Finding the perfect Forex strategy can be an exhausting task. Many traders spend countless hours searching for a consistently profitable system, often encountering frustration along the way. However, the solution might be simpler than you think. What if you could adopt a straightforward strategy that aligns with your trading style and opens up the potential for substantial profits under the right conditions? This blog post by YaMarkets, the best online trading platform in Malaysia, precisely aims to cover this strategy and you can execute the perfect forex trading strategy for beginners.

 

Key Element 1: The Trigger

In Forex trading, a "trigger" serves as the specific action or event that signals a trade opportunity. It's an essential component of any strategy, indicating when a trader should begin technical analysis or initiate a trade. Common examples of triggers include price movements crossing over a simple moving average.

However, the challenge arises when traders need a trigger that effectively adapts to their style. To identify a versatile trigger, we looked at trend reversals to find the crucial moment where trends switch directions. This investigation involved scrutinizing hours of charts across multiple currency pairs and timeframes.

Finding the Perfect Trend Reversal Moment

After extensive research, we identified the key trigger: price surpassing a major high or low. This observation holds true across different timeframes. When price crosses a significant high or low, it often signals a trend reversal. For instance, if the price rises and then crosses a previous high, it typically moves downwards, and vice versa. This simple yet effective discovery forms the cornerstone of our strategy.

Adding Confirmation: The MACD Indicator

While identifying major highs and lows significantly improves trade accuracy, it’s not enough on its own. To increase confidence, we introduced the Moving Average Convergence Divergence (MACD) indicator. The MACD helps verify major highs and lows, ensuring they align with the actual price movements. By adding the MACD, we can filter out false triggers and focus on genuine trading opportunities.

For example, if a high or low marked on the chart also corresponds with a MACD peak or trough, it adds an extra layer of confirmation. This practice enhances the reliability of our trigger, leading to more informed trading decisions.

The Remaining Challenges

Though discovering the primary trigger and adding MACD confirmation improve our strategy, challenges remain, including avoiding fake breakouts and determining optimal entry points.

Solving the Fake Breakout Problem

Fake breakouts can lead to significant losses, so differentiating them from true breaks is crucial. A simple rule to identify true breaks is to ensure that if a breakout candle pops above or below the trigger line, the subsequent candle must close beyond that breakout candle without reversing. This ensures the break is genuine. If the subsequent candle does not confirm the breakout, it's likely a fake and should be avoided.

Optimal Entry Strategy

Determining the best entry point is another critical aspect. There are two primary approaches:

 1. Entering on the Breakout Line: This approach involves entering a trade as soon as the price crosses the breakout line. While this method increases the number of trades, it also risks deeper pullbacks.

 2. Entering on Pullbacks: This strategy waits for the price to pull back to the breakout line before entering. Although this reduces the number of trades, it often results in better risk/reward ratios.

Choosing between these methods depends on your trading style. If you prefer frequent trades, enter on the breakout line. If you value patience and better risk management, opt for pullbacks. Try your trading strategies today with the best online trading platform in malaysia - YaMarkets. 

The Real Profit Potential: Confirmations

The true potential of our strategy lies in confirmations. Confirmations are additional technical or fundamental factors that enhance the strategy's accuracy. They can significantly elevate your trading performance, transforming a simple strategy into a highly profitable system.

Simple Confirmation Example: Session Times

One straightforward confirmation is to restrict trading to specific sessions. For instance, you might only trade during the New York session, avoiding the Asian and London sessions. This approach can help you focus on the most profitable times, as certain sessions have higher volatility and better trade opportunities.

Technical Confirmation Example

A technical confirmation might involve ensuring that the breakout candle respects a certain moving average. For example, you could require the breakout candle to start above a 100-period simple moving average. This added criterion helps filter out weaker trade signals and strengthens the overall strategy.

The Importance of Customization

Every trader is unique, so personalising the strategy is essential. Analyse your winning and losing trades to identify patterns and develop personalised confirmations. This customization will give you a competitive edge and align the strategy with your trading style.

Potential Confirmations to Explore

Here are some confirmations you might consider:

•  Technical indicators (e.g., RSI, Bollinger Bands)
•  Price action patterns (e.g., candlestick formations, support/resistance levels)
•  Fundamental factors (e.g., economic news, interest rate changes)
•  Risk management rules (e.g., fixed stop losses, position sizing)

By integrating these confirmations, you can create a strong trading strategy tailored to your needs.

Conclusion

Finding the best online trading platform in Malaysia and the best broker in Malaysia can significantly impact your trading success. Platforms like YaMarkets, with their reliable market execution and rich features, can complement the strategy outlined in this post. Start by implementing the triggers and confirmations discussed, and continuously refine your approach based on your trading experiences.

For more detailed explanations and additional resources, explore YaMarkets blog posts and start trading with YaMarkets today. Happy trading!