What Is A 4-Hour Forex Strategy? Those who know about FX transactions know. You can make short-term investments by opening time-zone transactions. For this reason, short-term investments can be quite profitable or risky.
Are you thinking of a short-term investment? Before making a time-frame investment, you need to study these markets well. After that, if you consider yourself sufficient, you can take action.
It is important to remember that when you see the snow you want during this time, you can get out. A 4-hour forex strategy will allow your trading thoughts to develop.
This article was created by the forex blog. For the first time in England, such a comprehensive article was created under the name of 4-hour forex strategy. It is unacceptable that you publish without permission or the logic of our strategies.
You’ve got your head together, your mind is very good.. then we can look at the content of our article.
4-Hour Forex Strategy
With this strategy, the main goal is to take advantage of the popular word “trend is your friend” in the trading world. This volatile trading strategy uses a combination of moving averages, support and resistance, volatility and a few other tools to maximize profit from trends in the Forex market. At the same time, the strategy aims to keep losses and retreats to a minimum.
Although this strategy can work well in all time zones, it is best used in the 4-hour time zone. This makes it quite suitable for swing investors.
In this strategy, the 4H chart is the basic chart (where we scan potential locations where trading signals may occur in the chart) and the 1-hour time frame or trading table as the signal chart (where we execute orders accordingly to this strategy).
How Does A 4-Hour Forex Strategy Work?
Note that if you choose to use a different time interval as the base graph, you go down one more time interval for the signal graph (therefore, if 1h is the base graph, then the 30m time frame is the signal graph).
The key cornerstones of this strategy are:
We must have a trend. This strategy is based on trend behavior. So it can’t be used basically without one.
To determine whether there is a trend, we will use a set of two moving averages, one with 34 periods or the other with 55 Periods MA. You may notice that these numbers are part of the Fibonacci sequence.
We can judge whether a trend is worth trading by observing how moving averages relate to price movement.
Note: feel free to try different moving averages (such as simple, exponential, and weighted) for this strategy.
- For an uptrend, the trend must meet the following conditions: price movement above two moving averages.
- Price remains above moving averages.
- 34 MA is above 55 MA and remains above 55 MA.
- Mas often tilt upward as they follow the trend.
- For a downward trend, the same applies in the opposite direction: price movement is below two moving averages.
- Price remains below moving averages.
- 34 MA remains below 55 MA and below 55 MA.
- Mas are often tilted down because they are behind the trend.
The chart below shows an example of a downward trend with moving averages.
As can be seen from this EURAUD chart, the price tends to bounce off two moving averages. Basically, moving averages are a support zone during uptrend and a resistance zone in downtrend.
What To Look Out For In 4-Hour Forex Trading
This trend is located around and within this moving average zone, where the best trading opportunities for trading strategy are located.
We are trying to profit from trend fluctuations. Therefore, therefore, we want to participate in the retreat trend.
Entry rules: there must be a trend in 4H, where moving averages are sorted as described earlier.
We should expect a pullback to begin or the price to move towards two moving averages.
When the retreat reaches the area around and between the moving averages; we move to the 1-hour time zone to search for entries.
There must be a pullback trend line (reverse trend direction) that is touched at least 3 times (as shown in the example below). This will usually be a continuation chart model at the same time (in the 4-hour chart), such as a triangle or a channel.
Expect a break in the 1-hour chart with the closing of the retreating trend line in the direction of the larger trend (in the 4-hour time frame). Enter breakage after the price crosses the trend line (in the 1-hour chart).
An example of what an entry with this strategy would look like is shown below.
For this exception, we place the stop below the entry point at 30% of the daily average actual range. On that day, the ATR was 72 pips for the AUDUSD pair, so 30% of the 72 is 21.6, which means that we will place the first stop for this transaction at 22 pips + spread.
What Should Be Done In A Possible Harm?
Place the first stop loss placement: ATR (average actual December) indicator on chart D1.
Set the stop loss to 30% of the Daily ATR behind your entry level (breaking the trend line).
Add the spread to the Stop loss (for some more exotic currency pairs, the spread can usually be 15 or more pips, which can make a big difference in the 1-hour timeframe in terms of when your stop loss is triggered).
Take the EURUSD pair, whose Normal daily interval is about 100 pips. If you entered into a trade on EURUSD with this strategy, your stop loss would be 30% of 100, which equates to 30 pips plus spread, which is usually around 1-2 pips for EURUSD. So, in this case the total stop loss will be 32 pips. Risk management:
Once you enter the trade, you need to manage and track this stop loss in order to get the maximum profit from the trend. This strategy works as follows:
When the price moves 30% of the Daily ATR in profit, Make stop loss equal.
If at any point during the transaction, a countertrend retreat trendline begins to form on the 1-hour chart, exit the transaction.
A countertrend retreat trend line will be a trend line that is touched 3 times. When this happens, it is more likely that a new retreat or even a return has begun. Therefore, it is better to exit the trade and wait for a new opportunity.
How To Make A Profit In A 4-Hour Forex Transaction?
This is a trend trading strategy, we will use a trailing stop to exit trading. This allows us to profit in a larger part of the movement.
There are some specific rules for this subsequent stop order:
On the upward trend:
Find the latest highest high as the price sets new highs.
Take that highest candle.
Be low on this candle.
Count backwards for the previous 5 lows from the low level of this candle.
Not: only lower ones count. Lows that are the same as or higher than previous lows are omitted.
He broke the stopper a few pips lower than the lowest level of the fifth candle.
In the downward trend:
While price creates new lows, find the latest low low.
Take the candle at the lowest level.
Find the height of this candle.
Count backwards for the 5 high points before the height of this candle.
Note: only higher highs are important. Highs that are the same or lower than previous highs are omitted. A few more pips of bacon from the height of the fifth candle.
This trailing stop appears in a chart as follows.
The blue arrows are the starting point of the count. The line is therefore a stop-loss placement for that point in time. The figures are an example of how candles are counted to determine the stop. Here, how low highs are left out until the next high is found backwards.
As the downward trend moves to its new low bottom, the count for the following Stop must be re-made and the Stop must move lower.
EURUSD 1 hour chart. Note how manual tracking allows the investor to capture almost the entire movement in this chart. Trades are only issued when the price rises above the Blue Line, which occurs once on this chart in the first case on the left.