Best Forex Trading Strategy For Beginners - How To Find Entry And Exit Points
If you're looking for the best forex trading strategy for beginners and struggling intermediate forex traders, then look no further. In this video I'm going to share with you the modified version of the simple yet, powerful forex trading strategy which I used to earn a 35% return on investment through trading the forex markets in less than three months. And make sure to stick around to the end of this video because I'm going to be giving away free access to our profitable forex trading blueprint and video crash course, which is going to show you exactly how to start making money through forex trading working for just four hours a week or maybe even less than that, on semi-autopilot. By the end of this video, you'll know exactly how to find entry and exit points for some super low risk, high probability, forex trade setups just like the ones you're seeing on my screen right now, using our simple trend-following, forex trading strategy.
So keep watching. [Music] Hello there and welcome to another video my name is Anas Abba and I'm a forex trading coach over at FXMindTrix Academy, where we teach forex traders just like you exactly how to become consistently profitable forex traders, using simple and easy to follow forex trading techniques. If this is your first time here and you'd like to learn how to become a consistently profitable forex trader, start now, by clicking on the subscribe button and hitting the bell icon, so that you'll get notified every time we publish amazing new content such as the one you're watching right now. Now with that out of the way, let's jump right into the meat and potatoes of this video, shall we? The forex trading strategy which you're going to learn in this video is made up of five simple steps. The first step in the strategy's low risk, high probability trade setup identification process, is 'Trend identification'. The second step is 'Trend Confirmation', and right after that we've got the third step, which is 'Trade-Entry Determination'. The
fourth step, is 'Stop-Loss identification' and last but not least, the fifth step, is 'Profit Target Determination'. But in order to find profitable trade entry and exit points using the trend-following, forex trading strategy which I'm about to share with you in this video, we're first going to need to setup our price charts with the technical indicators which are going to help us to do just that. So let's go ahead and do that now. Okay, so as you can see on the screen, I'm currently inside MetaTrader and the first three technical indicators which we are going to be adding to our price charts are going to be 60 period simple moving averages applied to prices' high, low and close. So let's go ahead and do that okay. Click on the 'Insert' tab in the Navigation Menu and then hover your mouse's cursor over the 'Indicators' tab and under the trend category of technical indicators select the 'Moving Average'. In this field
where it says 'Period' you want to select, you want to type in '60', okay. And then under the 'MA Method' drop down menu you want to select 'Simple'. Under the 'Apply To' tab, you want to select 'Close', okay. And then in this colors,
in the color palette, you want to select the color 'Red' or you could color it whatever color you want but I'm going with 'Red' for now, okay. So I'm going to be selecting a thick line here, the third line in this drop down menu to make this line stand out, this 'Moving Average' to make it stand out okay. And once I'm done with all of this I'm going to click on the 'OK' button. And that's it. You see, we have our first 60-period, simple moving average which is applied to prices' 'Close'. Okay, now we're going to do the same thing one more time. Actually, we're going to be
doing it twice, but let's go on with the second time now. Click 'insert', hover your mouse's cursor over the 'indicators' tab. Under the 'Trend' category of technical indicators select 'Moving Average' again. We're still, we're going to leave this set to 60, the period, we're going to leave it set to 60 but the only difference now is, we're going to be changing this. The 'Apply To', okay.
Under the drop down menu we're going to select 'High' and under the Style's tab, I'm going to be coloring it black. okay. You could go with whatever color you want. Now to make these lines different, okay, this 60 period which we're going to be applying to prices' 'High', to make it stand out from the other line which we added, this 'Red' one, I'm going to be selecting this thin line here and then in the drop down to its left, the left of the line we selected I'm going to be selecting this dotted lines, okay. And once I'm done with this settings, I'm going to click on the 'OK' button okay. And that's it. We have it
again on our charts okay. So this is the 60-period simple moving average applied to prices' 'High'. We're going to do the same thing again. Select 'Insert', 'Indicators', 'Trend' and 'Moving Average' but this time around, it's still the simple moving average but this time around, we're going to be selecting prices' 'Low' okay. And we're going to
leave the settings as is. so this dotted line is going to look like a dotted line again. Click on the 'OK' button and we have our three, 60-period simple moving averages on our price chart. Now, the two more indicators which we are going to be adding are going to be timeframe specific okay.
Let me just show you. it's going to be easier for you to see it. So click on 'Insert', hover your mouse's cursor over the 'Indicators' tab and then, under the 'Trend' category of technical indicators, select the 'Average Directional Movement index' indicator. You want to leave this settings as is, okay. You want to leave the period set to '14' and personally, I'm going to be selecting this, uh, the 'blue' color okay, for this indicator. I'm going to be going with blue.
But here's something I want you to pay attention to. You see, where, under the 'Colors' tab for this indicator's settings, in its dialog box, you see where it says '+DI', you don't want this to, you don't want this to appear on your charts, okay. So what you want to do is, click on the drop down menu for the color palette and then select 'None'. Okay we're not going to be using this particular, uh lines on the indicator that's why we just want them to be uh set to transparent so that we can't even see them on our charts so, the second one '+DI' you want to also select 'None' okay. And under the 'Visualizations' tab what you want to do here is you want to click on 'Add' under the 'Levels' tab sorry, you want to click on 'Add' and then you'd simply type '25' in this bar okay, So this is going to add a horizontal line to the '25' level of the indicator.
This is going to become more apparent and its use is going to become more apparent as we progress through the video okay so, once we're done with this the next, the last thing which we want to do for this indicator is, instead of leaving it to show on all timeframes we want to uncheck this box, okay and we want to select the daily timeframe So the 'ADX' is only going to be shown on the daily timeframe because that's where we're going to be using it okay, so once we're done with all of these settings click on 'OK', the 'OK' button here and voila. You can see that we have our 'ADX' indicator, okay. So the last indicator which we are going to be adding is also timeframe specific just like I told you and that is the, you're going to find the indicator under the 'Bill Williams', tab it's called the 'Fractals' indicator.
Okay, so once you click on your, the 'Insert' tab, on the navigation menu hover your mouse's cursor over the 'Indicators' tab and under the 'Bill Williams' category of technical indicators, click on 'Fractals'. So, we're not going to do much settings here just leave the color to 'Black' and under the 'Visualization' tab we want to uncheck the 'All Timeframes' checkbox and then select the one hour chart because we want this indicator to only be shown on our one hour chart. So once we're done with this setting, click on the ok button. As you can see we can't see the Fractal on this timeframe because we're on the daily timeframe, but look what happens when iclick on the one hour timeframe. Once this chart loads, I'm waiting for it to load now.
it's not showing the fractal indicator so let me switch, let me toggle the timeframes again. ithink I must have done something wrong. Let me select the 'Objects List', sorry 'Indicators List'. And under the Fractal indicator. Okay you see it's set to '15 minutes', we don't want that, we want it set to one hour, okay.
Click on '1 Hour', that's weird. Okay and click close. And now you can see that we have our Fractals indicator on the one hour timeframe. So that's all we want to do for our indicators settings now. This trend following forex trading strategy uses multiple timeframe analysis to identify and confirm the direction of the prevalent trend for any currency pair within the foreign exchange markets.
it also capitalizes on multiple timeframe analysis to find super low risk, high probability, trade entry and exit points, on the lower timeframe charts of whichever forex currency pair you decide to use it to trade with. in the first step of this trend-following, forex trading strategy's low risk, high probability, trade setup identification process, you're going to learn how to determine forex trend direction for any currency pair you wish to analyze within the global spot forex markets. Now, in order to successfully accomplish this task, we're going to be using the daily timeframe of whichever currency pair we wish to trade within the spot forex markets. Whenever price successfully crosses and closes above the three, 60-period simple moving averages on the daily timeframe of any currency pair, we're going to conclude that the overall direction of the trend on that currency pair, is a bullish trend, according to this strategy's rules.
on the flip side, if price crosses and closes below the three, 60-period SMAs on the daily timeframe of the currency pair we wish to trade, we're going to arrive at the conclusion that the direction of the trend on that particular currency pair, is bearish, just like the examples which you are seeing on my screen right now. And that almost brings us to the end of the first step in this forex trading strategy's low risk, high probability forex trade setup identification process. The reason why isay almost is simply because, there's one more thing which we'll need to do before we'll be allowed to move on to confirming the direction of the market's prevalent trend according to the time-tested rules of this proven, trend-following, forex trading strategy, before finally moving on to finding trade-entry and exit levels in the direction of that trend which we could fully take advantage of. And that thing is learning how to filter low risk, high probability forex trade setups from high risk, low probability forex trading setups using the average directional movement index indicator, which is also commonly referred to as the 'ADX'. Doing this, is going to help us to stay away from taking, low probability trading positions during ranging and weak trending market conditions.
You see, whenever there's a strong trend within the markets, the average directional movement indicator is going to show that to us by crossing above the horizontal line which we placed at the '25' level reading of the indicator, during our chat setup process just a while ago. And since we are only looking for low risk, high probability trade-entry and exit points during strong trending market conditions, we're going to completely ignore all of the trend signals on the daily timeframe of the currency pair we wish to trade if the reading on the average directional movement index indicator is below the horizontal line which we placed at the 25 level mark of the indicator's window. in the example which is being displayed on the screen now, you can see that the blue line of the ADX indicator has clearly crossed and closed above the horizontal line which was placed at its 25 level mark, signaling to us that there's a strong trend in the market. And when you look at the price action on the chart above the ADX indicator in this example, you will notice that price also crossed and closed below the three, 60-period simple moving averages, on the daily timeframe of this currency pair when the blue line of the ADX indicator crossed above the horizontal line which was placed at the indicator's '25' level mark. This is simply telling us that, there's a strong bearish trend in the market.
Therefore according to the rules of this trend-following, forex trading strategy, we are now allowed to move on to the second step of its low risk, high probability, trade setup identification process, which is, confirming the direction of the market's prevalent trend. So chugging right along. in this step of the process, you're going to learn how to confirm a trend in forex trading, using multiple timeframe analysis. Now
in order to successfully accomplish this task, we're going to be using the four-hour chart of the currency pair which we would like to trade. if the direction of the trend is bullish on the daily timeframe of the currency pair which we would like to trade, then we would also like to see a bullish trend, on the four-hour timeframe of that currency pair, in order to confirm that the direction of the trend is actually bullish. On the other hand, if the direction of the trend on the daily timeframe of the currency pair which we would like to trade is bearish, then we would also like to see a bearish trend on the four-hour chart of that currency pair, in order to confirm that the direction of the trend in the market is actually bearish. So for example, assuming that the direction of the trend on the daily timeframe of this particular currency pair is bearish, it's actually safe for us to say that the direction of the market's overall trend is bearish at the moment, since the direction of the trend on this currency pair's four hour chart is also bearish. And in case you've forgotten, the reason why we arrived at the conclusion that the direction of the trend on this particular currency pair's four hour timeframe is bearish is simply because price has successfully crossed and closed below the three, 60-period SMAs on the currency pair's four hour chart. On the flip side, if the direction of the trend on the daily timeframe of this currency pair was bullish we would have wanted to see a bullish trend on its 4-hour chart before we would conclude that the direction of the pair's overall trend is actually bullish at the moment.
So I just showed you how to identify the direction of the long-term trend of any currency pair, using its daily timeframe. And ialso showed you how to confirm the direction of that trend, using the four hour timeframe of that same currency pair. The reason why we are doing this, is simply because when a trend is moving in the same direction on the daily timeframe and the four-hour timeframe of any currency pair, the probability that price is going to continue moving in that direction is much higher than the probability of price moving in the opposite direction. And profitable forex trading is nothing but a game of probabilities. This is why one of the first signs which will let you know that a trend is either pausing or coming to an end is when the direction of the trend on the higher timeframe and the lower timeframe of the currency pair which you're analyzing, have stopped moving in the same direction.
in fact, this is one of the most common methods professional trend traders use, to know when a trend is ending. Since you've now learned how to identify and confirm the direction of the trend of a currency pair within the foreign exchange markets, the next step in the process, is to learn exactly how to find trade entry and exit points in the direction of the market's prevalent trend. And that is exactly what I'm going to be showing you how to do in this step of our trend-following, forex trading strategy's, low risk, high probability trade setup, identification process. FXMindTrix Academy's trend-following, forex trading strategy, uses the one hour timeframe of any currency pair, to find low risk, high probability trade entry and exit levels within the forex markets. But according
to the rules of the strategy, we're only allowed to arrive at this step of the process, if the trend on the daily timeframe and the four-hour timeframe of the currency pair which we would like to trade are both moving in the same direction. To put it in simple terms, the first and second steps of this trading strategy's trade setup identification process, were actually put in place to give us a big picture view of what is actually going on within the foreign exchange markets. it's really that simple. if you could remember, in step number one, we were expected to identify the direction of the trend within the foreign exchange markets, and in step number two we were actually required to confirm that the direction of the trend on both the daily and the four-hour charts of the currency pair which we would like to trade are both moving in the same direction. So for example, if the direction of the trend on the daily timeframe of a currency pair is bullish, and the direction of the trend on that same currency pair's four hour timeframe is also bullish we are only going to be looking for long trade setups on the one hour timeframe of that currency pair.
On the contrary, if the direction of the trend on the daily chart of any currency pair is bearish, and that bearish trend is confirmed by a bearish trend on the four-hour chart of that same currency pair, we're only going to look for short trade setups on the one hour chart of that particular currency pair. However, if the direction of the trend on the daily timeframe of a currency pair is bullish, and the direction of the trend on the four-hour timeframe of that same currency pair is bearish, we're not allowed to crank down to the one-hour chart of that currency pair, to look for forex trade setups. in the same vain, if the direction of the trend on the daily timeframe of a currency pair is bearish, and the direction of the trend on the four-hour chart of that same currency pair is bullish, we're not going to look for trade setups to take advantage of, on the one hour timeframe of that currency pair. So to put it in simple terms, 'No Trend Alignment, No Trade'. it's really that simple. Now that we've extensively talked about exactly what needs to happen before we will be allowed to move down to the one hour timeframe of any forex currency pair to look for low risk, high probability trade-entry and exit levels for our forex trade setups in the direction of the market's prevalent trend, let me quickly show you how to find high probability trade-entry levels in the direction of that trend.
As you can see on the screen, we're going to need to use the fractals indicator, in order to successfully accomplish this task. in a down-trending market, the trade-entry level for our short trading positions are going to be around two to three pips below the lower wick of the most recent swing low on the one hour chart of the currency pair which we would like to trade. The fractal indicator is going to make it a lot easier for us to identify swing highs and swing lows on the price chart of the currency pairs which you would like to trade, during trending foreign exchange market conditions. So for example, on the chart which is being displayed on the screen now, our short trade entry level, is going to be placed around two to three pips below the lower wick of the most recent swing low which was formed on the one hour chart of the currency pair which we're analyzing, right after we must have confirmed that the direction of the trend on the daily and the four-hour timeframes of the currency pair were all bearish. However,
during up-trending market conditions, the trade-entry levels for the long trade setups which we're going to identify using this forex trading strategy are going to be located about two to three pips above the upper wick of the most recent swing high on the one hour chart of the currency pair which we would like to trade. Provided that, the direction of the trend on the daily and the four-hour time frames of that particular currency pair are both bullish. Therefore, in the case of an uptrending market, we're going to be looking for up fractals on the one hour timeframe of the currency pair which we would like to trade, because they're going to make it easier for us to find the most recent swing highs which we will be using to identify the trade entry levels for our long trade setups. if there's no trend alignment between the daily chart and the four hour chart of the currency pair which we would like to trade, we're simply not going to crank down to their one hour charts to start looking for forex trade setups, according to the rules of this forex trading strategy.
iknow I've thrown quite a bit of information at you in this section. But don't worry everything is going to start making sense, once ilet you watch right over my shoulder, as itrade the live forex markets, using this forex trading strategy towards the end of this video. So just stick with me here okay. ialmost forgot to mention that, just as we would like to see that the trend is moving in the same direction on the daily and the four hour chart of a currency pair before we would proceed to start looking for forex trade setups in the direction of that trend on the one hour timeframe, we are not going to proceed to finding entry and exit points for forex trade setups, if the direction of the trend on the one hour timeframe is not in alignment with the direction of the trend on the daily chart and the four-hour chart of the currency pair which we are looking to trade.
Put simply, the direction of the trend needs to be the same on the daily timeframe, the four-hour timeframe, and the one-hour timeframe of any currency pair which we would like to trade, before we can proceed to finding trade entry and exit levels in the direction of that trend on the one hour timeframe. So to do a quick recap, in step number one, ishowed you how to determine forex trend directions. in step number two, ishowed you how to confirm a trend in forex, and in step number three ishowed you how to identify the exact price level where you should be getting into the foreign exchange markets with a trading position, during both bullish and bearish trending market conditions. Well, in step number four, you're going to learn how to identify the exact price level where you're going to be placing stop-loss orders, for the forex trade setups which you're going to identify using this trend-following, forex trading strategy, during trending market conditions. So let's get on with it, shall we? in the previous step, you learned that the trade-entry levels for the short trade setups which we'll identify during downtrending market conditions, should be placed around 2 to 3 pips below the lower wick of the most recent swing low, on the one hour chart of the currency pair which we would like to trade. ialso told you that, the trade entry levels for the long trade setups which we'll identify during uptrending market conditions, should be placed around 2 to 3 pips above the upper wick of the most recent swing high, on the one hour timeframe of the currency pair which you would like to trade.
Now in order to identify the exact price level where we are going to be placing the stop-loss orders for the forex trade setups which we'll identify using this forex trading strategy, we're going to be using the 60-period SMAs applied to prices' high and low on the one hour chart. So, moving on with our previous example, the stop-loss order for the short trade setup which we identified, is going to be placed at the price level where the 60 period SMA which was applied to prices' High, was located at right after we spotted the swing low which we used to determine the trade entry level for our short trade setup. However, if price was trending to the upside on this particular currency pair, we would have used the 60 period SMA which was applied to price's low to determine the exact price level where we are going to be placing the stop loss order for our long trade setup.
So in a nutshell, this forex trading strategy uses the 60 period simple moving average which was applied to prices high on the one hour timeframe of a currency pair, for the purpose of identifying stop loss levels for the short trade setups which we'll identify during bearish trending market conditions. On the flip side, this trading strategy uses the 60 period simple moving average which was applied to price's low on the one hour timeframe of a currency pair, for the purpose of identifying stop-loss levels for the long forex trade setups which it identifies during bullish trending market conditions. So, since you now know the exact price levels where you're going to be placing your trade entry and stop-loss orders according to the rules of this trend following, forex trading strategy, the next step in the process is to identify the price level where you're going to be placing your profit targets.
And that is exactly what I'm going to be showing you how to do, in step number four. You see, determining the price level where you're going to be placing the profit target for the long or short forex trade setups which you'll identify using this forex trading strategy, is really simple. All you would need to do to get the exact price level where you're going to be placing the profit targets for your forex trade setups, is to simply aim for a profit target which is twice the number of pips which you are risking on each and every trade you decide to take. So for example, if the distance between the trade entry level and the stop-loss level of a forex trade setup you identify is 50 pips, your profit target is going to be placed 100 pips away from that trade setup's trade entry level, according to the rules of this trend following forex trading strategy.
Let me quickly show you exactly what I'm talking about, using a practical example. As you can see on the screen, price successfully crossed and closed below the three, 60-period simple moving averages, on this forex currency pair's daily timeframe, about a couple of days ago, satisfying the first step of our trend following, forex trading strategy. But that's not all, the bearish price crossover on the daily chart of this currency pair, has also been backed by a corresponding cross of the blue line which represents our ADX indicator, above the horizontal line which we placed at its 25 level mark, signaling to us that this bearish trend is actually a strong one. Therefore, we can now proceed to the four hour timeframe of this currency pair to confirm the validity of the bearish trend which we just identified on its daily chart, before finally moving on to finding trade entry and exit points using the currency pair's one hour timeframe. But before then let me quickly place a vertical line to mark the day when the blue line of our ADX indicator, crossed above the horizontal line which we placed at its 25 level mark, after a successful bearish price crossover occurred on the daily timeframe of this particular currency pair.
So, I've just cranked down to the 4 hour timeframe of the USD/JPY, and as you can see on the screen, price actually made a bearish crossover below the three, 60-period simple moving averages on the four hour timeframe of the currency pair, about a couple of days ago. The bearish crossover on the four-hour chart of this currency pair, actually occurred a couple of days before the ADX indicator on the daily chart of the currency pair crossed above the horizontal line which was placed at its 25 level mark. At that particular point in time, we wouldn't have proceeded to the pair's one hour chart, with the intention of finding trade entry and exit points, since the blue line of our ADX indicator would have still been below the horizontal line which we placed at its 25 level mark. However, a couple of hours later all of the requirements which we needed to confirm before moving on to the one hour chart of this particular currency pair with the intention of finding low risk, high probability forex trade setups in the direction of the bearish trend which were identified and confirmed using the daily and the four hour charts of this currency pair, were fully satisfied according to the rules of our trend following, forex trading strategy.
Therefore, we're now going to proceed to the currency pair's one hour timeframe, to find entry and exit levels for short forex trade setups in the direction of the prevalent bearish trend on the currency pair's daily and four hour timeframe. Okay, so I've just cranked down to the one hour timeframe, and if you could remember I actually placed the red vertical line which you're seeing on the screen, on the candlestick which was formed on the day when the blue line of the ADX indicator, crossed above the horizontal line which we placed at its 25 level mark on the daily timeframe of this currency pair. And since we confirmed the validity of the bearish trend which we identified on this currency pair's daily timeframe using its 4 hour chart, we can start looking for trade entry and exit levels for short forex trade setups in the direction of the current bearish trend on this currency pair. in other words, since price was trading below the three, 60-period simple moving averages on this currency pairs daily and four hour timeframes and the ADX indicator on its daily timeframe had crossed above the horizontal line which was placed at its 25 level mark, we could proceed to looking for low risk, high probability short trade setups in the direction of the bearish trend which the USD/JPY currency pair was experiencing then. Therefore, in line with the rules of our trend following, forex trading strategy, our short trade entry level would have been placed a couple of pips below the lowest price of the most recent swing low which got formed on the one hour time frame of this currency pair, right after we successfully identified and confirmed the direction of the trend on the pair using the price charts of its daily timeframe and its four hour timeframe. As a result of this, you'll notice that our short trade entry level was about a couple of pips below the lowest price of the candlestick which led to the formation of the first confirmed down fractal which got formed on the right hand side of the vertical line which was placed to mark the moment when all of the trend identification and confirmation conditions for this forex trading strategy were met on this pair's daily and four hour charts.
