Trade with the trend on price retracements
Simple and straightforward trading strategy, issued by DailyFX: follow the trend of the chart and wait for the retracement before taking the position.
1) Determine the trend
Use the EMA 200 to identify the trend of the price: uptrend if the price is above the EMA 200, downtrend if the price is below. Quite easy, maybe even superficial, but quite immediate to use.
2) Wait for the retracement to be concluded
In an uptrend market situation, wait for the EMA 3 crossing upward the EMA 30 from below, and similarly in a downtrend market picture wait for the crossover to take place from above and downward.
The entry point, long or short, does not take place when the retracement occurs, but when it is concluded, that is when the 3 period Exponential Moving Average goes back below the 30 period EMA in a downtrend, or similarly when the EMA 3 goes back above the EMA 30 in an uptrend market. At that point, you will enter respectively short and a long position.
You will place a market order for two lots.
Add to your chart the MACD indicator with settings 12-26-9; close the first lot position at the MACD crossover and the second lot when the price hits the EMA 25, this last stop clearly being a trailing stop.
The above strategy is intended to be a simple and straightforward yet effective trading strategy and is suitable for both Forex and Stock trading activity.