Forex for a trader
4 hr chart is the best in forex

4 hr chart is the best in forexThe Four-Hour Trader, A Full Trading Plan. by James Stanley , Currency Strategist. Price action and Macro. Your Forecast Is Headed to Your Inbox. But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk. Your demo is preloaded with ?10,000 virtual funds , which you can use to trade over 10,000 live global markets. We'll email you login details shortly. You are subscribed to James Stanley. You can manage you subscriptions by following the link in the footer of each email you will receive. An error occurred submitting your form. Please try again later. Four Hour Trader Talking Points: Traders can implement a well-heeled plan taking only four hours per week The four-hour chart can be ideal for Forex Traders looking to trade around the clock We outline a full plan based around Price Action that traders can begin using today. All of the sudden, the world has gotten very small; and life is moving faster than ever before. The internet presents a lot of benefits to the human species; but time management is not one of them. As competition for page views, viewer numbers, and attendance continues to heat up, very little in this life emphasis a slow and steady approach.

But to the trader, in many cases, that is the best way to go about speculation in markets: Slow, steady, and consistent . But being there as a trader, and getting there as a new speculator are completely different markets. In this article, we’re going to outline a complete trading plan that will take less than four hours of a trader’s time each week. And further, this is an approach that can be focused on longer-term moves , and swings . If you have a day job, or any other pre-existing commitments that limits your time on charts, this is an approach that can offer quite a few benefits. The Center of the Approach. The 4-hour chart plays a special role in the FX market. Most equity markets are open between 8 and 9 hours each day, and as such, the four-hour chart might take on less importance. After all, a four-hour chart just shows two bars for each trading session, so traders might as well just look at the daily chart. But in the Forex market, the four-hour time frame takes on special importance. The market never closes, and traders are literally Trading the World . The four-hour candle represents half of each geographic trading session.

Each of these sessions can take on markedly different tones, and that is where traders can look for potential opportunities. In the FX Market, traders are truly ‘Trading the World’ Traders can use the price movements and gyrations on these four-hour charts to analyze markets, and find potential pockets of opportunity. Watch for the close of each 4-hour candle that you can. Using the New York close to define ‘financial time’ means that we’re seeing candles close at 5, 9, and 1 AM and PM (based on ET). If you’re using Central Time, that’s 4, 8, and 12 AMPM while Pacific Time is 2, 6, and 10 AMPM. If you’re busy at the time, Mobile Applications can generally offer you what you need to perform the analysis at the close of each of these candles. Traders can then take a ten-minute block of time upon the close of each of these four-hour candles to look for potential trade setups, while also using this as an opportunity to manage risk . If the trader is awake for four of the six four-hour candles that form each day that would mean that the trader would need approximately 40 minutes per day to analyze charts. If time permits, an additional 10-15 minutes can be used at or around the daily close. The total time commitment required is 40-50 minutes each day, for a total of 200-250 minutes per week (240 minutes is 4 hours). Use Price Action to locate the strongest trends. Trends in markets can be easily graded and seen with price action… by simply looking for charts to make progressively higher-highs, and higher-lows (in the case of an uptrend), and lower-lows, and lower-highs (for downtrends). Price Action can help traders locate the strongest trends. In the article Price Action, an Introduction we look at a way that traders can grade trends without the use of any indicator at all, using just past prices.

Traders want to look to trade in the direction of these trends; buying up-trends, and selling down-trends. But, is it enough to just buy up-trends or sell down-trends and ‘hope’ that they continue? No. Traders can use price action to appropriate their entries into these positions. Use Price Action to buy up-trends cheaply, and sell down-trends expensively. Once a strong trend has been located, the trader can then look to plot their entry by looking for a ‘trigger’ into the position via price action. Once again, traders want to look to efficiently buy up-trends when price is cheap, or near support. We looked at how traders can find this support in the article, Price Action Swings . Traders can look to buy up-trends after a recent swing low. Traders can look for additional confirmation of the entry by looking to the price action candles that form at or around those swings. We looked at quite a few of these triggers in Trading Bearish Reversals (for down-trends) , and The Hammer Trigger for Bullish Reversals (for up-trends). Traders can look for bullish triggers at or around recently printed new lows. Use Stops and Limits to Enforce Favorable Risk-Reward Ratios. We talk about this a lot at DailyFX, and there is a reason for it: It’s important! One of the main premises of our price action education is that future prices are unpredictable, and as such, there is no such thing as a ‘holy grail’ or ‘can’t lose’ strategy. By adding a stop and limit, and letting the trade work – the trader eliminates the possibility of making a knee-jerk reaction that they may end up regretting.

It also enforces a favorable risk-reward ratio, and puts traders in the most promising spot to avoid the number one mistake that Forex traders make. Since traders are looking at their charts for each four-hour bar, they have built-in trade management for each position that they take on. Traders can use the close of each four-hour candle as an opportunity to adjust stops ( particularly the break-even stop ), or to take profits while also looking to trigger new positions. Traders can take this a step further by trailing their stop in an effort to lock in gains in the event that the trend gets especially built-in. We looked at this premise in Trading Trends by Trailing Stops with Price Swings. Traders can lock up gains to maximize trends. Created by James Stanley. -- Written by James Stanley. James is available on Twitter @JStanleyFX. The 4 hour trading approach requires a solid psychological foundation to markets. Check out our Building Confidence in Trading g uide to learn more about the mindsets behind trading. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. Trading the 4hr Charts. Verified Profitable Trader.

The 4-Hour Chart. No, this is not a Timothy Ferriss promotion or new book, but an examination of the 4hr chart, along with the how and why I recommend using it for your price action trading. If you are in the beginning or developmental stages for learning how to trade the forex market, I definitely recommend learning to read price action off the 1hr, 4hr an daily time frames. For our purposes, we will concentrate on the 4hr chart. Some Advantages of the 4hr Time Frame? Price Action is the result of order flow (the total summation of all buy and sell orders). It really matters not why people buy and sell, or if they are buying and selling, what matters is who has dominant control of the market, where is the market most likely to go, and how can we trade it. With that being said, a few minutes of price action can more often than not, represent a false move, perhaps Toyota buying some USD with JPY, and very likely have any significant force behind it to drive the market, bring in other players, and be the start of a big move. Think about it…how many 1min, 3min, 5min, 10min, 15min, or even 30mins of price action throughout the day will really be representative of a major move and driving force throughout the day? Now, think about the 4hr chart. No matter how you slice it, 4hrs is half of a trading session (for the most part). For any trading session, a 4hr candle will represent a large sum of order flow, sentiment, continued or sustained buyingselling, etc. If a rejection happens on a 4hr chart, it likely represents a large rejection because to sustain that rejection, the market had to close the entire 4hr candle while maintaining the rejection till the end. If it rejects during the 4hr candle, but closes exactly where it rejected, then it wasn’t that important because it couldn’t sustain that rejection in time. Time is a critical component when reading price action and representing order flow.

In many cases, the longer price reactsrejects off a key level, the longer it holds from that rejection, the stronger it can be. Of course the price action context leading up to it is key and informative, so make sure to understand this. But if a key level can sustain the directional move for 4hrs as opposed to 5mins, then it had to do so through increased order flow and participation from the market. That communicates there were more players and more money behind this move. But on a 5min candle, or even a 1min candle, this could be nothing and represent littlemeaningless order flow with no real potency behind it. It could be the result of some minor profit taking which creates a negative feedback loop in terms of order flow and price action. But do this for 4hrs and sustain it into the close, and we are talking more participation, orders, money and participants. For price to sustain a particular price action move for 4hrs means no matter how many players, sentiments, and ideas there were participating in the market, the dominant theme held for half the trading session and quite a long time. But on a one min time frame, a 5min, or even 30min time frame, these moves could be simple noise which can move the market up to 30pips without having any major force behind it. Think about how many 5min candles in between the NY close and Tokyo open and how much order flow will really be behind that? Think about how many 1min and 3min candles will be between the 3rd and 4th hours of the london session (where volatility and pip ranges generally decrease) and how they will represent less order flow and participation. Then you will see how ineffective these candles can be and how what your reading has very little meaning. One and Two Bar Patterns. Continuing with that logic, for those who trade pure price action patterns, like an inside bar (which is a 2 bar pattern) shows up on a 1min, 3min, 5min or even 30min time frame, it is much more likely to be absolutely meaningless than an inside bar which shows up on a 4hr time frame. Think about it, if price holds inside the previous price range on a 5min candle, that could mean almost anything and be the result of a laundry list of order flow environments and situations. 5mins of price going nowhere could mean anything and have very little direction on upcoming order flow.

But apply an inside bar on a 4hr time frame, and you are talking 4hrs of price action being held in a range for almost half an entire trading session. That means no matter how many players participated in the market, nobody was able to break the previous price range for an entire 4hrs which tells you a) price was pretty suppressed, b) very little directional control in the market, c) very little participation. That is much more communicative in terms of information than any passing 5mins. The market could be in a dominant trend, but be simply pausing for 5mins because its coming to lunchtime, there were some short term counter-ordersforces in the market that will be quickly absorbed, a little profit taking (again, a negative feedback loop on price action and thus, not great for trading). Technically, for an inside bar pattern, you would be basing your decision on 8hrs of price action since an inside bar pattern is a 2bar pattern (thus 8hrs), so there is a lot more information in this then an inside bar pattern on a 5min time frame (10mins of price action). Furthermore, to get any real significant amount of data with confirmation and continuation of the order flow (and price action), you need far more 1min, 3min, and 5min candles to make sure the noise is filtered out. That means more moving parts and more variables to manage. Contrast to the 4hr chart where one candle (or two) can give you all the information you need to make a trade while filtering out any noise and meaningless price fluctuations. For an interesting story about meaningless price fluctuations, make sure to put in a question in the comment box below and i’ll tell you a story which will blow your mind. In Conclusion. As we can see, when trading and reading price action, a 4hr candle will offer us much more information, and have a cleaner look and feel to it than any 1min, 3min or 5min chart. This will make it easier for you in your learning process as you’ll be making decisions off of less false signals, more information and cleaner charts. The 1hr, 4hr and daily time frames will have a greater communicative value about direction, clear supportresistance levels, what is a key rejection, who’s in control, while filtering out noise and meaningless order flow and price action.