Now, having identified the exact price level where we would have set a sell stop pending order to get us into the market with a short trading position for this particular example according to the rules of this forex trading strategy, the next step in its trade setup identification process will be to identify the exact price level where we will place the stop loss order for our newly found, short forex trade setup. Having said that, the stop loss order for this particular short forex rate setup which we identified using the one hour chart of the USD/JPY currency pair, is going to be placed at the price level where the 60 period simple moving average which was applied to prices' high was located at, right after we identified the exact price level where we would place a sell stop pending order to get us into the market with a short trading position. On the contrary, if we were taking a long trading position using this trend following, forex trading strategy, we would have placed our stop loss order at the price level where the 60 period simple moving average which was applied to prices' low was located at, right after we must have identified the exact price level where we would be placing a buy stop pending order to get us into the market with a long trading position.
The live trade example which i'll be sharing with you towards the end of this video is actually a long trading position. So don't worry if you're still yet to wrap your head around the dynamics of this trend following, forex trading strategy. Everything is going to become crystal clear once you watch over my shoulder as i trade the forex markets using this forex trading strategy, right in front of your eyes.
in the meantime, we're going to need to proceed to the next step in this trading strategy's trade setup identification process, which is identifying the exact price level where we're going to be placing the profit target for the short forex trade setup which we just identified using this currency pair's one hour chart. But in order to do that, we're first going to need to know the exact amount of pips between the trade entry level and the stop loss level of the short trade setup which we just identified on this currency pair's one hour timeframe, following the rules of our trend following, forex trading strategy. Once we know the exact amount of pips between the trade entry and exit points for the trade setups which we identify using this trading strategy, we're simply going to multiply that number by two in order to get the exact amount of pips which we're going to be aiming for as our profit target. As a side note, the exact price level where we're going to be placing the take profit orders for the short trade setup which we'll identify during downtrending market conditions, are going to be calculated by subtracting the profit targets of our short trade setups from their trade entry levels. But during uptrending market conditions, the specific price levels where we're going to be placing the take profit orders for the long trade setups which we're going to identify using this forex trading strategy, are going to be calculated by adding the profit targets of our long trade setups to their trade entry levels.
Okay moving on with the short forex trade setup which we've been using as an example in this video, if we would like to determine the exact price level where we're going to be placing the take profit order for this short trading position, the first thing we would want to do is to calculate the amount of pips between this trade setup's trade entry level and its stop loss level. Once we get that number, we're going to multiply it by 2 and then subtract it from the trade setup's trade entry level, in order to get the exact price level where we're going to be placing its take profit order. As you can see on the screen, the trade entry level for this particular short trade setup, was located around this currency pair's 105.20 price level and its top loss order was located at its 105.75 price level. And when we subtract this trade setup's trade entry level from its stop loss level we will be left with about 50 pips.
That 50 pips, is simply the distance between this particular short trade setup's trade entry level and its stop loss level. Therefore, we're going to need to multiply that 50 pips by two, in order to get the exact number of pips which we're going to be aiming for as a profit target for this particular short trade setup. in this case, our profit target is going to work out to be about 100 pips, since 50 pips multiplied by 2, is 100 pips. Now, in order to get the exact price level where we're going to be placing this short forex trade setup's take profit order, we're simply going to subtract 100 pips from the setup's trade entry level. And that's the reason why you're seeing the take profit order for this short trading position at the 104.20 price level of the currency pair.
As you can see on the chart which is being displayed on the screen now, the short trade setup which we identified on the one hour chart of the USD/JPY currency pair, actually turned out to be a winning trade. And since we were risking 50 pips to make 100 pips on this trading position, we would have easily banked a profit which was twice the size of whatever amount of money we were risking on this trade, when price decided to hit its profit target. isn't that just awesome? well, of course it is! Since you now know exactly how to find trade entry and exit levels using FXMindTrix Academy's low risk, high probability, forex trading strategy, I'm going to let you watch right over my shoulder as I trade the foreign exchange markets, using this trend following, forex trading strategy in real time. The live trade example which you are about to watch was taken on the NZD/USD currency pair, following the rules of our trend following, forex trading strategy.
But instead of boring you to death with the theoretical details of the long trading position which I took on this currency pair, let's quickly head on over to MetaTrader, so that you could see exactly why I took the trade and how I managed to bank a little over 120 pips of profits from it. So I'm currently on the daily timeframe of the NZD/USD, and as you can see on the screen I've got an open, long trading position which is running with a floating profit of a little over 60 pips on the currency pair at the moment. So, why in the world did I take this long trading position on the NZD/USD currency pair? Well, according to the first step of our trend following, forex trading strategy, a bullish price crossover occurred on the daily chart of the NZD/USD currency pair, about a couple of days ago, signaling to us that the direction of the long-term trend on the currency pair was bullish. And the blue line of the ADX indicator, also crossed above the horizontal line which was placed at the indicators 25 level mark, confirming to us that the bullish trend we just identified on the currency pair is actually a pretty strong trend.
