How To Trade Forex Using A Bias
I decided to write a short article on trading Forex using bias with our Forex signals and bands. This Forex trading Bias is mainly used for short-term Forex trades but can still be utilized in long-term trades.
Checking these five items off your trading list each day will help standardize your trades and find a short-term trading bias.
1. Identify A Trend On 1/4/8/Daily Chart
Let’s look at the image below. As you can easily see, we have an uptrend in all 4 time frames. So obviously, the trend is up.
2. Locate Price Action On 1/4/8/Daily Chart
Looking at the image below, you can see where price action is at the moment. It is below the moving average on the 1 hour but is sitting above the MA on the longer-term time frames. Is the price going to react off those other time frame’s MA? You can bet the house on it!
Now let’s look at what happens because of the trend and where price action is sitting. That’s right, an easy move off price action produced a 40 pip trade. 40 pips x $100 per pip makes for a nice profit of around $4,000.00 in 3 hours of “work”.
3. Check for Arrows on 1/4/8/Daily Chart
We can see a 1 hour arrow up but a 4 hour arrow down at the first image again. What do you do? All you have to do is wait for that 4 hour arrow to take price to the moving average and/or flipped up band and look for an entry up. As soon as the new 4 hour candle appeared and above the MA, wait for it to get close or touch the MA, then take it up!
You may have noticed that small red arrow on the 8 hour time frame; you will learn that the most that it will do is take it to the previous time frame’s moving average. The trend is your friend!
4. Look for Possible Currency Correlation
I usually have 4 charts on my screen. So, if I see a strong correlation in the trend or signals of the GBP pairs, then that also helps confirm my bias. Here is the GJ again, and the 2nd image is the GC. Do you notice the correlation?
5. Identify Starting Postions
I pretty much covered this in the other images, but I will recap. You should look for your starting points on bands or a moving average. As shown in the several images above a great Forex trade entry would have been on the bands of the 1 hour correlating with moving average of the 4 and 8.
I pretty much covered this in the other images, but I will recap. You should look for your starting points on bands or a moving average. As shown in several images, a great Forex trade entry would be on the bands of the 1 hour correlating with the moving average of the 4 and 8.
Hope this short checklist/ Forex tutorial will take your trading to the next level. If you want to know how to get the signals and the bands shown in the above images, just click on the link below and join the Premier Forex League!
Remember to focus on the process and not solely on the profits!