When it comes to Forex trading, one of your greatest allies is the simplicity of your trading strategy. If you describe it in one sentence, then chances are it's going to work very well for you. This is because simple trading strategies are self-fulfilling prophecies. When other traders are using them all the time, the market imitates this because everyone ends up seeing the market in the same way. For this reason, I want to introduce you to one of the simplest Forex trading strategies you'll ever see.
It's called the Forex 123 strategy. This simple strategies involves taking a look at swing highs and swing lows on Forex charts. After you determine a new swing high and a new swing low in a bullish retracement, you create a plan of attack and set profit targets based on that. In other words, you look for the first three pivot points in a bullish retracement. These three once formed the basis of a new retracement forming that is the pattern you want to enter into on the trade.
It may sound complex when using a lot of technical jargon to describe it, essentially all your looking for is a V-shaped pattern in which the end of the visible higher than the beginning of it. In the case of a bearish retracement, will simply looking for the exact opposite. You're looking for 1 2 3 pattern in which the three is actually lower than the one. This will be your entry point for a short position. At this point you want to sell whatever pair you are observing.
Just make sure you're analyzing fundamental indicators in order make sure that you are not entering into a mistaken trade. This means taking a look at the overall economic bias on currencies to determine if the trend overall follows the trend you're observing on a micro level. Take the time to analyze economic reports and pay attention to recent news on both currencies in order make sure that you are trading against the grain.