Therefore, I moved on to the next step of our forex trading strategy's low risk, high probability, trade setup identification process, to confirm the direction of the long term trend which I identified on the daily timeframe of the NZD/USD, using the currency pair's four hour chart. If you take a close look at the chart which is being displayed on the screen now, you'll notice that a bullish price crossover also occurred on the 4 hour chart of the NZD/USD currency pair, about a couple of weeks ago. Now, after confirming that the trend on this currency pair's daily and four hour charts are both moving in the same direction I simply cranked down to the pair's one hour chart, to start looking for low risk, high probability, trade entry and exit points in the direction of that bullish trend. As soon as I moved down to the one hour timeframe of the NZD/USD, I placed a buy stop pending order to get me into the market with a long trading position about two to three pips above the most recent swing high which I found on the NZD/USD currency pair's one hour chart, using the fractal indicator. And right
after that, I placed the stop loss for the buy stop pending order which I placed on this currency pair, at the price level where the 60 period simple moving average which was applied to prices' low on its one hour time frame was located at, at that particular moment in time. A couple of hours after I placed a buy stop pending order at the trade entry level which I identified using the one hour timeframe of this currency pair price broke right through it to get me into the market with the long trading position which you're seeing on the screen now. Even though I almost got stopped out of this long trading position with a loss when price got rejected at this resistance area on the one hour chart of this currency pair, price decided to continue moving in the trade's favor which is why I've got a profit of about 60 pips on it, at the moment. When I hover my mouse's cursor over the stop loss order of the long trading position which I just opened on this currency pair, you'll notice that I'm only risking 61 pips on the trading position. Therefore, according to the rules of this trend following, forex trading strategy we're required to always aim for a profit target that is twice the amount of pips which we're willing to risk on each and every trade we decide to take. As a result of this, you will notice that I placed the take profit order for the long trading position which I took on this currency pair, at about 122 pips away from the trading position trade entry level.
If price decides to reverse and trigger this trade's stop loss order, I'm only going to incur a loss of 61 pips. on the flip side, if price decides to continue moving in the trade's direction, to hit its profit target, I'm going to bank about 122 pips of profits from the trading position. Another way to look at this is, if I was risking one percent of my forex trading account's capital on this trade, I will end up making a profit of about two percent of my trading accounts capital, if price decides to hit the profit target which I set on the trading position. If you take a close look at the screen, you'll notice that price is about half-way near the profit target which I set for this long trading position, which I took on the NZD/USD currency pair, following the rules of our trend following, forex trading strategy. But we're not going to close this trade and bail out with our puny little profit, we're going to have to wait and see if price is going to hit our stop loss or take profit order, because that's exactly what this forex trading strategy tells us to do. So a couple of days have passed since I took this long trading position on the NZD/USD currency pair.
But price is still yet to hit either our take profit or stop loss order. However, slowly but surely price seems to be inching towards the profit target which I set for this trading position. At the moment, this long trading position is sitting on a floating profit of about 80 pips which is only about 40 pips away from our profit target, according to the rules of our trend following, forex trading strategy. We're not going to close this trade and bail out with our 80 pips of profits even though the temptation to do that could be pretty unbearable to most inexperienced forex traders. On the contrary, we're going to sit and wait for price to either hit this trade's stop loss order or profit target. And since I'm only risking one percent of my forex trading account's capital on this trade, the worst that could happen is to lose one percent of my forex trading account's capital if price decides to hit the trade's stop loss order.
But on the other hand, I'm going to earn a profit of about 2 percent of my trading account's capital, if price decides to continue moving in the trades direction, to eventually hit its profit target. So there's really nothing to worry about at this point. Alhamdulillah! Price has finally hit the profit target which I set for the long forex trading position which I took on the NZD/USD currency pair. If you could remember, at the beginning of this video I told you that I was going to show you how to identify low risk, high probability trade setups within the foreign exchange markets. And as promised, I just let you watch right over my shoulder as I used the trend following, forex trading strategy which I just taught you in this video, to bank a little over 120 pips of profit from a single forex trading position, right in front of your eyes. And guess
what, you too can get this type of great results, when you use the forex trading strategy which you just learned in this video, to trade the forex markets but I must warn you. Even if you've got a proven, profitable forex trading strategy such as the one which I just revealed to you in this video, you're going to find it extremely difficult to make money through forex trading, if you fail to practice sound risk and money management. what do I mean? Well let's assume that immediately after watching this video, you went and found yourself a reputable forex trading broker and you funded your forex trading account with a thousand dollars of your hard-earned money, so that you could try out the strategy within the live forex markets. And playing by the rules of the strategy, you made up your mind to risk no more than one percent of your forex trading account's capital on each and every trade which you decide to take. And since this forex trading strategy only allows us to take trades which will bring in profits that are twice the amount of money which we are willing to risk on each trade we decide to take, you will be earning a profit of about two percent of your trading account's capital from your winning trades.
So for simplicity's sake, let's say you took five trading positions using this trend following, forex trading strategy four of them were winning trades and one of them turned out to be a loss. With four wins and one loss, your win rate is going to be about 80 percent. And in forex trading, that is a ridiculously high win rate percentage. But in this example, the high win rate of your forex trading strategy didn't translate into profits in your forex trading account. And that is simply because, instead of risking only one percent of your forex trading account's capital on each one of the trades you took, you got overconfident after that fourth consecutive winning trade which you took, and so you decided to bet the farm. You
decided to risk 10 percent of your forex trading capital on that fifth trade. You did that because you were in such a rush to double your forex trading account's capital. I mean everyone else seems to be doing that same thing on YouTube, isn't it? But lo and behold, your fifth trade using the forex trading strategy turned out to be a losing trade, causing you to incur a staggering loss of about 10 percent of your trading account's capital. Now on the surface, your forex trading performance stats are going to say that you've got a whopping eighty percent win rate. However, after digging in a little deeper it'll be discovered that your forex trading account is down by about two percent, when we subtract the eight percent gross profits which you earned from your four winning trades, from the 10 percent gross loss which you suffered from your oversized losing trade. In this example,
the strategy did pretty well, however you still ended up losing money as a result of poor risk management, and your inability to follow your forex trading strategy's rules. This is why you'll hear professional forex traders often saying that proper risk management is much more important than forex trading strategies. But let's quickly take a look at a completely different scenario, where we're going to use the high risk to reward ratio of our forex trading strategy to our advantage. Let's assume that, you followed the risk management rules of our forex trading strategy and you only risked one percent of your trading account's capital. You still took five trades in this example, however things weren't as smooth as they were in the previous example which I gave you a couple of seconds ago.
