Free Forex Trading System

If you're looking for a free Forex trading system, here's one of the most effective strategies you can find anywhere. It's a simple trend following strategy and it is used successfully by Forex traders of all experience levels. The basic idea behind the strategy is to wait until you see a pullback in the price of the currency pair and then trade with the direction of the trend. We've said it before and we'll say it again...the trend is your friend. But anyway, read on to learn the basics of this particular trading strategy.

How it Works

When trading this free Forex trading system, you're not going to get a lot of indicators on the chart and confuse yourself. This strategy is all about the K.I.S.S. philosophy, also known as "Keep It Simple, Stupid." You first identify which direction the trend is moving. Then you wait for a slight price pullback to enter the trade. At that point, you ride the trend to victory! Here's a few of the specifics on how to trade the strategy.

Setting Up Your Chart

Open an H1 or H4 chart on your Metatrader platform. Then insert two exponential moving average lines onto your chart. This can be done by going to the "Insert" tab and then finding the "Moving Average" indicator. Set one of the moving averages to reflect 12 periods and set the other one to reflect 24 time periods.

You can choose a color for each line in the settings. For this example, let's say that you choose the 12 hour time period line to be represented by blue and the 24 hour line to be represented by red. Since it's a free Forex trading system, you are welcome to choose your own colors.

Determining the Trend

The first part of this strategy involves determining the current trend in the foreign exchange market. To do this, you'll look at which side the blue line (12 hr) is on. If the blue line is on top of the red line, it means the trend is moving up. If the blue line is on the bottom, it means the trend is down.

Entering The Trade

After you determine which way the trend is moving in the market, it's time to wait for a trade opportunity to present itself. At this point, you need to wait until the price line moves back and touches the blue moving average line. At that point, you're going to enter the trade in the direction of the overall trend. You set your stop loss at 50 pips and you leave the take profit figure open.

This might be difficult to do because you are actually entering a trade when you've just witnessed the market moving in the opposite direction of the trend. While this can lead you to hitting your stop loss in some cases, many times, this is simply a slight pullback. When this happens, the market starts moving in the direction of the trend again and eventually you make money. By getting into the trade during the pullback, we can maximize the number of pips that we make on the trade.

Closing the Trade

Once you're in the trade, there's really no telling how long you'll be in it. Since this is a trend following strategy, you're basically going to be in it until the trend stops. You're going to be like one of those kids who wore M.C. Hammer pants for the short period of time that Hammer was cool. Then you're going to take the pants off and burn them once the trend wears off and everyone realizes they look ridiculous.

To determine when the trend (Hammer pants) is over, you're going to look at the moving average lines. When the blue moving average line crosses back over the red line, it means that the trend is probably reversing. At that point, you close out the trade regardless of whether you're in profit or in the hole.

Money Management Rules

While you are free to customize the money management of this free Forex trading system to your liking, I would recommend using a maximum of 2 percent of your account balance on each trade. If you get into more than that, you can blow your account out quickly. This strategy is known to go through periods of several losses in a row and if you aren't strict on the money management, you'll be out of the game and back to living in your mother-in-law's basement in no time.

You might also decide to move your stop loss level to breakeven after you are well into profit. For example, after you get up 30-50 pips, you might want to move it up to breakeven so that you're playing with house money at that point.

Making the Big Money

Although this strategy is known to experience a few losers in a row when the market is not really trending, you can more than make up for these losses with one good trade. If you stick it out until a great trend really presents itself, you could catch 400 or 500 pips on one big move. It's kind of like a boxer who keeps jabbing to feel out his opponent. Then when the opponent isn't expecting it, the boxer jacks him in the jaw with a left hook and knocks him out. Just stay in the game long enough to get your shot.

Try out this free Forex trading system on your demo for a while before you go live. It really does work even though it's pretty simply. Don't be fooled by the simplicity. Just go with it and bring in some money. Let the "advanced" traders worry about their negative account balances advancing and we'll just take checks to the bank.

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