In the next few weeks, I am going to share some forex strategies that has assisted me in my trading journey, to start off today, I will be sharing the Moving average strategy. The Moving Average Strategy was my very first strategy when I started trading Forex about 5 years ago and I still use it occasionally till today.
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I am a fan of trading the naked chart, but as a newbie or a struggling forex trader, you need some triggers to assist you in making informed market decisions, one of those triggers can be spotted by the Moving average strategy.
The Moving average can help you to identify market trend, spot support and Resistance and assist you to make inform decisions on your trading.
How to Grow your Forex Account Using the Moving Average Strategy
Before, we continue, you need:
1. A Demo Account (If you don’t have one, click here to open one with the Broker I use)
2. A little knowledge of Price action (to understand market structure) and a
3. A phone or a Laptop with a trading platform
One of the trap that most newbies fall into at the initial stage of their trading journey is the desire to make huge return on their investment over night; to some of them, once, the blow their account once or twice (which is normal especially if they don’t have the right knowledge), they start looking for signal groups, then copy trading, account management, then they dump forex).
Let me tell you the truth: I blow my account three times before becoming a successful trader. The reason I blew the account was simple, my first forex tutor told me, buy low, sell high, he didn’t tell me about retracement or consolidation, so I win few trades with his orientation, after sometimes I was an unending loosing streak.
Don’t be left out, Open a free trading account now by clicking here
My fortune in trading changed, when I decided to take charge of my trading journey. So if you are a struggling Forex trader and you are looking for how to grow your forex account and change your trading history, please take charge of your trading journey, take a break from trading, open a demo account (click here to open one) and start working on building your strategy.
You don’t need to pay anybody to know Forex or join any mentorship session to be Forex guru, you just need to be determined and be ready to spend time with your chart, learn and understand what the candlesticks are saying, then develop your own Forex Strategy.
If you are a newbie: First, read on Price action, secondly, read on Candlestick, then after understanding these two, you can add a little knowledge on indicator to assist you in making inform trading decision.
Let now dive into:
How to grow your forex account using the Moving average strategy
Moving averages are trend indicators, they are part of analytical tools available provided on trading platform to help you in making trading decisions.
What I am about to show you has given me over 89% win rate in my Forex trades, and just about 11% on the drawdown side. This is how I trade, once I spot an opportunity based on the Moving averages which is confirmed by the market structure, I placed a trade with Take Profit and Stop Loss at the same time ( take profit is always twice the stop loss). Please never place a trade without a stop loss. I always allow my trades to hit either the stop loss and the take profit, but if I buy a pair and I discover that it will break the resistance point and go higher, I will move the stop loss to secure my profit and push the take profit close to the next resistance, same things goes if I am on a sell.
Let’s now look at the setting of the moving average.
I use Exponential Moving Averages (EMA) 9 and 21 apply to close. 9 EMA acts as a faster moving average, while 21 EMA acts as the slower moving average. The general rule for moving average is that in an uptrend, the faster moving average (9EMA) should be above the slower moving average (21 EMA). Once this is spotted, and is confirmed by the market structure, place a buy and put a stop loss slightly below the last support zone and put a take profit slightly close to the next resistance zone.
The reason, I am saying slightly close to the zone or below the zone is because market structure violation is always imminent in the market, the market does not move in a straight line, it may decides to form another zone before getting to the main resistance or support zone, so it’s always good to break even.
In a downtrend, the slower moving average (21) is above the faster moving average (9), so you sell once you confirmed with the market structure, put a take profit profit close to the next support zone and a stop loss close to the next resistance zone. I use this strategy to trade Boom and Crash and it is very effective.
N/B: Please try the strategy out in your demo first before going to your live account, if you don’t understand price action, don’t worry, my next article will be on Price action strategy. In the main time, you can read about it on Babypips
Disclaimer
Deriv offers complex derivatives, such as options and contracts for difference (“CFDs”). These products may not be suitable for all clients, and trading them puts you at risk. Please make sure that you understand the following risks before trading Deriv products: a) you may lose some or all of the money you invest in the trade, b) if your trade involves currency conversion, exchange rates will affect your profit and loss. You should never trade with borrowed money or with money that you cannot afford to lose.