This will give you less confusing information in the beginning, and teach you how to be patient with your trading. Once you have developed your skills, have some experience and confidence under your belt, it’s really up to you from there how you want to trade, whether it be on the smaller time frames (1min – 30mins) or larger time frames (1hr, 4hr and daily). At that point, it’s a question of style and life - style . But it should be noted we aren’t saying trading on the lower time frames is meaningless. One can trade price action on any time frame and make money. In fact people are making money on almost every time frame available. Just understand you have to increase your price action skills and ability to read price action context before trading lower time frames. For some people’s brains, it doesn’t work with their natural wiring and dispositions. For other traders it does, so the key is finding what works for you. If it hurts your brain, then it likely isn’t for you, so make sure whichever style you trade isn’t hurting your brain, but engaging it well. For those of you wanting to learn how to read price action and the order flow behind it, take a look at our Advanced Price Action Trading Course where you will learn rule-based price action systems to trade the forex market. Please remember to leave your comments below and to ‘Like’ and ‘Tweet’ to share the article. Also make sure to check out our most recent article on Price Action Trading. The great thing about trading 4 hour Forex charts.

In my opinion nothing beats 4 hour Forex charts , you may be wondering why I would make such a claim. Is it something to do with some ‘esoteric secret?’ or maybe ‘The World’s top traders are doing it?’, maybe it is ‘Some secret ploy to sell you my latest product that relies on a 4 hour chart?’ The reason why I believe the 4 hour Forex chart is the best time frame ever is basically just to do with my lifestyle, how I personally trade and how I create time for trading in my life. I lead a pretty hectic life, with running the Dynamite Indicators, looking after my partner and raising my beautiful little girl, there is always 101 things to do each day. Trying to fit trading into my life in the past was sometimes difficult, especially when trying to keep the important people in my life happy but with a four hour chart I manage it. For some people trading may seem like a daunting idea, especially if you already have a fulltime job and you are not in a position financially to give it all up to become the ultimate day trader. If all this sounds far too familiar then keep reading to learn why I claim that the 4 hour chart is best chart out there. Trading can be very time consuming, lots of people choose to try and trade daily charts or even weekly charts. But this can feel like you are waiting forever for charts to line up. You may have to wait days or even weeks between moves, this will just add to your frustration. My average Day to Day Schedule using 4 hour Forex charts. The best thing about the 4 hour forex currency charts, is the fact that it fits my lifestyle perfectly. This is how my trading works on a day to day basis and the reason why more recently I have started to trade Forex over Stocks using a 4 hour chart, I do still keep my eye on a few stocks and for that I use a daily time frame. 07:00 am: I wake up, I switch on my trading computer and load up TradeStation. I check all of my open positions and spend approximately 10 minutes seeing what the markets are up to. 07:30 am: I shower and get ready for work, some days I even hit the gym first. I check my twitter and news feed on the way to the office, this gives me an idea of the general market news for the day and what people are talking about.

09:30 am: I get to my desk about 9:30am. I check my charts and start to look at the hundreds of emails I receive each day, I start working on my various projects. 01:00 pm: I take lunch and get back to my desk for 2:00pm. 02:00 pm: Naturally I check my charts again. This is the same process all day, I manage my stops and positions, I look to see what is setting up and I enter any trades that meet my entry criteria. I carry on working on my projects for the rest of the afternoon. 05:30 pm: I start wrapping things up for the day, and you guessed it… I check the charts just before I leave work, by the time I get home and have some dinner, see my daughter and partner it will be coming up to 8:00pm. 08:00 pm: I spend a good hour doing some research and analysis, looking at new ideas and looking to see what is lining up for the next trading day. I check all of my positions and then I try to relax for the rest of the evening. I take one last glance just before bed which is usually around about 11pm. So you can see how with 4 hour Forex charts I literally never miss a bar. I prefer the 4 hour chart because it is so much faster than a daily chart.

Best of all I can live my life without being glued to the charts 247. I literally see each bar as the day progresses. It allows me to open and close my positions when the opportunity to enter or exit arises and I still manage to get everything else done too. If my life-style sounds a little bit like your life-style and you’re wondering how an earth you can squeeze trading time into your already busy schedule then have a look at the 4 hour chart and see if it can work for you too. If you use 4 hour Forex charts , post me a comment I would love to hear from you. Profitable Forex Strategy Using 4 Hour Charts. Here’s my profitable Forex strategy that I use consistently. I found this from a forum years ago with great documentation and simply applied it. It’s probably one of the most effective strategies around in my opinion and it’s completely documented with PDF’s. Before I explain this, there’s a 20 page PDF you can download below that will explain in detail on how to analyze the trends. I’ve been trading Forex now for almost 5 years and believe me I’ve had my fair share of ups and downs. I’ve tried many systems, indicators, robots and managed accounts. It’s taken me this time to customize a winning system with using my own trading strategy that has now enabled me to become a profitable trader. I found this strategy from another trader and there was great documentation on it. I simply analyzed it, applied it and I’ve been very succseful with it. I am going to explain a very simple system here in detail and hopefully you too can apply what I teach. Keep in mind, I do use Forex robots as well, but only to validate trades and compare to my own personal trading system. One of these systems that I recommend is Forex Trendy by far. It is the best trend scanner available for an affordable price. Now for the system that I use in conjunction with my trading robot. Grab a 4 hour chart and place the following indicators. A 89 simple MA, 21 exponential moving average and a 200 simple MA. The pair I favor the most and trade this system on is the EURUSD pair. I love this pair bc it doesn’t move too fast, it trends consistently and it seems to be the most predictable.

Not to mention over the years I’ve noticed this pair seems to bounce off of .80 and .30 a lot. For example, there’s always a good chance price will bounce off of 1.2730 or 1.2780. I am not saying it does it all the time, but these are good barriers in a lot of cases. Simply put this system is based off of the pair pushing through the 89 SMA then pulling back to the 21 exponential moving average and trading with the trend. However, MACD is used to confirm the trading signals. I’ve attached a PDF below that details how I trade this setup step by step. I must say it’s extremely effective and it does take some practice. Download The Ebook Download Now. 4 Hour Forex Trend Following Strategy With Moving Average. Here’s a great versatile trading strategy that can be used to buy and sell trend reversals or to buy dips in an established up trend or sell rallies in an established down trend. Chart Setup. Indicators: 200 Period Exponential Moving Average, MAAngle with default settings Preferred time frame(s): 4 Hour Trading sessions: Any Preferred Currency pairs: Majors + Currency Crosses. Download. 4H EURUSD Chart: How to enter a trade?

As the above chart illustrates, go short at the open of the next bar when the price trades below the 200 EMA and MAAangle indicator bar color brown. On the contrary, go long at the open of the next bar when the price trades above the 200 EMA and MAAngle bar color green. In an established up trend, go long when the MAAangle bar color changes from yellow or brown to GREEN (buy dips). In an established down trend, go short when the MAAangle bar color changes from yellow or green to BROWN (sell rallies). See trading example below for better understanding of the trading concept. Click the chart to enlarge. Trading Rules. Buy Rules: Price above the 200 period moving average Wait for the MAAngle to change from brown or yellow to GREEN color. Execute long trade! Place stop loss below the previous swing long or 1 pip below the 200 EMA. Price objective: Risk X 1.5 or better (i. e risking 50 pips to make 75 pips) Alternative take profit method: Take profit at the previous swing high level (resistance). Sell Rules: Price below the 200 period moving average Wait for the MAAngle to change from green or yellow to BROWN color. Execute short trade! Place stop loss above the previous swing high or 1 pip above the 200 EMA. Price objective: Risk X 1.5 or better (i. e risking 80 pips to make 120 pips) Alternative take profit method: Take profit at the previous swing low level (support).

What Are The Best Chart Time Frames To Trade ? As price action traders, we primarily study charts and price bars, and the price bars in each time frame show us the ‘emotion’ of price for that specific period of time. Whether it’s a 1 hour, 4 hour or daily chart, each price bar on the chart shows the ‘emotion’ and sentiment for the period of time it reflects. For example, on a 1 hour chart we will be able to see the emotion and feeling of the market over the last hour by looking at the last price bar on that chart. That said, a 1 hour chart or a 4 hour chart is going to show us a lot more data, emotion and insight into the market than a 5 minute chart will, would you agree? Would you also agree that the daily chart will show us even more emotion than a 1 hour chart or 4 hour chart? Today, I’m not just going to tell you what time frame to trade, but I’m going to explain to you why time frames influence the signal you’re trading, stop placement on a trade and the chances of winning and losing a trade. The implications of these points are profound, yet they are often over-looked or ignored by day-traders and scalpers. I am going to show you some evidence of why you need to take this stuff seriously and turn off your low time frame charts once and for all. The connection between time and trustworthiness of a relationship.

Think of the market like a personal relationship between two people; the longer you’ve known someone, the more you know whether or not you can trust them, right? If someone shows you they are a trustworthy person over time then you will probably trust them, however, if a person lies a lot you may actually trust them less as you get to know them…but the point is that until you’ve spent time getting to know a person, you really can’t make any judgments about them, one way or the other. To give you a more specific example; when you meet someone for the first time, can you really get a good feel for their personality and character in just 5 minutes of talking to them? Or would it take a full day of conversation to get a more accurate feel for their personality and overall mood? The longer you’ve known someone, the better “feel” you have for who they really are. It’s really very similar in trading; the more you study higher time frame charts like the 4 hour and daily, the better ‘feel’ you develop for the market because you are getting to know more about it and you can see the “bigger picture” a lot easier than you can on smaller time frames. The higher time frames carry more weight because they display more data and show more time than a smaller time frame does. If you are just studying 5 minute or 15 minute charts all the time, you are missing out on the bigger, more significant picture of the market. You’ve probably witnessed this with a long-time friend; you can almost figure out how they will react in any situation…whereas with a complete stranger whom you’ve known for only 5 or 10 minutes, this would almost be impossible; it’s obviously because you’ve had more time to study and learn about your friend.

