Why are we focusing on medium-term forex trading rather than long- or short-term strategies? To answer that question, let’s take a look at the following evaluation table:

Type of Trader	Definition	Good Points	Bad Points
Short-Term (Scalper)	A trader who looks to open and close a trade within minutes, often taking advantage of small price movements with a large amount of leverage	Quick realization of profits or losses due to the rapid-fire nature of this type of trading	Large capital and/or risk requirements due to the large amount of leverage needed to profit from such small movements
Medium-Term	A trader typically looking to hold positions for one or more days, often taking advantage of opportunistic technical situations	Lowest capital requirements of the three because leverage is necessary only to boost profits	Fewer opportunities because these types of trades are more difficult to find and execute
Long-Term	A trader looking to hold positions for months or years, often basing decisions on long-term fundamental factors	More reliable long-run profits because this depends on reliable fundamental factors	Large capital requirements to cover volatile movements against any open position

Now, you will word that both short-term and long-term traders require a giant amount of capital, the first kind desires it to generate ample leverage, and the other to cover volatility. Although these two types of traders exist in the marketplace, they are comprised of high-net-worth individuals, asset managers or larger institutional investors. For these reasons, retail merchants are most probably to be successful the usage of a medium-term strategy.

The Basic Forex Trading Framework

The framework protected in this article will focus on one central concept: buying and selling with the odds. To do this, we will appear at a range of methods in multiple timeframes to decide whether a given trade is well worth taking. Keep in mind, however, that this is no longer a mechanical/automatic trading system; rather, it is a machine through which you will get hold of technical input and make a decision. The key is discovering conditions where all (or most) of the technical indicators point in the same direction. These high-probability trading conditions will, in turn, normally be profitable.

Forex Chart Creation and Markup

We will be the use of a free program referred to as MetaTrader to illustrate this buying and selling strategy, however, many other comparable programs can additionally be used that will yield the equal results. There are two basic buying and selling application requirements:

• The capability to display three distinct timeframes simultaneously
• The ability to plot technical indicators, such as moving averages (EMA and SMA), relative energy index (RSI), stochastics and transferring average convergence divergence (MACD)

Setting up the Indicators

Now we will appear at how to set up this method in your chosen buying and selling program. We will additionally define a series of technical indications with guidelines related with them. These technical symptoms are used as a filter for your trades.

If you choose to use more symptoms than shown here, you will create a more reliable device that will generate fewer trading opportunities. Conversely, if you pick out fewer indicators than proven here, you will create a less-reliable device that will generate greater trading opportunities. Here are the settings that we will use for this article:

• Minute-by-minute candlestick chart
• RSI (15)
• stochastics (15,3,3)
• MACD (Default)
• Hourly candlestick chart
• EMA (100)
• EMA (10)
• EMA (5)
• MACD (Default)
• Daily candlestick chart
• SMA (100)

Adding in Other Studies

Now you will want to include the use of some of the extra subjective criteria, such as the following:

• Significant trendlines that you see in any of the timeframes
• Fibonacci retracements, arcs or fans that you see in the hourly or each day charts
• Support or resistance that you see in any of the timeframes
• Pivot factors calculated from the preceding day to the hourly and minutely charts
• Chart patterns that you see in any of the timeframes
• In the end, your display screen ought to appear something like this: