News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Canadian Dollar snapped a three-week losing streak after USD/CAD stalled at key technical resistance. Get your CAD weekly forecast from @MBForex here: https://t.co/BPHuKecwnz https://t.co/73OmuCKfU9
  • Forex quotes reflect the price of different currencies at any point in time. Since a trader’s profit or loss is determined by movements in price, it is essential to develop a sound understanding of how to read currency pairs. Learn how to read quotes here: https://t.co/CNtqrKWDBY https://t.co/KzhQnGiLyt
  • A currency carry trade involves borrowing a low-yielding currency in order to buy a higher yielding currency in an attempt to profit from the interest rate differential. Find out if the carry trade suits your trading style here: https://t.co/7t4BzmLg8w https://t.co/cuneuJNZlH
  • Get your snapshot update of the of top level exchanges and key index performance from around the globe here: https://t.co/d8Re5anlG5 https://t.co/danCiP5vqK
  • Traders utilize varying time frames to speculate in the forex market. The two most common are long- and short-term-time frames which transmits through to trend and trigger charts. Learn more about time-frame analysis here: https://t.co/9S5tXIs3SX https://t.co/JhYoQ7I19K
  • The Nasdaq 100 index is aiming to breach a key resistance level at 14,950 for a second time. A successful attempt may open the door to further gains, although the MACD indicator flags signs of weakness. Get your equities forecast from @margaretyjy here: https://t.co/BEYupi32qB https://t.co/PWeXE8tZVY
  • Currency exchange rates are impacted by several factors. Are different world leaders a contributing factor? Find out here: https://t.co/4jsORznRTE https://t.co/t34kotPE8R
  • Many people are attracted to forex trading due to the amount of leverage that brokers provide. Leverage allows traders to gain more exposure in financial markets than what they are required to pay for. Learn about FX leverage here: https://t.co/BdgFmkRxVw https://t.co/lM1OIJdjhr
  • Trading Forex is not a shortcut to instant wealth, excessive leverage can magnify losses, and sentiment is a powerful indicator. Learn about these principles in depth here: https://t.co/lZFM8youtX https://t.co/6qGEVjDlN6
  • Although the medium-term outlook remains negative, Bitcoin could make a bullish move in the coming days if prices manage to hold above key support in the $29,150/28,600 region. Get your #Bitcoin forecast from @DColmanFX here: https://t.co/T7iAD0fbbU https://t.co/xVSG7nKIQG
Learn Forex: A Simple Stochastics Strategy

Learn Forex: A Simple Stochastics Strategy

Walker England, Forex Trading Instructor

Article Summary: Creating a Forex trading strategy does not have to be a difficult process. Today we will review a simple Stochastics strategy for trending markets.

When choosing a trading strategy, new traders often become confused by all the variables and indicators available to consider. Ultimately the key to trading success is finding a simple strategy that you understand, and have the ability to replicate. Today we are going to review the basics of creating a simple strategy by finding the trend then applying the Stochastics Oscillator.

Find the Trend

Before we enter into any trade, we need to find market direction by trend identification. Below we have the EURGBP on a 4Hour Chart. We can see the pair is making new highs while establishing higher lows. This is the first sign that the EURGBP is trading in a strong uptrend. This analysis can be confirmed by the use of a 200 SMA. Traditionally traders are bullish when price is above the 200 SMA and bearish if price resides under the indicator.

Given the information above traders should look to buy the EURGBP. If the trend continues, prices are expected to make higher highs.

Learn Forex – EURGBP 4Hour Trend

Learn_Forex_A_Simple_Stochastics_Strategy_body_Picture_3.png, Learn Forex: A Simple Stochastics Strategy

(Created using FXCM’s Marketscope 2.0 charts)

Entries with Stochastics

Once market direction is identified, we can then use an indicator to enter into the market. Below we can see the Stochastics (SSD) Oscillator on a 1Hour chart. Since we are only looking to buy in an uptrend, it is important to identify areas where the market is oversold. The Stochastics indicator marks this with the 20 level running horizontally along the indicator. Traders looking to buy a retracement can then enter the market when then %K value crosses above the %D value signaling a return to bullish momentum.

Below you will find several sample entries using Stochastics. The arrows below price have been included on the chart to better understand where execution may occur.

Learn Forex – EURGBP 1Hour Entries

Learn_Forex_A_Simple_Stochastics_Strategy_body_Picture_2.png, Learn Forex: A Simple Stochastics Strategy

(Created using FXCM’s Marketscope 2.0 charts)

Exiting Positions

Now that a trade has been opened, traders need to have a plan to exit the market. This is the final step in developing a successful strategy! Traders may choose a variety of stop / limit and risk reward combinations here to suit their trading needs. However, if you are already using the Stochastics Oscillator for entries, you can also use it to plan your market exit. If we are buying on a return to bullish momentum, traders should conclude buying when momentum subsides. This can be found when %K crosses back below %D. The green arrows below have identified where our sample trades would be closed using this technique.

Regardless of the methodology chosen, it is always important to have a plan to exit the market. Once you have this final component in place, you then proceed to test your strategy live in the Forex market.

Learn Forex – EURGBP 1Hour Exits

Learn_Forex_A_Simple_Stochastics_Strategy_body_Picture_1.png, Learn Forex: A Simple Stochastics Strategy

---Written by Walker England, Trading Instructor

To contact Walker, email instructor@dailyfx.com . Follow me on Twitter at @WEnglandFX.

To be added to Walker’s e-mail distribution list, send an email with the subject line “Distribution List” to instructor@dailyfx.com .

Been trading FX but wanting to learn more? Been trading other markets, but not sure where to start you forex analysis? Register and take this Trader Quiz where upon completion you will be provided with a curriculum of resources geared towards your learning experience.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES