USD and GBP/USD.
4. Tops and Bottoms:
Time Frames: 5. 15, 30 min. 1, 3 hr. and 1 day-just one chart at a time.
Indicators: 20 EMA and 40 EMA for all time frames.
ADX 14 for all time frames.
Currency: Any
Entry: Find the chart with ADX being over 30 mark, which will indicate a strong trend. We
start with a daily chart and continue the search moving downwards until we find the chart
with ADX over 30 mark.
In case several times frames meet requirements we opt for the highest time frame.
Having chosen the time frame, we are ready to trade the first bounce off on the 20 EMA.
We set a limit order close to 20 EMA: accordingly: in a downtrend we expect the price to
touch 20 EMA from below, then reverse and move down, in an uptrend from above reverse
 Forex Strategies

and move up.

Always make sure that at the moment of entry you are using the highest time frame with
ADX currently over 30. Only then you can expect the price to obey 20 EMA.
Initial stop loss: is placed above (when short) /below (long) the 40 EMA.
Once in the trade stay with the time frame used for entry.
Looking at the charts traders will find that at times the prices reverses exactly at 20 EMA,
but sometimes it moves even further before making a u-turn. Always be ready to leave
some room for the price to make this turn that´s why we suggest using 40 EMA for stops.
5. Pivot Points: Calculate daily pivot points for your favorite currency pair. For calculation
use data from 5pm EST time to 5pm next day EST time.
Sit & watch 1 min. chart. Be patient. Let price touch any pivot point lines, or come at least
one pip away from it. The price do touch the pivot points 90% of the time. Enter with larger
than you would regularly do order, but be reasonable.
Set stop loss 3 pips + spread on the other side of the pivot line.
Take profit once available-I would usually close my trade with the first completed 1 minute
candle and as soon as I am profitable.
Pivot points are excellent levels of supports and resistance. The moment price comes and
touches them it bounces off like a rubber ball.
How to calculate pivot points?
Pivot Point (PP) = (High + Low + Close/3)
6. GBP/USD:
Time Frame: 5 min.; chart
Indicators: MACD (5,8, 9)
SAR on MACD (0.1, 0.11)
SAR on the chart (0.1, 0.11)
Trade only from 7:30 am EST to maximum 11:30 am EST Preferred day Tuesday to Friday.
Once both SAR are in agreement (the same buy or sell opportunity) enter with either 1
order (to get 5 pips and leave the trade) or 2 orders at once (to chase the market further).
A stop loss is adjusted upon entry to the last but one SAR dot on the chart. If at the
 Forex Strategies

moment of the entry there is only one dot on the chart-set stop at this dot.
Profit target: 1st. 5Pips
2nd only when an opposite signal appears both SARs change direction or when the stop
(by that time is usually a profit stop or at least a break even situation) is hit. If before that
you feel that profits are already high to keep lock them earlier.
Want an even better entry? Then open an additional 1 min. chart with the same settings
and once got a signal from 5 min. chart, look at 1 min. Does the price confirms/moves in
your direction or it is going the opposite way. Wait until the price on 1 min. chart aligns with
5 min. chart.
 Forex Strategies

Parte 4
Elliot Wave Guide
In the 1930s, Ralph Nelson Elliott discovered that freely traded markets are patterned.
More specifically, he discovered that moves in
the direction of the larger trend unfold in 5 waves and that moves against the larger trend
(corrections) unfold in 3 waves.
Elliott studied multiple time frames, ranging from yearly to half-hourly, of the Dow Jones
Industrial and Dow Jones Transport
(considered more important at the time) indexes. He found the same patterns, regardless
of time frame. This concept, that a market
exhibits a similar structure at all degrees of trend (much like tree, which is made up of
smaller versions of itself), would later come to be
known as fractal (see Figure 1).
Although initially concentrated on stock markets, Elliott expanded his study to various
commodities markets and found the same
patterns! He wondered why markets that are supposedly driven by different outside events
would exhibit the same patterns. The
answer is that market trends are not a product of outside forces, but are instead a product
of human psychology, which follows the
wave principle.
FIGURE 1: The basic 5-3 pattern is evident at all degrees of trend
This advanced guide expands on the basic Elliott Wave guide by presenting in more detail
the patterns that Elliott discovered.
 Forex Strategies

Motive Waves
Movements in the direction of the trend of one larger degree trend unfold in 5 waves are
referred to as motive waves. Notice in Figure
1 that waves 1, 3, 5, A, and C each divide into 5 waves. These waves are with the trend of
one larger degree, which divide into 5
waves. On the other hand, waves 2, 4, and B divide into 3 waves because these waves
are against the trend of one larger degree.
 Forex Strategies

All motive waves obey 2 rules.

1.) Wave 2 never retraces more than 100% of wave
2.) Wave 3 is never the shortest wave
Impulse
Impulse waves are the most common type of motive wave. In an impulse, wave 4 does not
enter into the price territory of wave 1
(although in FX, with the high degree of leverage, you will see overlapping on intraday
charts; but rarely).
Extensions
In an impulse, one of waves 1, 3, or 5 is extended. Wave 1 is rarely extended. Wave 3 is
often the extended wave.
Forex Strategies
 Forex Strategies

Diagonal
Diagonals are known to traditional chartists as wedges. A diagonal is most common in the
5th wave position that follows an especially
strong 3rd wave. In such instances, the pattern is referred to as en ending diagonal. In an
ending diagonal, each wave (1,2,3,4,5)
consists of 3 waves and waves 2 and 4 can overlap.

Figure 3: An ending diagonal in the 5th wave position following an especially strong 3rd
wave
Reversals from ending diagonals are sharp and the entire diagonal is usually fully
retraced. The position is initiated near the line that
connects waves i and iii (this estimates the end of wave v). The initial stop is not clearly
defined since the position is initiated near the
5th wave extreme.
Triangles
Triangles are common as 4th waves, B waves (and X waves…see combinations). The
pattern consists of 5 overlapping (and usually
contracting) waves labeled A, B, C, D, and E. Each one of these waves is composed of 3
waves.
 Forex Strategies

Elliot in Action
Elliott wave practitioners will often say that “it’s all about 5’s and 3’s”. 5 waves in one
direction indicate that the larger degree trend is in that direction. Knowing the larger
degree trend enables the trader to position for the big move.

Can you count the waves?

For more information you can watch the video <click here>.
 Forex Strategies

Part 5
Fibonacci Trading
Who was Fibonacci?
Leonard Fibonacci was a famous Italian mathematician and discovered a simple series of
number that created ratios describing the natural proportions of things in the universe.
This series of numbers is derived by starting with 1 followed by 2 and then adding 1+2 to
get 3, the third number. Then, adding 2+3 to get 5, the fourth number, and so on.
After the first few numbers in the sequence, if you measure the ratio of any number to that
of the next higher number you get .618.
These ratios are called the golden mean.
Fibonacci Retracement Levels
0.236, 0.382, 0.500, 0.618, 0.764
Fibonacci Extension Levels
0, 0.382, 0.618, 1.000, 1.382, 1.618
Traders use the Fibonacci retracement levels as support and resistance levels. Since so
many trader watch these same levels and place buy and sell on them to enter trades or
place stops, the support and resistance leveles become a self fulfilling expectation.
Traders use the Fibonacci extension levels as profit taking level.
Most charting software include both Fibonacci retracement levels and extension level
tools. In order to apply Fibonacci levels to your charts, you will need to idetify swing High
and Swing Low points.
A swing High is a candlestick with at least 2 lower highs on both left and right itself.
A swing Low is a candlestick with at least 2 higher lows on both left and right of itself.
 Forex Strategies

Fibonacci Retracement
In an uptrend, the general idea is to go long the market on a
retracement to a Fibonacci support level. In order to find the
retracement levels, you would click on a significant Swing Low and
drag the cursor to the most recent Swing High. This will display each
of the Retracement levels showing both the ratio and corresponding
price level.
 Forex Strategies
The placement of stops is a challenge. It´s probably best to place stops below the Last
swing low (on an uptrend) or above the swing high (on a downtrend), but this requires a
high level of risk proportion to the likely profit potential in the trade.
Another problem is determining which swing Low and Swing High points to start from to
create Fibonacci Retracement Levels. The point is there is no one right way to do it, but
the bad thing is sometimes it becomes a guessing game.

Fibonacci Extension Levels

The next use of Fibonacci you will by applying is that of targets.

In an uptrend, the general idea is to take profits on a long trade at a Fibonacci Price
Extension Level. You determine the Fibonacci extension levels by using 3 mouse clicks.
First, click on a significant Swing Low, then drag your cursors and click on the most recent
Swing High. Finally drag your cursor back down and click on the retracement Swing Low.
This Will display each of the Price Extension Levels showing both the ratio and
corresponding price levels.
 Forex Strategies
Another problem is determining which Swing Low to start from in
creating the Fibonacci Extension Levels. A way is from the lowest
Swing Low of the past 30 bars. Again, the point is that there is no one
right way to do it, and consequently it becomes a guessing game.
Alone, Fibonacci levels will not make you rich. However, Fibonacci
levels are definitely useful as part of an effective trading method that
includes other analysis and techniques. You see the key to an
effective trading system is to integrate a few indicators (not too many)
that are applied in a way that is not obvious to most observers.
All successful traders know it´s how you use and integrate the
indicators (including Fibonacci) that makes the difference. Never enter
or exit a trade based on Fibonacci Levels alone.
 Forex Strategies
Part 6
Money Management
This section is dedicated to control losses hope it will help you
achieve and control damages.
1. Trading Sequence: The wining risk ratio is ½.
*We open a trade based upon our Entry criteria. For example we open a BUY on
EUR/USD at 1.35.Our stop loss in set to 10 pips 1.3490and our take profit is set to 50 pips
at 1.3550.
*If our take profit is hit we then wait for a new entry signal and begin again.
*If our stop loss is hit, then our next trade will be a sell (assuming our first trade was a buy)
which we would enter at Market Price as soon as our Stop loss is triggered. This new sell
position would have the same take profit 50 pips and stop loss 10 pips. This sequences of
trades continues each time our Stop loss is hit, with the resulting trade going in the
opposite direction of the previous trade. The sequence of trades is complete whenever a
Take Profit is reached.
2. Free Trades: Free trades are positions with stops set at break even + the cost of
spread. This is achieved by rolling up your stop to a break even point as soon as
conditions permits.
You have to leave them loose enough in order to escape regular market
fluctuations, yet make them tight enough in order to protected your gains.
How to do it?
One of the easiest ways to trade with a trailing stop is probably using the SAR
indicator.
After the entry, the stop loss is adjusted patiently with each new SAR dot up until
the moment we reach a break even point or we get a valid swing high/low.
SAR allows to avoid bringing our trailing stop too close too soon after the entry.
However, once we have a first pullback and a new valid Swing High/low (which
suggests that a resistance/support level has just been found), we can immediately
bring our stop loss few pips above the swing and no longer rely on the indicator.
From the point we are trading at break even we can fully enjoy a free trade and
decide on the next stop adjustment strategy, this time to lock some profits. One of
the methods to
 Forex Strategies

use is to move your stop below/above each new candle only after the market moves
in your favor.
Now matter what indicator/method you choose for stop trailing purposes, the goal is
to achieve a break even point as soon and as safe as possible.
In order to successfully use this alternative method, your entries should never be
taken near or exactly at reversal levels (because such entries often develop into a
negative trade first before turning into a winner not the best option in this case)
instead you should look to enter with a trend on a move that´s already in progress.
Either way both scenarios had one thing in common free trades.
3. Lot size management:
*Rule #1: If you win your first trade in a series you count it as a win and start a new
series.
*Rule #2: When you lose, you keep trading the same size lot until you hit a winner.
After 1 win you trade equal to the aggregate of the previous losses (example after
4 losses at 1 lot followed by 1 win at 1 lot you increased your trading size to the
sum of the 4 losses-4 lots in this example).
*Rule #3: If you have a series of losses, one win, then another series of losses you
trade the size of your most recent bet multiplied by the length of the larger losing
streak;
Example: after 2 losses at 1 lot, 1 win at 1 lot, 3 losses at 2 lots, and 1 win at 2 lots,
you are now betting at 6 lots (3 losses by 2 lots).
A natural result of this system is that there are circumstances where the trader will
be break even before two consecutive wins. This happens when a second win is
achieved within the number of trades equal to the largest losing streak of the series.
Example: LLLLWLLW would actually result in a break even case.
The biggest risk is a big series of losses with intermittent wins that are not
consecutive. Example: LLLLWLLLLLLLW translates to trading at 28 lots per trade
following that second win. Add 2 losses to this examples and you are down 56 lots
and still looking for 2 consecutive wins.
 Forex Strategies

4. Risk/Reward Ratio: A good risk/reward ratio is able to make an unprofitable

system profitable, while a poor risk/reward ratio can turn a winning setup into a
losing strategy.
Risk: the amount of assets being put at risk. In forex is the distance of our stop loss
level (in pips) multiplied by the number of lots traded. Example: a stop loss at 50
pips with 2 lots traded would give us a total risk of 100 pips.
Reward: the amount of pips we look to gain in any particular trade-in other words
the distance to a take profit level.
Example of risk/reward ratio:
100 pips stop vs 200 pips profit goal gives us 1:2 risk/reward ratio
25 pips stop vs. 75 pips profit goal gives us 1:3 risk/reward ratio.
An average trading system which is able to produce at least 50% of winning signals
automatically becomes profitable if the stop loss and profit target are 1:2risk/reward ratio
or higher.
On the other hand a trading system which is capable of delivering 70% of winning signals
can still be unprofitable in the long run if it shows poor money management with, for
example, 3:1 risk/reward ratio.
Small risk-large reward: a winning formula used by professionals traders.
 Forex Strategies

Conclusions
• Forex is the largest financial market in the world. With over $3 trillion trade every
day.
• Forex is high risk investment, but if you are discipline, educated and follow a trading
system your investment will increase in a constant, easy way.
• Always use a stop loss, remember the formula low risk, high leverage.
• Trading in Forex is not about gamble, you have to have a set of rules. You need a
plan to make money.
• Good money management is required to be a successful trader in Forex.
• Before you count your profits be sure to know how much are you willing to lose.
• Trading in Forex is a psychological event. Always losing or gaining money is a
psychological event you need to be responsible. Not been greedy and also cutting
losses is the key in this game.
• And finally every successful trader likes to learn every time he has the opportunity,
so never stop searching and learn.

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