Macro Forex Trading Strategies

Simple FX Trading strategy – Follow the crowd!

A Simple FX Trading strategy might also be the best for most new forex traders as it’s very easy to understand and execute without expensive tools etc. All you really need is a trading platform and TradingView if you want it to be fancy.

All you need to do is to understand which macro fx event that will result in high volatility in different FX crosses. Those events could be:

  • FED Rate Decisions
  • Core CPI data releases
  • Unemployment Claims Reports
  • Data concerning avg. wage increases

The common denominator for the examples above are that:

  • You know what time the data is released beforehand (check our calendar)
  • You know which FX crosses the macro forex events usually affects

How to use the Simple FX Trading Strategy

Find a relevant event as suggested above and note the time and understand what the different outcomes will do to the FX cross (e.g. EURUSD) selected.

When the time comes have two open screens:

  1. Containing TradingView or your Trading Platform with the selected FX cross in e.g. 15 minutes candles zoomed in more than you usually would do. The zoom is to see details in the movements. Perhaps add other relevant indicators, such as the US 10Y yield (recommended in most cases).
  2. Prepared with your tradepanel open and with the selected FX cross in a graph now make sure you have pre-selected the size of the spot-order, so you can click Sell/Buy in less than a second.

As soon as the time comes (you can usually use the candles to determine it precisely as the releases most often are in quarts) notice if there are a substantial move in either direction and trade in that direction. You follow the crowd and thus the market. If the instrument goes down, then sell/go short and if it goes up buy/go long! Simple as that.

Simple FX trading strategy

Notice the massive increase in EURUSD in this screenshot above. That could very well be from a data release as described above. You can also see the US 10Y yields move massively down, which is a good, but lacking indicator for confirmation of the trade.

So why is this strategy good?

It’s good because as amateur, semi-professional or even professional forex trader you have the odds stacked against you both in terms of:

  • General statistics
  • Spreads
  • Speed. Professional traders get the data before us and are able to execute orders faster than us.

Especially because of the last bulletin this is in many cases a good strategy. You will get in on the trade pretty early and in most cases you’ll get in the money (where you profit from your trade) fairly quickly, hereafter you can secure your position.

What are the dangers of it?

There’s no such thing as a free lunch! The dangers mainly consists of these two:

  • It was a false move and when you enter the position it rapidly goes in the opposite direction. Therefore you should be ready to close the position in seconds until you have set your stop-loss that will secure your position from there on
  • The data did not defer much from the consensus and/or the volatility is low. Then you might enter your forex position in the edge of a local channel and lose some money or close it at around the price you bought it

In most cases this strategy will work out great if you only trade on data you know moves the markets. And if you have the incoming information and your trading platform under control. Get to know both well before doing real trades. When the position has been made, and a stop-loss has been placed, it is time to read the actual data and understand the markets response to it. Get an idea of the consensus of the market via Bloomberg. This will enable you to estimate, which price you should consider closing your position at. Usually it will be wise to close a succesful position within 30 minutes after the release of data.

Thanks for reading our Simple FX trading strategy

We really hope that you have enjoyed our suggested strategy, which contains information that we have obtained over a decade of trading, hearing +1,000 podcasts, reading hundreds of books and sparring with many other professional FX traders, economists and whatnot. We hope that it will give you a great start daytrading forex and if you have feedback, suggestions, questions etc. please post them here below and we will attend to it.

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