Let’s look at a chart example of how a 5 minute chart really does not tell you much about the “bigger picture” of a market. Below, we see the 5 minute USDJPY chart, and from this data we really cannot tell if the overall trend is up or down, as the market appears to just be ebbing and flowing very quickly and without much underlying or consistent sentiment: Next, let’s compare that 5 minute chart above to a daily chart time frame of the same market; USDJPY. From the chart below, even a 6 year old can tell that overall price is moving up; there’s an uptrend underway. Due to the simple fact that you are getting to know more about the market from looking at more data, you are learning some very very important things about it (that the trend is up!) that you cannot tell from just looking at the 5 minute chart. Another example; if you are traveling and you stay in a town you’ve never been in before for one week, and it rained the whole week, would you tell everyone it “rains a lot in that town”? Or would you agree that you really need to stay in that town for longer and observe its longer-term weather patterns to make such a judgment? Most of us would agree that you need more than one week’s data to judge a town’s overall weather pattern…in other words, a week inside of a year is basically just noise. You can’t make an assumption about a town’s weather pattern unless you look over a longer period of time. Similarly, it’s nearly impossible to read a market’s underlying sentiment without analyzing higher time frame charts. Longer time periods = more data = more evidence proof. Why lower time frames are “noise” Simply comparing a 5 minute chart to a 1 hour chart will show you how many more failed signals there are on lower time frames. The underlying reason as to why lower time frames (I consider anything under a 1 hour chart to be a “low time frame”) have more failed signals than their higher time frame counter parts, is because there will be a lot more meaningless price movement on a 5 minute chart than on a 1 hour. For example, if you were to just look at one price bar on a 1 hour chart, you would not see all the 5 minute incremental movements that made up that 1 hour period….you would instead see the collective picture of all those 5 minute movements.

You simply are not going to get a very strong directional movement out of a 5 minute or 15 minute chart signal, instead, you will get a lot of little meaningless movements. You’ll get a much stronger directional movement out of a 1 hour signal and even more out of a 4 hour signal and yet more out of a daily chart signal. You can expect more movement from a signal the higher up in time frame you go. In the chart below, we are looking at some recent price action on the 5 minute EURUSD chart. You can see that there were a lot more pin bar signals that probably would have been losing trades than there were winning trades. This demonstrates clearly the fact that whilst there are more signals on lower time frames…more signals does not equal more money, in fact it usually means more losing trades and lost money. Next, let’s look at the price action that occurred on the 1 hour EURUSD chart around the same time as the 5 minute image above. The first thing you should immediately notice is that there were a lot less losing trades and a lot more winning trades. It’s because there were less false-signals on the 1 hour chart since the 1 hour chart filters out a lot of that “noise” on the 5 minute chart. Market noise and daily ranges. Markets move in statistical average ranges each day; meaning there’s a certain average range that the market is probably going to move within on any given day. These average ranges will change over time as markets become more or less volatile, but you need to be aware how they affect your trades. The thing about these average ranges that many day traders and scalpers are seemingly unaware of, is that if you’re trading a small time frame and you place a stop loss on that small time frame, the chances that you will get stopped out simply because your stop is within the average statistical range of the higher time frame, are quite high. If you’re trading a higher time frame, your stop loss is likely to be outside of the average daily range of the market so you are unlikely to get stopped out from the random intra-day market noise that occurs each day. Now, that’s not to say I want you guys to place wider stops, I’m telling you to be aware that stop loss placement is a big factor in your success or failure as a trader and you need to be aware how time frames affect stop loss placement. It’s pretty obvious that if your stop loss is close to the current market price, as it is on lower-time frame trades, it’s more likely to get hit than if you’re trading the higher time frames. Small time frames demand a lot of attention.

Would you like to check the market every 5 minutes or every 4 hours? The higher the time frame, the less you have to check the markets. If you are like most people, you probably have a full-time job or full-time school, or maybe even both; most people simply don’t have the time to sit at their computers all day trying to trade a 5 minute chart. It’s also a lot more stressful, so it really just makes no sense to try and ‘force’ money out of the market by scalping or day-trading. I am a huge proponent of ‘letting the trades come to me’. Meaning, I check the markets two or three times a day and look for obvious signals, primarily on the daily and 4 hour charts, and if nothing meets my criteria for a trade setup, I don’t trade…I go do something else instead. I don’t sit there ruminating over the market all day wishing and hoping for a trade like many beginning and struggling traders do. I really do not care if I am in the market or not on any given day, and this is the attitude and trading mindset that you need if you want to trade completely devoid of emotional attachment to the market. My point is simply this; focusing on higher time frames is much better for busy professionals as well as for people who don’t want to have the stress of being glued to their charts all day. It also allows you to employ my crocodile trading method which is a cornerstone of my overall trading theory and strategy. Small time frames elicit over-trading. “Over-trading”, also known as trading when no obvious signal is present, or taking “stupid” trades, or “gambling”, is something I have discussed quite a bit in other articles, so I won’t get into it too much today. However, I will say that trading low time frames like the 5 minute and 15 minute charts, etc. is one of the biggest reasons why traders trade too frequently. The longer you park your ‘bottom’ in your computer chair watching the 5 minute chart tick up and down, the greater the chance you will rationalize a reason to be in the market. If you sit there staring at a 5 minute chart all day, the odds of you actually not entering a trade are extremely low. As humans, we struggle with self-control and self-discipline, especially when we put ourselves directly in the realm of temptation, like when trading low time frames. However, one area that we are lucky in as humans, is that we can plan ahead and avoid temptation altogether if we put our minds to it. Just as not buying junk food at the supermarket is the easiest way to avoid eating it…not immersing yourself in low time frame charts is the best way to avoid the temptation to constantly be in the market. I obviously cannot speak for everyone in the trading world, but the traders who contact me on a regular basis about struggling in the market and blowing out their accounts, are typically the ones who trade the lower time frames…

that has to say something right? From these experiences that I’ve had with other traders over the years, it’s pretty safe to say that ‘social evidence’ suggests that a main cause of failure in the market is trading low time frame charts. However, don’t take my word for it, last year we had over 15,000 emails hit our inbox, and I can comfortably say that the majority of the struggling traders I’ve helped were trying to trade small time frames. Thus, YOU should do something different…don’t be like the masses of failing traders who are constantly searching for trades on the low time frame charts. Have patience, trade only the higher time frames (1hr, 4hr, daily time frames are my favorites) and see if your trading doesn’t just slowly but steadily improve. If you want to learn more about higher time frame trading and how it can improve your trading results by filtering out meaningless market ‘noise’ and allowing you to see the ‘bigger picture’ of the market, checkout my Price action trading course. Profitable Forex Strategy Using 4 Hour Charts. Here’s my profitable Forex strategy that I use consistently. I found this from a forum years ago with great documentation and simply applied it. It’s probably one of the most effective strategies around in my opinion and it’s completely documented with PDF’s. Before I explain this, there’s a 20 page PDF you can download below that will explain in detail on how to analyze the trends.

I’ve been trading Forex now for almost 5 years and believe me I’ve had my fair share of ups and downs. I’ve tried many systems, indicators, robots and managed accounts. It’s taken me this time to customize a winning system with using my own trading strategy that has now enabled me to become a profitable trader. I found this strategy from another trader and there was great documentation on it. I simply analyzed it, applied it and I’ve been very succseful with it. I am going to explain a very simple system here in detail and hopefully you too can apply what I teach. Keep in mind, I do use Forex robots as well, but only to validate trades and compare to my own personal trading system. One of these systems that I recommend is Forex Trendy by far. It is the best trend scanner available for an affordable price. Now for the system that I use in conjunction with my trading robot. Grab a 4 hour chart and place the following indicators. A 89 simple MA, 21 exponential moving average and a 200 simple MA. The pair I favor the most and trade this system on is the EURUSD pair. I love this pair bc it doesn’t move too fast, it trends consistently and it seems to be the most predictable. Not to mention over the years I’ve noticed this pair seems to bounce off of .80 and .30 a lot. For example, there’s always a good chance price will bounce off of 1.2730 or 1.2780. I am not saying it does it all the time, but these are good barriers in a lot of cases. Simply put this system is based off of the pair pushing through the 89 SMA then pulling back to the 21 exponential moving average and trading with the trend.

However, MACD is used to confirm the trading signals. I’ve attached a PDF below that details how I trade this setup step by step. I must say it’s extremely effective and it does take some practice. Download The Ebook Download Now. 4 hr chart is the best in forex. There is a common wisdom that all traders will sooner or later come to the conclusion that the optimal timeframe for online trading is one day and more. However, it is difficult to say is it true or not, because basically the difference between timeframes is determined rather by the size of the deposit and the free time which trader has. There is, of course, the presence of the so-called "noise" movements at the less than one day intervals, but fractal analysis settles this problem as well by applying mathematical calculation for all hardly predictable price movements. Nevertheless, Forex trading systems in the interval less than a day make not a daily profit for many traders only, but also the perfect combination of energy spent and the income which was made. I would like to show you an example of a simple trading strategy which uses two indicators only. This is a simple one hour Forex strategy. The graph shows the principle of work with the EUR USD pair on the hourly time interval. Two indicators are used here. The first one is the Relative Strength Index with a parameter 13, and the second one is a simple moving with a parameter 13 and the shift by three candles. The principle is simple. The most important here is not wait the moment when the RSI shows overbought or oversold levels. Only after this indicator signal you can expect moving signal.

This signal indicates a situation when a simple moving average meets the price graph from the bottom with the upward movement and from the top in a downward motion of the price graph. Stop-losses can be placed according to the wish of the trader, but within the last minimum or maximum. This one hour Forex strategy is distinctive because of the fact that, in parallel with standard signals, it often shows divergence - convergence signals. You can add another indicator to this chart, it is better to say another moving. If you add MA with parameters 21 and shift 5 to this chart you will get the opportunity for long orders. Furthermore, this one hour forex strategy gives us another signal that is an intersection of two moving averages, and it provides us with an opportunity to weed out the wrong signal for the closing order. So, the order is closed not when the price graph meets the MA13, but when the price graph crosses the MA21. However, we should note the nuance of this trading strategy that is a large number of false alarms. To do this, you just need to adjust the parameters of the basic indicator of the trading strategy. The picture shows the Relative Strength Index with the parameter 13. If you set, let’s say, the parameter 21, then the number of indicators’ signals will be reduced significantly, but at the same time the false signals will be reduced as well. In general , the trader decides which parameters to use. Another one hour forex strategy is described further. It is based on a single indicator, which is called Bollinger Bands, or Bollinger Band line.

This indicator allows you to work in a sideways motion, and in long positions as well. However, due to its interpretation and changes in the parameters, the Bollinger Bands indicator remains the difficult one for many traders. But here we will explain its signals in a simple way. So, the parameters are: a period 20, shift 3. The rebound from the top and from the bottom line of Bollinger Band is a signal for the orders opening. Thus, the trade is conducted within the channel of price movement. The middle line is used as a simple moving and defines the main trend direction. Furthermore, two significant signal should be noted. The first one is when the price does beyond the upper or lower Bollinger Bands. This situation indicates that the movement will continue. The second signal is a strong narrowing of the canal. The example is shown on the picture below. In this case, you should pay attention to the situation when the middle line meets the price graph, because it is a strong signal for opening of the order.

Thus, using the one hour interval on the Bollinger Bands line you can achieve the high accuracy of the price trend forecast. To draw a conclusion, we can say that the one hour Forex strategy can be made on the basis of almost any indicator, and the combination of any of them can be applied. The most important rule here is a strict adherence to the established strategy, regardless of its components. Source: Dewinforex. Learn Forex: Three Simple Strategies for Trading MACD. by James Stanley , Currency Strategist. Price action and Macro. Your Forecast Is Headed to Your Inbox. But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk. Your demo is preloaded with ?10,000 virtual funds , which you can use to trade over 10,000 live global markets. We'll email you login details shortly.

You are subscribed to James Stanley. You can manage you subscriptions by following the link in the footer of each email you will receive. An error occurred submitting your form. Please try again later. In our previous article, Trading with MACD , we saw that this utilitarian indicator can help a trader see quite a bit of information - including the possibility of noticing trend changes at a very early stage of a currency pair’s move. Unfortunately, one of the drawbacks of the indicator using default input settings is that many of the signals that are generated may not work out the way the trader wants. So while this can be a valuable indicator, it is necessary to enhance the strategy or approach with additional means of determining which signals to take and which to avoid. In this article, we are going to look at 3 different ways that traders can look to utilize the MACD indicator based on the market condition they are looking to trade. Traders looking to trade trends with MACD may feel very ‘at-home’ with the indicator, as MACD is generally utilized as a mechanism to enter into trending situations. Traders can look to filter trends with the 200 period moving average, and taking trades only in the direction of the trend. So - when price is above the 200 period Moving Average - traders are only looking to buy on bullish MACD crossovers of the Signal Line. The chart below will illustrate further: Created with MarketscopeTrading Station II. This strategy can be utilized on any timeframe longer than the hourly chart. Charts of shorter time periods may prove too ‘lagging’ for many short-term traders’ tastes. Both indicators are built and traded from the same time frame, so no additional work outside of adding the indicators is required of the trader.

Strategy Tools: 200 Day Moving Average, MACD with (12, 26, and 9 inputs) Entry Criteria: Take MACD Signals ONLY in the direction of the general trend, as graded by the 200 period Moving Average. Exit Criteria: Contra-cross of MACD OR price Crossing the 200 period Moving Average. (So if trader had taken a long entry with a MACD Buy signal - they would exit the position on either a MACD Sell signal OR price crossing below the 200 period Moving Average.) The Ranging Swing Trader. The next strategy isn’t as flexible as the first in the fact that it is specifically built for the 1 hour charts, with some assistance from the 4 hour chart (although the 4 hour chart specifically will not be used.) But just because multiple time frames are utilized by the trader, it doesn’t mean that the entirety of the trader’s analysis cannot be done on the same chart time frame. In this strategy, the trader wants to first grade for ranging market conditions, and this can be done with the ADX indicator. Traders can use an hourly chart, and build the ADX indicator based on the 4 hour chart simply by clicking the ‘Data Source’ tab in the indicator’s properties boxes on Trading Station II (shown below). Created with MarketscopeTrading Station II. After applying ADX built on values from the 4 hour chart, traders can add a line to the indicator with the horizontal line tool at the value of ’30.’ This is the filter for the strategy. If ADX is greater than 30 - then traders do not look to trade this range-based strategy as prevailing trends may be too strong for cogent entries. If, however, ADX is below 30 - then traders can look to take each and every MACD signal that generates from the indicator. Created with MarketscopeTrading Station II. Strategy Tools: Hourly chart with MACD applied, ADX based on the 4 hour chart. Entry Criteria: Take MACD Signals ONLY when 4 hour ADX reads below 30. Exit Criteria: Stops and Limits with Limits being set at 2 times the stop amount.

Stops and Limits can be obtained by using the 4 hour Average True Range amount. While being one of the most difficult market conditions to trade (since it is nearly impossible to predict when a reversal of price may actually take place), trading Reversals is also one of the most attractive to retail traders. With one look at the SSI, and noticing the penchant that many retail traders have for attempting to call tops or bottoms helps illustrate this. Reversals can bring big moves to the trader. They can also bring big losses. Which is precisely why it is so important to use strict risk management when trading in these conditions; and traders should be ready to cut their losses quickly the reversal proves unlikely. In the article, How to Trade MACD Divergence , Walker England shows exactly how this can be done. The picture below will illustrate a classic case of Bullish Divergence. In this instance, notice that price has went on to make a ‘lower-low,’ while MACD has printed a ‘higher-low.’ Taken from How to Trade MACD Divergence , by Walker England. Notice that while prices were in the process of printing a new low, the higher low established by RSI illustrates ‘divergence.’ This, in-and-of-itself is often used by traders to trigger entries in reversal markets.

