4hr forex trading system

The Four-Hour Trader, A Full Trading Plan.

Price action and Macro.

Traders can implement a well-heeled plan taking only four hours per week The four-hour chart can be ideal for Forex Traders looking to trade around the clock We outline a full plan based around Price Action that traders can begin using today.

All of the sudden, the world has gotten very small; and life is moving faster than ever before.

The internet presents a lot of benefits to the human species; but time management is not one of them. As competition for page views, viewer numbers, and attendance continues to heat up, very little in this life emphasis a slow and steady approach.

But to the trader, in many cases, that is the best way to go about speculation in markets: Slow, steady, and consistent.

But being there as a trader, and getting there as a new speculator are completely different markets. In this article, we’re going to outline a complete trading plan that will take less than four hours of a trader’s time each week. And further, this is an approach that can be focused on longer-term moves, and swings.

If you have a day job, or any other pre-existing commitments that limits your time on charts, this is an approach that can offer quite a few benefits.

The Center of the Approach.

The 4-hour chart plays a special role in the FX market.

Most equity markets are open between 8 and 9 hours each day, and as such, the four-hour chart might take on less importance. After all, a four-hour chart just shows two bars for each trading session, so traders might as well just look at the daily chart.

But in the Forex market, the four-hour time frame takes on special importance. The market never closes, and traders are literally Trading the World . The four-hour candle represents half of each geographic trading session. Each of these sessions can take on markedly different tones, and that is where traders can look for potential opportunities.

In the FX Market, traders are truly ‘Trading the World’

Traders can use the price movements and gyrations on these four-hour charts to analyze markets, and find potential pockets of opportunity.

Watch for the close of each 4-hour candle that you can. Using the New York close to define ‘financial time’ means that we’re seeing candles close at 5, 9, and 1 AM and PM (based on ET). If you’re using Central Time, that’s 4, 8, and 12 AM/PM while Pacific Time is 2, 6, and 10 AM/PM.

If you’re busy at the time, Mobile Applications can generally offer you what you need to perform the analysis at the close of each of these candles.

Traders can then take a ten-minute block of time upon the close of each of these four-hour candles to look for potential trade setups, while also using this as an opportunity to manage risk.

If the trader is awake for four of the six four-hour candles that form each day that would mean that the trader would need approximately 40 minutes per day to analyze charts. If time permits, an additional 10-15 minutes can be used at or around the daily close.

The total time commitment required is 40-50 minutes each day, for a total of 200-250 minutes per week (240 minutes is 4 hours).

Use Price Action to locate the strongest trends.

Trends in markets can be easily graded and seen with price action… by simply looking for charts to make progressively higher-highs, and higher-lows (in the case of an uptrend), and lower-lows, and lower-highs (for downtrends).

Price Action can help traders locate the strongest trends.

Higher-highs and Higher-lows denote an up-trend per Price Action.

In the article Price Action, an Introduction we look at a way that traders can grade trends without the use of any indicator at all, using just past prices.

Traders want to look to trade in the direction of these trends; buying up-trends, and selling down-trends. But, is it enough to just buy up-trends or sell down-trends and ‘hope’ that they continue? No. Traders can use price action to appropriate their entries into these positions.

Use Price Action to buy up-trends cheaply, and sell down-trends expensively.

Once a strong trend has been located, the trader can then look to plot their entry by looking for a ‘trigger’ into the position via price action.

Once again, traders want to look to efficiently buy up-trends when price is cheap, or near support. We looked at how traders can find this support in the article, Price Action Swings .

Traders can look to buy up-trends after a recent swing low.

Traders buying up-trends can wait for a ‘higher’ swing low to form before entering.

Traders can look for additional confirmation of the entry by looking to the price action candles that form at or around those swings.

We looked at quite a few of these triggers in Trading Bearish Reversals (for down-trends) , and The Hammer Trigger for Bullish Reversals (for up-trends).

Traders can look for bullish triggers at or around recently printed new lows.

Use Stops and Limits to Enforce Favorable Risk-Reward Ratios.

We talk about this a lot at DailyFX, and there is a reason for it: It’s important!

One of the main premises of our price action education is that future prices are unpredictable, and as such, there is no such thing as a ‘holy grail’ or ‘can’t lose’ strategy.

By adding a stop and limit, and letting the trade work – the trader eliminates the possibility of making a knee-jerk reaction that they may end up regretting. It also enforces a favorable risk-reward ratio, and puts traders in the most promising spot to avoid the number one mistake that Forex traders make.

Since traders are looking at their charts for each four-hour bar, they have built-in trade management for each position that they take on.

Traders can use the close of each four-hour candle as an opportunity to adjust stops ( particularly the break-even stop ), or to take profits while also looking to trigger new positions.

Traders can take this a step further by trailing their stop in an effort to lock in gains in the event that the trend gets especially built-in. We looked at this premise in Trading Trends by Trailing Stops with Price Swings.

Traders can lock up gains to maximize trends.

Created by James Stanley.

-- Written by James Stanley.

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Forex trading strategy #32-a (4hr MA Trends)

Submitted by User on June 29, 2010 - 16:48.

Submitted by Egudu.

This is Egudu, I want to give you guys a cool system and it's simple.

Indicators: 5 SMA applied to close, 14 SMA applied to close and EMA of 144 and 169 applied to close.

Time Frame: 4hrs only.

The 144 and 169 gives the direction of trend, I mean when 144 above 169 it's an uptrend and if below it's a downtrend.

You use the 5sma to enter the market in the direction of trend while you use the 14sma to enter against the trend.

In the direction of the trend given by the two ema, when a candle closes below the 5sma for a sell and above it for a buy, while if against the trend as given by the ema, when a candle closes below the 14sma you enter a sell and above it for a buy.

Stoploss is always the high of the signal candle or low.

Now this system is pretty cool and wonderful, suggestions and questions are welcome. Thanks.

I have attached charts for visuals:

Can i use this system for 1 hour? or maybe do you have other settings to be used on 1 hour?

i guess you can but the whips would be too much, so if you can bear it, but i recommend 4hr thanks.

However I think it would be better to have at least another confirmation before entering to avoid whipsaws. Such as Stocs at OB/OS and also to look out for divergence. What do you think? NewBoy.

Good and simple system. When do you exit the trade on profit? Thanks.

Thanks to all, i would say there's really no exit, just use a trailing stop to trail it, or whatever your stop loss is, just target twice or thrice it. And for confirmation using stoch. or other stuff, i really dont like it, just enter when the signal says so, and even the whips that result to loss are small when compared to the profit from it if u follow it. i am still open to suggestions.

now like i said i really want to help traders in this forum, for a quick entry, i use a kind of candle pattern, and here is it, when you have a candle having the same open and high after a three candle uptrend, you enter the market for a sell, and the reverse is for a downtrend. this candle pattern is almost magic, just look at it, there all other ones i use which i guess i would tell you guys, so enjoy and ask me any questions, and i would recommend that you guys check out the 1hr reversal system. i would have love to post charts on it but just check it out first then make your observations, thanks.

"while if against the trend as given by the ema, when a candle closes below the 14sma you enter a sell and above it for a buy"

Could you elaborate above using chart?

Active traders Poll - share your live experience or read what others have to say.

Forex Swing Trading Strategy #2:(4HR GBPUSD Swing Trading Strategy)

Posted by Mangi Madang 1930 days ago.

Hi fellow swing traders, here is a swing trading system which you can use to trade the GBPUSD currency pair.

This swing trading strategy has the potential to average more than 100 pips a month .

You just have to manage your risks and it can be a real killer forex swing trading system for you.

Ok, enough of trash talk, lets get started with a bit more detail into the GBPUSD forex swing trading strategy.

OVERVIEW OF THE 4HR GBPUSD FOREX TRADING STRATEGY.

(1)With this forex swing trading system, you need to use the 4hr chart as well as the daily chart to make a trading decision. Your trade entries are made in the 4hrs but you need to check the daily timeframe for what the main trend is before you enter a trade on the 4hr timeframe.

(2) You also need to have these forex indicators,:

slow stochastic with the settings(13,5,5) applied to both charts, EMA 4, EMA14, and EMA 50 on the 4hr chart.

(1) On the 4hr chart, open a trade at market order or with a pending stop order on the new opening candlestick when 4ema first crosses 50Ema followed by 14Ema.

(2)Your stop loss should be 50 pips.

(3)Exit the trade when 4EMA reverses and crossed 14EMA on the next open candle.

(5)Last but not the least, you need a good filter to filter out potential bad trade setups with this swing trading system. Here’s what you need:the stochastic indicator on the daily chart:

For Valid Long Entry: Slow %K above Slow %D on the Daily Chart.

For Valid Short Entry: Slow %D above Slow %K on the Daily Chart.

Note: the %K&%D on the stochastics are the two line on the stochastic indicator chat that cross each other based on where price is going.

The reason why you need to use the stochastic on the daily chart is pretty simple:follow the trend. The daily chart has more importance than the 4hr chart.

(6) Take profit: there is not take profit option here(dummy!) because you need to refer to rule (3)!

Now if you are still confused, these two charts below will make things a bit more easier for you to understand. Click on the charts if you need to see it more clearly.

Now as trade filter, swith to daily chart to see if the two stochastics lines have crossed to the downside to confirm the overall direction of the trend(in this case, its a downtrend):

ADVANTAGES OF THE 4HR GBPUSD FOREX TRADING STRATEGY.

allows you to actually get into a trade just after the moving average crossovers happens, which means you are potentially entering a trade just after the trend has started…which is better than entering a trade at the halfway point of a trendy market move.

DISADVANTAGES OF THE 4HR GBPUSD FOREX TRADING STRATEGY.

The biggest problem I see with this trading system is the entry because moving averages are lagging indicators therefore the ideal entry point would have been anywhere from 2-7 candles back. this also means that at the entry where you got into a trade, price may be due for a temporary pullback and if your stop loss is not wide enough, you will get stopped out. This forex strategy is definitely not good for ranging market, expect your stop losses to get hit frequently.

CAN YOU USE THIS FOREX TRADING STRATEGY WITH OTHER CURRENCY PAIRS?

The short answer is yes. Better for you to stay with currency pairs that have good trending characteristics.

It would mean the world to me if you shared it, tweeted it, facebook liked/shared, pin it etc by clicking any one of the links below.

6 Comments.

What is advantage and disadvantage of this strategy?

thanks for visiting.

I’ve just updated the post with the ‘ADVANTAGES’ & ‘DISADVANTAGES’ of the 4hr gbpusd trading system.

Scroll back up to see.

Is it relevent to use this strategy in usdgbp pair nowaday?

Can i use to other pair?

Yes, this system can be applied to any currency pair as long as the currency pair has good trending characteristics.

Thanks for sharing this strategy with us. I want to know the success ratio of this strategy, 2ndly, you mentioned 13ema and later said 14ema, which one is the correct one?

I don’t use this system like many other trading systems & strategies on this site. I’ve researched and compiled, what In my opinion, are simple forex trading strategies that many forex traders from beginners to advanced traders can find useful.

Listing the strategies on this site does not mean I use all this systems 🙂

Ok, with regard to the what EMAs to use, its 14ema as shown on the chart. I’ve fixed that typo error and thanks for pointing it out.

Forex Articles.

January 6, 2010.

4 Hour Forex Trading System - My Exact Set-Up.

The only drawback to running a forex blog is that you are constantly being bombarded with lots of questions, and some of the most common questions I receive relate to my 4 hour trading system. So in this first post of 2010 I thought I would share with you my exact trading set-up.

You can find out how I trade this 4 hour system by subscribing to my newsletter if you haven't already done so (simply fill in the form to the right) but I just want to show you what my everyday chart looks like.

I use very few technical indicators, and they are basically as follows:

- Smoothed Repulse (5)

The 50 and 200 period EMAs are just there for guidance really, both for determining the long-term trend and for highlighting areas of support and resistance in some instances, and the Supertrend is just used on the daily chart to tell me which way I should be trading.

My typical 4 hour chart looks like the one below, although on this time frame I'm only really interested in the 5 and 20 period EMAs and the Smoothed Repulse indicator. (The other indicators are only on there because I often toggle between the 4 hour and the daily chart).

The main signal comes when the EMAs cross over, and the best signals occur when this event coincides with the Smoothed Repulse crossing through 0 in the same direction. This is exactly what happened yesterday on the GBP/USD pair, as you can see from the chart below.

The Smoothed Repulse indicator isn't an essential aspect of this system. You can simply trade the EMA crossovers if you so wish. However it does help you pinpoint the very best set-ups.

Anyway I hope this answers any questions you may have, and I wish you a Happy New Year.

12 Comments on 4 Hour Forex Trading System - My Exact Set-Up »

January 6, 2010.

Leah Tsang 4:48 pm :

Thank you so much for sharing. Your information has truly helped.

I wish you good health and profitable tradings in 2010.

January 7, 2010.

Costa 12:02 am :

Thank you for the info. Wish you all the very best for 2010.

Louis Ferreira 10:32 am :

Thank you for sharing your hard earned ways of trading succesfully. I will be trying it and will let you know if I LIKE OR NOT, BUT IT MAKES SENSE.

Jose 12:03 pm :

Thanks for sharing your sistem. Where can I do the "Smoothed Repulse Indicator" download?

A great 2010 for you and your family.

aldo 4:27 pm :

Thank You for sharing it with us and all the best for the New Year.

george judd rowley 7:50 pm :

very good James thanks a lot have a great year. Judd.

January 8, 2010.

Mat 7:04 am :

Is there a Smoothed Repulse indicator for metatrader? I have been looking around but there doesn't seem to be.

January 12, 2010.

James Woolley 9:54 am :

Matt, I've been searching online as well and unfortunately it looks like it's only available via ProRealTime.

March 28, 2011.

Eddie 11:37 am :

Hi, thanks for everything you have share.

I need to ask that your setup for your EMAs is EMA 5 OPEN or CLOSE ?

James Woolley 2:59 pm :

March 31, 2011.

Eddie 9:36 am :

October 3, 2011.

thierry 11:47 am :

Can someone get or post the formula to determine the Smoothed Repulse indicator ?

I could attempt to develop a MT4 indicator….

waiting for answer…

Leave a Comment.

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