In this article we will be discussing the 1 hour Forex strategy that most intraday traders use as part of their strategy. The 1-hour trading strategy is a very popular trading strategy, as there are so many ways that you can utilise the one-hour period.
- The 1-hour forex trading strategy is a popular strategy amongst beginners and intraday traders due to the variety of ways a forex pair can be analysed during this period.
- The one-hour timeframe captures a lot of market movement and can be a good way to gauge the latest sentiment.
- Many traders use this strategy in conjunction with technical tools such as MACD, Bollinger Bands and Moving Averages
What is the 1 hour forex strategy?
The one-hour trading strategy is simply the timeframe that you conduct your analysis on any forex pair. The intraday strategy is becoming increasingly popular due to the number of ways a forex pair can be analysed during the one-hour timeframe. To take advantage of the 1-hour forex strategy, you need three things:
1: Analysis – Your analysis should form part of every single trade you take. It is crucial that you conduct thorough analysis, which may involve certain technical or fundamental factors. For technical analysis, consider using a range of tools such as MACD, Bollinger Bands, Moving Averages or Price Action. For fundamental analysis, you might consider paying close attention to the release of important financial data such as interest rates, CPI, or Labour numbers.
2: Entry – Getting your entry right can potentially mean the difference between more or less profit, and in some cases, it can mean the difference between a win or a loss. Your entry should be confirmed by your analysis. For instance, if you are a fan of using Price Action, then you might wait for confirmation until a particular candle presents itself – such as the morning star for a potential sell.
3: Exit – Your exit is just as important as your entry, although some might argue that it is more important depending on the circumstances of your trade. Planning your exit correctly can mean locking in profits, but more importantly it could minimise losses. Your exit should again have some sort of alert based on your analysis; this is to lock in profits as well as minimise losses.
Why should you try it out?
Why should you try the 1-hour trading strategy? Well, one reason is that it is one of the most popular time frames to work on. The other is that it captures a lot of movement in the markets, whereas if you were to scalp on any lower time frames, there may be too much movement for you to gauge the proper sentiment. On the other hand, if you were to swing trade on the 4-hour time frame, or higher then you could potentially miss vital price action.
The 1-hour trading strategy is perfect for those who are just getting into trading and want to immerse themselves in the financial markets.
1-hour trading strategy – Buy Setup
Above is an example of a buy setup using the 1-hour forex trading strategy with Bollinger Bands, combined with price action. You can see just before the hammer there is a huge sell-off, then the hammer indicates that the bears have now lost control and the bulls are taking over. What gives strength to this indication is the fact that it has broken past the Bollinger Bands – which could indicate that this asset is currently oversold.
1 hour trading strategy – Sell Setup
Above is an example of a sell setup using the 1-hour forex trading strategy, again with Bollinger Bands combined with price action. This setup is pretty much the inverse of a buy signal, where we have price action breaking through the Bollinger Bands with the candle forming a shooting star. This indicates that the bulls have lost control and the bears have taken over.
1 hour trading strategy – Exit Point
Above is an example of an exit from a 1-hour forex trading strategy, combining Bollinger Bands and price action. You can see the shooting star breaking above the bands to start the trade. Then later we can see some evidence to suggest the bears have lost control with the 3-soldier formation, as well as the candles breaking clean out of the bands.
Below is a list of rules that you should follow when using the 1-hour trading strategy:
- Check the Sentiment – Checking the sentiment could potentially show you if you are trading in the right direction. It could also help you figure out what trend the markets are in. To do this, you could use the higher time frames to gauge whether the over trend is owned by the bulls or the bears.
- Get Confirmation Before Entering – Not waiting for confirmation and entering into a trade too early can result in heavy losses. First get confirmation from your analysis, then place your entry into the trade.
- Know When to Exit – Trading with emotion is one of the worst things a trader can do, whether they are a beginner or more experienced. Knowing when to exit is a fundamental part of being a trader, and often one of the most difficult aspects to learn. Be sure to control your emotions, or more often than not your unrealised gains will soon turn into realised losses.
1 hour Forex Strategy – Pros
- Capture intricate market details
- Take multiple trades in one day
- Potential for big swings
1 hour Forex Strategy – Cons
- Markets can be fast-paced
- Smaller time frames often miss the bigger picture
Overall, the 1-hour chart forex trading strategy is one of the most popular strategies with many traders harnessing their skills. For beginners, a 1-hour forex trading strategy could be considered a good way to enter the markets because it has the right amount of pace for someone who is just starting out.
Frequently Asked Questions
Potentially yes, as long as you conduct adequate analysis and have your entry and exit set.
Yes. Scalping is taking advantage of very quick moves that some may prefer, but others may feel comfortable trading for longer periods within 1-hour.
Start with whatever you feel comfortable with – but never risk more than you can afford to lose.
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