Traders will wait for the crossover of the MACD and Signal line, and look to enter the trade with the ‘higher-crossover.’ The illustration below will show the exact point with which traders would look to enter, using the same chart we investigated previously. Created with MarketscopeTrading Station II. Strategy Tools: Any time frame chart with MACD applied (default inputs of 12,26, and 9) Entry Criteria: Take MACD Signals when Divergence is present. Exit Criteria: Stops and Limits with Limits being set AT LEAST 2 times the amount of the stop. Stop should be set to the low of the move (with Bullish Divergence) or the high of the move (with Bearish Divergence). Traders may also incorporate a trailing stop, as shown in Trading Trends by Trailing Stops with Price Swings , by incorporating price action into the trade management. --- Written by James B. Stanley. You can follow James on Twitter @JStanleyFX. To join James Stanley’s distribution list, please click here. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. Volatility-Based 4-Hour Forex Strategy. Introduction to the 4-Hour Forex Strategy. The forex strategy described is a trend following strategy designed to allow traders to follow an existing trend with confirmation of the volatility on the asset as well as the momentum of the asset move. This strategy is known as the Volatility-based 4hr strategy. This strategy is traded on all currency pairs, but purely on the 4hr time frame.

Indicators The indicators for this strategy are as follows: 100-period exponential moving average applied to close (change colour to red to improve visualization). MACD coloured histogram. Volatility meter indicator. The parameters for the indicator should be reset as follows: vis_atr 13 vis_std: 26 sed_atr: 37 sed_std: 100 threshold level: 1.3 lag_suppressor: true. The essence of using the volatility indicator is to ensure that trades are only taken when there is enough volatility to support a trend. Trend following strategies have a tendency to get caught in trends once in a while, so it is important to avoid trading at these times. This is what the volatility indicator is all about. It is a custom indicator which can be downloaded here. After download, make sure you unzip the files, then attach the indicators to the Indicators folder under the MQL4 folder of your MT4 client. This can be done by clicking File -> Open Data Folder on your MT4 client, then clicking MQL4 -> Indicators. Copy and paste the indicator files here, then restart your MT4 platform to view the Indicators in the Custom indicator folder. The Strategy.

The strategy is a trend-following strategy. The job of the 100-period exponential moving averages is to act as support or resistance to the price action. This is because the basis of the trade entry is when price breaks out of the 100EMA in a particular direction. But there comes a time when price will attempt to retrace to where it just came from, and will be rejected or will bounce at the 100EMA line. So the 100EMA gives the trade signal, while the coloured MACD indicator gives confirmation to the entry. The volatility meter will tell you if there is enough volatility to push a trend in the first place. 1) Long Trade The Long trade setup occurs when: The price action breaks above the 100EMA line and pulls back a little to it. It is preferable if the price action is coming from below the 100EMA, has tested that level several times without success but eventually breaks it. At the same time, the coloured MACD indicator shows a blue colour. The volatility indicator shows TRADE. (if it shows “No Trade”, that means that there is no volatility and the market will be range-bound, defeating the trade). The long trade is then executed at the next candlestick’s opening price. We demonstrate this trade setup in the snapshot below: Here we can clearly see that the 100EMA was a firm resistance which price could not break much earlier. Eventually the breakout occurred with a slight pullback to the 100EMA. Now acting as a support, the 100EMA will serve as the area where the Long trade is initiated.

Stop Loss. The stop loss is set at a few pips below the 100EMA line, since it will now act as a support. Take Profit. The Take Profit is not set at trade entry. Rather, the trade is closed manually in profit when the MACD coloured indicator changes to the reverse colour, red. Short Trade The Short trade setup occurs when: The price action is coming from above and breaks the 100EMA line, then pulls back a little to this line which will now act as resistance. At the same time, the coloured MACD indicator is red in colour. The volatility indicator gives the “TRADE” signal as shown in the blue box at the left side of the chart. The short trade is then executed at the next candlestick’s opening price. We demonstrate this trade setup in the snapshot below: The snapshot shows the price breaking below the 100EMA, taking a slight pullback up and taking off from the 100EMA line straight down to the exit area. Stop Loss The stop loss is set to a few pips above the 100EMA line. Take Profit. The Take Profit level is left open.

Rather the trade is closed manually in profit when the reverse colour of the MACD indicator appears on the chart, which is the blue colour. Conclusion. This strategy performs very well in a trending market, and not at all in a range-bound market. Therefore, the volatility meter indicator serves to give a “TRADE” signal when there is enough volatility to form a trend on the 4-hour chart, and a “DO NOT TRADE” indicator when there is no volatility to push any trade into profit levels. This strategy should be thoroughly practiced on a demo account before being applied to a live account. Download the indicators and place them as well as the template file in the appropriate folders before restarting your MT4 platform. The template file ensures you get the indicators attached, with the colours set to those which can be visualized very easily.



Articles:

  • 4 hr chart is the best in forex