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Weekly Forex Trading Systems

In this article we will review:

forex weekly trading strategy

In a strong uptrend, when we got the bearish engulfing pattern, the price action immediately blasts to the north, and it prints the brand new lower low. This trade ends up generating nearly four thousand pips within just four months. Imagine if you took this trade with a higher lot size, you could very easily make a six-figure income from one single trade. The higher timeframes provide less but accurate trading signals, so whenever you find the trade go big.

Example of a Basic Forex Trading Strategy

As mentioned above, position trades have a long-term outlook (weeks, months or even years!) reserved for the more persevering trader. Understanding how economic factors affect markets or thorough technical predispositions, is essential in forecasting trade ideas. Trend trading generally takes place over the medium to long-term time horizon as trends themselves fluctuate in length. As with price action, multiple time frame analysis can be adopted in trend trading.

Is the weekly chart better than the daily chart?

Often overlooked by newbies, one of the best forex trading strategies is to ensure your chosen broker offers super-low fees. After all, if your broker charges high commissions or wide spreads – many of the best forex day trading strategies discussed today will not be possible. Instead, you’ll find that your risk-averse profit margins get eaten away at by expensive trading fees. This is much more conducive for beginners – as you can take your time researching the markets and thus – you can avoid having to make quick and instant decisions.

Multi Time Frame Trading with the Weekly Time Frame

forex weekly trading strategy

In other words, you’ll be able to actively enter and exit positions throughout the day – as opposed to taking a more passive approach via swing trading. Don’t forget – you can always revert back to your eToro demo account when practicing a new day trading strategy – meaning you won’t be risking any capital. A combination of the stochastic oscillator, ATR indicator and the moving average was used in the example above to illustrate a typical swing trading strategy. The upward trend was initially identified using the 50-day moving average (price above MA line).

  1. There are different strategies you can create around the weekly chart, as we have mentioned above.
  2. So, if you pull up a weekly chart, one easy trick you can do to create the best trend indicator, is count back 13 and 26 weeks from the current weekly candlestick.
  3. If you’re thinking about buying and selling currencies online – you’ll need to have a few forex trading strategies under your belt.
  4. In addition to a buy/sell position – you can also place risk-management orders.

That said, our experience indicates that backtesting is more powerful on daily bars than weekly bars, at least in the stock market. The logic behind using a weekly system is that it trades less frequently than on daily bars, and it also might offer bigger gains. In trading, it is usually a good idea to wait for a candlestick to close before entering a trade on any time frame. This is because the closing price is likely to be a price area where the price has been able to spend some considerable time, making the entry more likely to be valid. These indicators will look to analyze the historical pricing data of a forex pair and will look for a specific trend.

On the flip side, you won’t want to implement position trading on the 15-minute chart. Different timeframes are more suitable for different trading styles and strategies. Both the weekly chart and the daily chart are good for an experienced trader who understands that different strategies can work on different timeframes. Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.

Moreover, traders should be mindful of potential gaps in price during the market open, which can impact stop-loss orders. By integrating risk management practices, traders can safeguard their capital while maximizing the strategy’s profit potential. Traders using the weekly chart often engage in long-term position trading, with a focus on identifying range-bound markets and looking for trade setups at support and resistance levels.

Imagine a trader who expects interest rates to rise in the U.S. compared to Australia when the exchange rate between the two currencies (AUD/USD) is 0.67. Adam Hayes, Ph.D., CFA, is a financial forex weekly trading strategy writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance.

As traders embrace the discipline and patience required, they can harness the power of this strategy and capitalize on the substantial price moves that unfold on the weekly time frame. Through rigorous backtesting and optimization, traders can refine their approach, adapt to changing market conditions, and build a resilient strategy that withstands the test of time. Then, make sure that you trade in the same direction as that trend, or trade reversals from support and resistance when there is no trend and the price is ranging. Use a higher time frame price chart such as the weekly time frame to make these calls.

They use the weekly chart to check the position of their trade setups within the broad market structure. Understanding how percentage in points work – or PIPs, is also a crucial strategy. In a nutshell, when the exchange rate of a currency pairs suffer fluctuations (the market moves up and down) – this is calculated in pips.

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