Forex: The 200 SMA Forex Day Trading Strategy

200 SMA Forex Day Trading Strategy

Using multiple timeframe currency analysis will enable you to dramatically increase the odds in your favor. The 200 SMA forex day trading strategy is made up of 3 different timeframe's, the 4 hour, 1 hour and 15 min chart. In this particular strategy, both the 4 hour chart and 1 hour chart are used to track the overall trend in the market. The 15 min chart is primarily used to determine the exact entry, exit and the stop loss. Once the 15 min chart trades in agreement with the 4 hour and 1 hour forex trends then you can enter a forex trade.

Trading Setup

Currency Pairs: Any

Used Timeframe's: 4 Hour, 1 Hour and 15 Min

Used Indicators: 200 Simple Moving Average (SMA200), 5 Exponential Moving Average (5EMA)

Trading Hours: EURO and US Session

How the 200 SMA Forex Strategy works

1. Determine the overall trend on both the 4 hour chart and 1 hour chart.

Buy Trend: When the 5EMA crosses the 200 SMA upwards.

Sell Trend: When the 5EMA crosses the 200SMA downwards.

4 Hour trend Hourly Trend  Overall Trend

4 Hour Trend	Hourly Trend	Overall Trend
Up	Up	Buy Trend
Down	Down	Sell Trend
Up	Down	No Trend
Down	Up	No trend

2. Trading rules to go long

> Market is in Buy Trend.

> Enter long when 5EMA crosses 200 SMA upwards on the 15 min chart.

> Place your stop loss 1 pip behind the low of the most recent support level.

> Profit Target: Use risk to reward ratio 1:2 (PT should be at least 50 pips).

3. Trading rules to go short

> Market is in Sell Trend.

> Enter short when 5EMA crosses 200 SMA from above on the 15 min chart.

> Place your stop loss 1 pip behind the high of the most recent resistance level.

> Profit Target: Use risk to reward ratio 1:2 (PT should be at least 50 pips).

Check out the following short example for better understanding of the 200 SMA forex strategy.

4 Hour chart : On November 8, Euro/Dollar is in Sell Trend

Hourly chart : On November 22, Euro/Dollar is in Sell Trend

15 Min chart : On November 26, Euro/Dollar short trade entry

On November 26, the 5EMA crosses the 200SMA downwards on the 15 min chart. As a result, the Euro/Dollar trades in agreement with both the 4 hour and 1 hour downtrends. We enter short at market

on the close of the bar at 1.3338. Initial stop loss is placed 1 pip behind the most recent resistance level

at 1.3385. Total trading risk on the short trade: 47 pips. Our target is twice the risk taken or at least 50

pips: 47 pips x 2 = 94 pips at 1.3244.

Hope you enjoy the system.