The biggest key to successful trading is the investor’s attitude or discipline. Once an investor take a determine approach, the focus is on finding the proper entry and exit point, not chasing pips where emotion will take control of the investor’s mind and it will definitely affect their trades. The 4/12/63 strategy is a perfect system for an investor with this kind attitude because it will show you the entry and exit point in trades. To learn more about entry point click HERE
The importance of EMAS: - Technically, moving averages provides an objective measure of trend direction by smoothing the price data and it been calculated using closing prices. Moving averages can also be used on median, typical, exponential and weighted closing price as well as other indicators.
Emas are the core of this strategy. An EMA is the average value of the price of a currency pair over a certain period of time. This number should be consistent, but it can be the opening price, the closing price or any other time in between. The emphasis of EMAS is more on recent price and less on older prices. The 4/12/63 strategy focuses on three EMAS: 4 period, 12 period and 63 period, as long as these periods are consistent with each other, they could be daily, hourly or a 15 minute chart. The chart should consist of candlestick symbols, 4 period EMA in red, the 12 period EMA in yellow and the 63 period EMA in blue.
There are two simple conclusions from this chart those determinations are: when the 4 crosses are below the 12 and both of them cross and are below the 63, this is likely a sell signal.
When the 4 crosses and is above the 12 and both of them cross and are above 63, it’s likely a buy signal.
Following the numbers:- the key indicator is the relationship between the 4 and the 12. You should be prepared to buy any time the 4 crosses and is above the 12 and be prepared to sell any time the 4 crosses and is above the 12, regardless of the 63. This condition should not be an absolute buy or sell signal but it should indicate that a potential trade is approaching. The next step is watching the relationship between the 12 and the 63. Once the 4 and 12 have crossed, look for the 12 to cross the 63. This become a strong indication of a buy or sell signal.
When not to trade:-When the 4 and the 12 are locked into a sort of spiral, where there is little or no range of movement that means the price is consolating or trendless; It is best not to trade. Gains and losses are too difficult to project at this time. In addition, it is best to avoid trading on holidays and late in the day on Fridays this time frequently is volatile and the signals are typically unreliable.
Stop loss strategies: - in other to help protect profit, three conditions should be set: establish a 20 pips stop loss beyond the 63 period EMA. Set a 15/25 pips trailing stop on any trade. Set a profit target at a recent high or low so that it creates a double top or double bottom. Wow, what I mean by double top or bottom is when two candlesticks form and have the same value of high or low. To be a proficient trader, you need more understanding on candlestick. To be sincere with you candlesticks are also powerful indicators that could make thousands or millions of dollars if well understood and you stick to its interpretations and trading rules.
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Author: Idowu Samuel
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