We have many different Forex trading strategies and each one seems to be more complex than the other. But I find simplicity and profitability in two simple moving averages (SMAs). Therefore I want to share with you my simple Forex trading strategy with which I managed to achieve 70% win ratio. Hopefully this way you will relies that you don’t need to have a complex strategy to be profitable in Forex.
2MA Forex trading strategy
The simple strategy includes 20 and 100 simple moving average applied to median (Median Price HL/2). It works best on G10 pairs and H1 timeframe.
For your convenience you can use this custom 2MA indicator which allows you to switch between two sets of preselected MAs with a click. Using the indicator you will not need to cramp your chart with more than two SMAs at a time, otherwise it will only be more difficult to analyze the market and see trade opportunities.
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2MA strategy condition to Sell
In order to short a given instrument, price must be in a downtrend with both 20 and 100 SMAs slopping to the downside or flat and Moving Average Convergence Divergence (MACD) below a neutral 0 line.
2MA simple Forex trading strategy short example
Given the above conditions, when price trades below both moving average, we can wait for retracement back to the 20 SMA and put a sell order 2 pips below it. Stop loss should be 15 – 20pips above the 100 SMA.
2MA strategy condition to Buy
Likewise, in order to long a given instrument, price must be in an uptrend with both 20 and 100 SMAs slopping to the upside or flat and MACD above the neutral 0 line.
2MA simple Forex trading strategy long example
With these conditions in place, once again we can wait for a rice retracement back to the upward sloping 20 SMA and put a buy order 2 pips above it. Stop loss should be 15 – 20 pips below the 100 moving average.
2MA simple Forex trading strategy tips
Using the above method I achieved 70% profitability. I use Take profit of around 30 to 40 pips.
2MA strategy example when to cut short if TP is not hit
However, I don't enter trades if a Stop loss is more than 100 pips. Lastly if the price goes against me I cut my losses even before SL is hit if I see bullish or bearish price action formation accordingly.
Should you trade by using pre-made trading strategy on your own at all?
Before you start trading with any strategy, you'll want to read this.
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