In the current topsy turvey currency markets it is difficult to know which forex strategies are most likely to work or not.  The experienced forex trader has a number of different currency trading strategies he or she will follow. Often the best plan is to simply walk away until the markets resume a tradeable trend.

I have 3 or 4 fx strategies that I have found that enable me to continue trading through the different market phases. All markets go through cycles. January to mid march I made more than 3000 pips from my own 4 hour system. Suddenly mid to late march the markets changed and it became unreliable and then un-tradeable.

I then went back to a simple 15 minute strategy that i have had success with in the past. I really don’t like trading 15 minute charts and yet April 2009 was my best month ever in my 5 year forex career. I made over 1800 pips, many of the trades posted live on twitter. Like to know the strategy ?  Send no money now ! This forex winning system is free, on the house;

Asian Break out forex strategy

Most forex strategies revolve around support and resistance. Price either bounces off previous areas or breaks through. Fx traders are looking at these areas to see how price reacts and look for clues as to where the price is going next.

This can be on any fx chart; 5 minute through to weekly. There are numerous examples of this here on the blog, mainly referring to trades on 4 hour charts (my preferred time frame).

This strategy that I am going to show you is very simple and relies upon the asian (tokyo) session being relatively quiet (it is most of the time). The price of a pair often bounces between 2 horizontal lines, above and below price;

$/chf trapped between 2 horizontal lines during asian session

As you can see in the diagram above the chf has been trapped in a tight (30 pip) overnight range. The average daily move on the chf in the last few months has been 150 pips. Therefore it is reasonable to assume that at some point (London forex market open or just before is the normal time) the price of this pair is going to set off up or down for a possible 120 pips.

The London open or the hour before is usually the catalyst for this movement. What we need to lok for is a break through one of these trend lines AND A PULLBACK. Eight times out of ten, price will break through this overnight range and then pullback inside. If you dive in at the 1st sign of a break you will lose nearly every time. I have been there, believe me !

Entry is critical on this type of trade. Where you enter depends on your risk tolerance. Under normal circumstances I would take the trade from the pullback to the 34/55 exponential moving averages (the top arrow in the following diagram). If you are new to these emas, check out the free forex lessons on the main site www.forex-fxtrader.com)

The beauty of entering here is that you would only need to place your stop 15 pips away (just above the asian overnight high). Therefore you have a risk reward of 15 pips to gain a potential 120 !

Swiss France breaks out of overnight asian range

However, the reason i used this particular example is that price throughout the night failed to break the (green) 200 ema.

I never take a break out trade that is near to the 200ema.

So on this occasion I would need to look for entry after the break of the 200ema.

Either a pullback, which is my preferred entry or a move 5 pips below the closed candle that did break the 200ema ie the 2nd arrow on the chart.

Again the risk reward is excellent. I would place my stop 20 pips away – just above the 34/55 emas with a potential gain of 100+ pips.

This particular break out moved 200+ pips in total. Unfortunately I wasn’t trading and missed it.

There are lots of other rules and variations to the above. I will update this article at a later date. however those of you who have joined the traders secret library have access to an article there that goes into much greater detail.

Go to the trading techniques page (there are over a 100 techniques on this awesome site), click on range break outs. The gentleman is a more conservative trade than I am, but he gives you much more rules and a more detailed strategy there.

The traders secret library/Surefire challenge is one of the few forex products that I recommend. This site is, in my opinion, the best forex educational site on the internet. If you haven’t  seen it before (the sales page is too “hyped” for me and nearly put me off joining, but I am glad that i did). click on the link below;

Traders Secret Library/Surefire Challenge

Want more of this? See these posts: