Here is a short clarification of considered one of my prime Three favourite foreign currency trading methods. All it entails is a 1 hour bar chart and observing value motion on the GBP/USD. I name it the “4 hour Sterling Strategy”.
This is what you do:
1. Open up a primary 1 Hour bar chart for the GBP/USD.
2. Observe the GBP/USD for a minimum of Four consecutive hours of tight-range consolidation. By “tight-range consolidation” I imply that the vary all through the Four hours could be very effectively outlined, normally with not more than 50 to 70 pips within the vary (quick bars).You don’t must wait and watch by the pc your complete time. You are anticipating Four consecutive hours of tight-range consolidation on the chart. So you possibly can test in each few hour to see if a arrange could also be coming.
3. When you establish Four consecutive hours of tight consolidation, you’ll proceed to observe extra often as you’ll look ahead to a breakout of that vary.
4. If the worth goes 7 pips above the higher vary value, then go LONG. If value strikes 7 pips beneath the bottom worth of the vary, then go SHORT. Remember to regulate in your unfold. I normally wait till it goes 10 pips above or beneath to ensure I’ve factored within the unfold (plus an additional pip for good luck!)
5. Set your cease loss at 30 pips and your take revenue at 70 pips. OR, set your cease loss at 30 and monitor the commerce and take your revenue manually.
Of course, the GBP/USD is infamous for being a very energetic foreign money pair. So the very best time to seek out Four hours of tight consolidation is in the course of the US afternoon or in the course of the Asian session.
Paper commerce or demo commerce this technique for awhile, and you’ll doubtless agree that this straightforward technique actually works!
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