EURUSD Simple Strategy

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3 Simple Strategies for Euro Traders

Euro (EUR) traders speculate on the strength of the Eurozone economy, compared to its major partners. The relationship between the Euro and US Dollar (USD) marks the most liquid forex pair in the world, with tight spreads and broad price movement that supports a continuous flow of profitable opportunities.

While there are many ways to trade the EUR/USD pair, three simple strategies have been consistently effective. These can be executed by forex traders at all skill levels, with newer participants reducing position size to control risk while experienced players increase the size to take full advantage of the opportunities.

Key Takeaways

  • With BREXIT on the horizon and a history of economic instability in the PIIGS countries, the euro has been popular among currency traders trying to profit off increased volatility.
  • There are several ways to trade the euro versus the U.S. dollar as well as several other euro currency pairs.
  • Here we describe just three basic strategies for trading the euro.

Buy or Sell the Pullback

The EUR/USD trend thrusts in both directions and carries the price from one level to another in a positive feedback loop that can generate considerable momentum. However, this rapid movement tends to fizzle out when the supply/demand equation shifts, often trapping latecomers in positions that will be excited for losses when the currency pair reverses and heads in the opposite direction.

The pullback strategy takes advantage of this countertrend movement, identifying significant support or resistance levels that should end the price swing and reinstate the initial trend direction. These levels often come at prior highs or lows as well as key levels defined by Fibonacci retracements, moving averages and the inception point of the original thrust.

Buy the Breakout/Sell the Breakdown

The pair often grinds back and forth within confined boundaries for extended periods, setting up well-defined trading ranges that will eventually yield new trends, higher or lower. Patience during these consolidation phases often pays off with low-risk trade entries when support or resistance finally breaks, giving way to a strong rally or selloff.

Good timing is needed to take full advantage of this simple strategy. Enter too early and the range could hold and trigger a reversal. Enter too late and risk escalates because the position will execute well above new support or well below new resistance. It’s often a good idea to reduce timing risk by opening a partial position when the pair breaks out or down and adding to it on the first minor retracement.

Enter Narrow Range Patterns

The pair will often rise or fall into a significant barrier and then go to sleep, printing narrow range price bars that lower volatility and raise apathy levels. Coincidentally, this quiet interface often marks a powerful entry signal for a breakout or breakdown. This strategy enters the position within the narrow range pattern, with a tight stop in place in case of a major reversal

This setup often prints an NR7 bar, which marks the narrowest range price bar of the last seven bars. Originally observed in the U.S. futures markets in the 1950s, this powerful but simple pattern predicts that price bars will expand in a sizable breakout or breakdown. It’s also a low-risk entry because the stop loss can be set very close to the entry price.

The Bottom Line

New and experienced Euro traders can execute these three simple but effective strategies that take advantage of repeating price action.

Equity traders can also apply these techniques with Currency Shares Euro Currency Trust (FXE), which tracks the forex pair in real-time. Leveraged and inverse ETFs can also be traded if you have the skills needed to manage the additional risk. ProShares Ultra Euro (ULE) offers double long side exposure, but it is thinly traded, at just 24,283 shares per day on average. ProShares UltraShort Euro (EUO) offers equal leverage to short sellers and greater liquidity, trading more than 700,000 shares per day on average.

Simple Forex Scalping Strategy For GBPUSD And EURUSD

Here’s another simple forex scalping strategy for GBPUSD and EURUSD. So if you are a trader that is looking for a forex scalping strategy to trade the EURO or the the GBP, you can try this one. This simple forex scalping systems involves price action trading with a use of a very specific candlestick pattern.

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Timeframes: 5minutes only

Forex Indicators: RSI with settings to 14 periods.

Currency Pairs: GBPUSD & EURUSD

Trading Sessions: Use London and New York Forex Trading Sessions for this system

Now, this scalping strategy also requires that you know what a shooting star candlestick is and what it looks like.

WHAT IS A SHOOTING STAR CANDLESTICK?

This is what a shooting star candlestick looks like:

So when a shooting star candlestick forms on a chart, what does it tell you?

  • when it forms in an uptrend market, it indicates bearishness. The color of the candlesticks does not matter, red or green, if its a shooting star, its all bearish.

Therefore, this scalping strategy is for selling only…no buying.

THE SELLING RULES

  1. The market must be up (in an uptrend)
  2. Check if the RSI line is above 70 which indicates an oversold condition.
  3. next, check to see if your see a shooting star candlestick and if you see one, go to step 4.
  4. place a pending sell stop order 1-2 pips under the low of that shooting star candlestick
  5. next thing you do is to place your stop loss 1-2 pips above the high of that shooting star candlestick
  6. then you also have to set your take profit target. You can do that by setting at 50 % level of the rally move or you can also use the previous swing low zone or level as your take profit target level.

ADVANTAGES OF THE FOREX SCALPING STRATEGY FOR GBPUSD AND EURUSD

  • during the london and new york forex trading sessions,the market is very liquid and you can make some quick profits using this scalping system.
  • its a very easy forex scalping system to use.
  • the shooting star candlestick is a very bearish candlestick and it formation only reinforces that bearishness and what you will tend to see is that after a shooting star candlestick forms, the price tends to fall so this trading system allows you to capture that price drop after the shooting star candlestick forms.

DISADVANTAGES OF THE FOREX SCALPING STRATEGY FOR GBPUSD AND EURUSD

  • Don’t try using this forex scalping strategy during the ASIAN trading session. There no much volatility in that trading session and there’s the possibility that the performance of this forex scalping system may not really be good.
  • be careful not to over trade because fx scalping is a high pressure fast paced trading environment and you can lose all your money trading like this.

Don’t forget to share this Simple Forex Scalping Strategy For GBPUSD And EURUSD with your friends by clicking those sharing buttons below. Thanks

The “So Easy It’s Ridiculous” Trading System

As you can see, we have all the components of a good forex trading system.

First, we’ve decided that this is a swing trading system, and that we will trade on a daily chart.

Next, we use simple moving averages to help us identify a new trend as early as possible.

The RSI is an extra confirmation tool that helps us determine the strength of our trend.

After figuring out our trade setup, we then determined our risk for each trade. For this system, we are willing to risk 100 pips on each trade.

Usually, the higher the time frame, the more pips you should be willing to risk because your gains will typically be larger than if you were to trade on a smaller time frame.

Next, we clearly defined our entry and exit rules. At this point, we would begin the testing phase by starting with manual back tests.

Here’s an example of a long trade setup:

If we went back in time and looked at this chart, we would see that according to our system rules, this would be a good time to go long.

To backtest, you would write down at what price you would’ve entered, your stop loss, and your exit strategy.

Then you would move the chart one candle at a time to see how the trade unfolds.

In this particular case, you would’ve made some decent pips! You could’ve bought yourself something nice after this trade!

Of course, not all your trades will look this sexy. Some will look like ugly heifers, but you should always remember to stay disciplined and stick to your trading system rules.

Here’s an example of a short entry order for the “So Easy It’s Ridiculous” system.

We can see that our criteria is met, as there was a moving average crossover, the Stochastic was showing downward momentum and not yet in oversold territory, and RSI was less than 50.

At this point, we would enter short.

Now we would record our entry price, our stop loss and exit strategy, and then move the chart forward one candle at a time to see what happens.

Boo yeah baby! As it turns out, the trend was pretty strong and pair dropped almost 800 pips before another crossover was made!

Now isn’t that ridiculously easy?

In fact, there is an acronym that you will often see in the trading world called KISS.

It stands for Keep It Simple Stupid!

It basically means that forex trading systems don’t have to be complicated.

You don’t have to have a zillion indicators on your chart. In fact, keeping it simple will give you less of a headache.

The most important thing is discipline. We can’t stress it enough. Well, yes we can.

YOU MUST ALWAYS STICK TO YOUR TRADING SYSTEM RULES!

If you have tested your forex system thoroughly through back testing and by trading it live on a DEMO account for at least 2 months

Then you should feel confident enough to know that as long as you follow your rules, you will end up profitable in the long run.

Trust your system and trust yourself!

If you want to see some examples of some slightly more complicated forex trading systems, take a look at Huck’s HLHB system or Pip Surfer’s Cowabunga system.

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