This time around, you lost three trades and you had only two winning trades. As a result of this, your win rate worked out to be about 40 percent. In this example. However, since
all of the trades which you took had a one is to two risk to reward ratio, you ended up earning a gross profit of about four percent of your forex trading account's capital, from your two winning trades and you only suffered a gross loss of about three percent of your trading accounts capital from your three losing trades. Therefore, you still ended up with a one percent return on your trading investments, even though you only had two winning trades and three losing trades in this example. This wouldn't have been possible if the profits from your winning trades were not twice the size of the losses from your losing trades. And this is why it is very important for you to never take the profits from your winning trades too early. Don't worry about price reversing against you and hitting your stop loss order, even if it was only one pip away from hitting your profit target. Trust me, in forex trading no matter what you do to prevent this, it is inevitably going to happen.
However, if you stick to the rules of this forex trading strategy, risking no more than one percent of your forex trading account, and you allow your winning trades to hit their profit targets, and your losing trades to hit their stop losses, more often than not, you're going to end up making money after you must have taken at least 100 trades. This is how this game works guys. It's really that simple. Therefore,
if you would like to make money through forex trading, using the trend following forex trading strategy which I just taught you in this video, you should never risk more than one percent of your forex trading account's capital on each and every trade which you decide to take. But in order to successfully do that, you're going to need to learn how to use a position size calculator to calculate the exact number of lots which you would need to trade with in order to risk no more than one percent of your trading account's capital on each and every trade which you decide to take. And that's exactly what I'm going to be showing you how to do, using MYFXBook's free position size calculator, in this section of the video.
In order to access MYFXBook's position size calculator, all you need to do is a quick google search for 'MYFXBook Position size calculator', as you can see on my screen, and the first results that pops up is the one you would want to click. There are actually lots of position size calculators you could use, you can see we've got the 'Babypips Position Size Calculator', but for this particular example, and they work almost the same but for this example, I'm just going to be going with MYFXBook's position size calculator, and if you'd rather not go through google, you just want to type in the result, all you need to do is to type in www.myfxbook.com/forex-calculators/position-size www.myfxbook.com/forex-calculators/position-size www.myfxbook.com/forex-calculators/position-size www.myfxbook.com/forex-calculators/position-size www.myfxbook.com/forex-calculators/position-size. Okay.
So now what you would need to, let's assume that you're trading with a ten thousand dollar account, okay. You've got ten thousand dollars in your forex trading account. Now what you would want to do right, in this, using this calculator, is you want to type in that ten thousand dollars in this field, okay. In your account size field and just like I keep telling you in this course to risk no more than one percent of your forex trading account's capital, in this 'risk ratio', if you're risking one percent of your trading account's capital, what you do is just type in '1' okay, this would mean that, you want to risk one percent of your trading account's capital and no more. And let's assume that,
the trade you're going to take, okay, the trade setup you identified using the strategy, this particular setup requires a '50-pip' stop loss, okay. So from your trade entry level to your stop loss the distance is only 50 pips. So that's the, that's what you're going to type in here in the stop loss field okay. you're going to type in '50'. Now your contract size, you don't want to touch this okay you just leave it, okay. So with that said, let's assume the currency pair you're trading is the EUR/USD, the currency pair where you identified this trade setup is the EUR/USD.
So we're going to leave that as is, but as you can see from the position size calculator, we've got lots and lots of currency pairs. So if you, if you're trading any other currency pair apart from the one I just selected here the, EUR/USD, you're simply going to select that currency pair from this drop down menu, okay. So once you've typed in all of this data you want to click on the calculate button. And if I just scroll down a little bit, you'll see that we've got the 'Results', okay. This 'Results', is simply telling you that, okay if you would want to trade, if you want to risk only one hundred dollars, that's one percent of your ten thousand dollar trading account, If that's what you want to risk on this trade, then here's what you need to do, you need to trade only 20,000 units of the EUR/USD, currency pair, okay.
But if you're, if you're using a trading platform like trading view, then this is going to come in handy, okay, this 20,000 units because you're just going to simply type in that units there. But if you're using a trading platform like MetaTrader, you're going to be using lots, okay. So you can see that, in order to risk no more than one percent of our trading account's capital, if we're having 10,000 in our trading account, we're going to need to trade 0.20 lots okay, in order to risk exactly one uh one hundred dollars. That's one percent of our trading account's capital.
So let me quickly show you how to do that, inside uh MetaTrader. So you can see that, I'm inside MetaTrader and this is the chart of the EUR/USD currency pair, okay. So, you see, we just found that the lot size we are supposed to trade in order to risk exactly one percent of our trading accounts capital that's uh $100 in this example, is 0.20.
So what you want to do is, you could either click on uh, type the 'F9' button on your keyboard or just right click and click, uh, hover your mouse's cursor over 'Trading' and select 'New Order', okay. Now, you see that '0.20' uh, lots which we found on the position size calculator, let me quickly show that to you again in case you've forgotten. You see this lots we're seeing here, okay. This '0.20' lots, okay now this is where you want to type in that lot inside MetaTrader, under the 'Volumes' tab, okay.
So, this is for this particular EUR/USD trade example which I'm showing you, but this applies to any other trading signal you're going to find, okay. So once you use a position size calculator to calculate the exact amount of lot you're supposed to trade to risk no more than one percent of your trading account's capital, you're going to come back inside MetaTrader, if you're using MetaTrader, and in the 'Volumes' tab, this is where you're going to type in that lot, okay. This is where you're going to type that in. Once you type that in, depending on the trade setup you get, you're going to enter the markets either with a market order or a pending order, okay. So you could choose the 'Buy Stop' pending order or the 'Sell Stop' pending order. And that's really all there is to it, okay. And you can see that I've
got another, yet another trade that I've taken with this strategy which is about to hit its uh, profit target, okay. So guys this really works, okay. Like I keep telling you guys, but you've got to have patience with it. This doesn't mean that you're not going to encounter losing trades. You're definitely going to encounter losing trades, but as long as you're risking only one percent of your trading account's capital and you're always going for, say, two percent of your trading account's capital uh, as your profit target, even if you were to win only 40 or 45 of your trades, you're going to end up profitable. So just take a look at this,
you can see that, on this trade I'm risking around 48 pips, okay. On this trading position and I'm going for 48 times 2, which is about 96 pips. Let me hover over this again, 96.8 pips, okay. So this is how it works, okay.
Risk one percent of your trading account's capital, aim for a profit target of two percent. Risk one percent, aim fora a profit target of two percent. Always do that and never give up on the strategy after you encounter a series of losing trades, okay. Even if this trade was to reverse against me and hit my stop-loss level, that wouldn't mean that the next trade I get, if price almost reaches my profit target I'm just going to close the trade and take my profits. When I do that I'm only hurting myself because eventually my profits are not going to be as large as they need to be, to cover for my losses, okay. That's why you always never want to touch your trades. Set and forget,
okay. So let's move on, okay. Let's proceed with this. Apart from forex trading psychology, risk management, is the one thing which could make or break any profitable forex trading strategy. It really doesn't matter how good your forex trading strategy is, as long as you do not practice sound risk and money management, you're going to find it extremely difficult to make money through forex trading on a consistent basis. To help you understand this concept better, just take a look at the performance stats of this forex trading account. This account is still losing money, even though it has got an astounding win rate of 69 percent and well over 600 trades have been taken through it.
The reason why this account is finding it difficult to make money through forex trading, is simply because the size of the losses from its average losing trades are much larger than the size of the profits from its average winning trades. As you can see on the screen, the average winning trade on this trading account, brings in a profit which is only about 33 US Dollars and 41 cents while the cost of its average loss is about 82 US Dollars and 62 cents. On the flip side, this trading account has only got a win rate which is a little over 40 percent, but it still managed to bring in a profit of about 35 percent, after only 100 trades were taken through it, simply because the profit of its average winning trade was much larger than the loss of its average losing trade. Now, isn't that amazing? Essentially, what I'm trying to say is, you and I can make money through forex trading, with an average forex trading strategy which can manage to bring in winning trades about 40 to 50 percent of the time, whenever we take at least 100 trades following the rules of that forex trading strategy, without fail. Don't fall for the trap of thinking that a forex trading strategy with a high win rate is all you need to make money through forex trading.
In the grand scheme of things, you only need a forex trading strategy which will help you to make more money from your winning trades than the amount of money which losing trades are going to take away from your forex trading account. This is why a high risk to reward ratio is just so important in forex trading. You only need a forex trading strategy with a high risk reward to ratio, a modest win rate and discipline to make money in this business.
And that's the reason why you hear professional traders often saying, 'Cut your losses short and let your profits run'. This is why our trend following, forex trading strategy, targets profits which are twice the size of the potential losses from its losing trades. If you follow the rules of this forex trading strategy without fail or giving into emotions such as greed and fear, which would cause you to take your profits too early or risk more than you should, you're going to find it pretty easy to squeeze profits out of the forex market, on a consistent basis. I can tell you that without a shred of doubt. Don't give up
on this forex trading strategy when you encounter a series of losing trades. Trust me, there's no forex trading strategy on the face of the earth that's going to give you winning trades 100 percent of the time. In fact, you do not need a 100 percent win rate to make money in this business. However, even if a forex trading strategy has got an edge over the markets, professional forex traders know that they're going to need to take a large number of trades, before the edge in their forex trading strategies will manifest themselves and tilt the odds of winning in their favor. Ideally, you would want to set a goal of taking at least 100 trades before trying to assess the performance of your forex trading strategies. So what would you rather do? Are you going to commit to this forex trading strategy and take at least 100 trades with it and prove to yourself that it works or are you going to dump it after you encountering a losing streak, in search of the next best, 'NO LOSS' forex trading strategy which you're probably never going to find anyways.
I'd love to hear what you intend to do, in our private forex trading community on facebook. I actually created this facebook group to serve as a place where both newbies and experienced forex traders who are making a killing with the forex trading strategy which I just showed you in this video, can hang out and help each other to become consistently profitable forex traders. Forex trading can be a pretty lonely business, especially when you're trying to figure out everything on your own. Fortunately, you're not going to need to spend a fortune on low quality online courses or countless hours trying to figure out how to make money through forex trading when you join our vibrant community of forex traders over at fxmintrixacademy.com/community fxmintrixacademy.com/community So do yourself a favor and take that life-changing step towards becoming the consistently profitable forex trader which you've always wanted to become by heading over to fxmindtrixacademy.com/community
I'm pretty sure you're not going to regret it. In the meantime, if you would like to learn how to make money through forex trading working less than four hours a week from anywhere in the world, head on over to www.fxmindtrixacademy.com/blueprint www.fxmindtrixacademy.com/blueprint or click on the
link in the description of this video to get instant access to the PDF Guide and the exclusive video training which is going to show you exactly how to do that, right away. And now it's over to you. Since you've now learned how to find entry and exit points using our powerful low risk, high probability forex trading strategy, let me know which one of these currency pairs you're going to place your first 100 trades on, using our forex trading strategy in the comments section. Are you going to take your first 100 trades on the GBP/JPY currency pair or the EUR/USD currency pair? I'd love to hear your thoughts in the comment section below. But if you would like to watch over my shoulder as I take a couple more live forex trades using the trend following, forex trading strategy which I just showed you in this video, click on the video which is being linked on the screen right now. And while you're at it, don't forget to subscribe to this channel and click on that bell icon to get notified whenever we upload more actionable live fo
2020-12-22 19:42
