With the right mindset and preparation, Forex trading can be truly rewarding. Yes, learning to make money and having financial freedom is something many desire.
However, there is an additional reward when you learn a strategy, and work to perfect the consistent execution time and again, watching a trade move from entrance to exit just as smoothly as you planned.
Although this is a great reward in and of itself, the fun part is being profitable. This, however, is difficult to do over an extended period of time – unless you master a proven trading strategy that can provide consistency in your trading.
The Cornflower Blue strategy is one way you can find fairly low stress, consistently successful trades in the erratic market of foreign exchange. The Cornflower Blue trading strategy has been around for a number of years now and is a proven method of intraday trading for Forex.
The strategy is based in following the trend and trading using EMA’s (Exponential Moving Average) that represent various time frames. The job of the EMA is to reflect an overall directional average of a specified time frame.
These EMA’s can be helpful in trend trading because they can help you to identify a trend, how strong it may be, and the direction it has been consistently moving over a period of time. This information can be very useful to a trader.
Example: If you know there has been a strong and consistent bullish trend, and you have an indicator telling you that it will likely continue trending up for the next day or two, then you should probably opt to trade buy positions. Trading with the overall trend, your trades are less likely to be stopped out.
The trend is your friend – until it ends!
Direction is important, but it is only one part of a successful trading equation. A solid trading strategy has a few common components to it. Direction will be one, entrance and exit will be another.
Of course, position size and profit targets vary from strategy to strategy. For instance, if you are using a scalping strategy, then your pip expectation should be smaller than if you were using a swing strategy. You must adjust your position size and stop losses accordingly.
The Cornflower Blue method is an intraday strategy and on average will yield about 20 pips, sometimes more if the trend is strong. This trading strategy is great for beginners because it helps you identify and trade with the trend.
Trading the Cornflower Blue Strategy
Below is an example of what a trade with the Cornflower Blue strategy may look like. The blue checkmark shows where you could place a trade (the candle beneath the checkmark).
You see early on there is an initial breakout, then the candles consolidate, but the EMA’s show a continuation of an upward trend. There is a pullback and a bounce off of the 12 EMA (violet line). See the full entry and exit rules below.
In this trade, that one candle yielded 45 pips and you can see candles continued on for many more pips over the course of a few hours. (This would have been a good place to set a trailing stop and let your profits run.)
The basic template setup for the Cornflower Blue Strategy is:
8 EMA – Using a yellow dotted line
12 EMA – Using a violet solid line
24 EMA – Using a cornflower blue solid line
72 EMA – Using a khaki solid line
Each EMA represents a different time frame and tells you what the market is doing in the short term, as well as in the long term, and everything in between.
The 8 EMA is the most immediate or shorter term moving average, staggered all the way up to the 72 EMA which reveals the most prevailing and long term trend for the market at that time.The 12 EMA will be the place where there is the most support when the trend is strong.
This setup should be done on the 1H chart which is where you will want to watch and typically place your trade. To establish the trend all EMA’s should be lined up in order, and heading in the same direction (up or down).
Entry: Once there has been a breakout, or the establishment of a new trend, wait until the market slows down a little, and watch for a pullback to the 12 or 24 EMA. (If it is a strong trend it will likely just bounce off of the 12 EMA.) When there is a pullback, place a trade on the next new candle.
Exit: A typical Cornflower Blue trade will run around 20 pips, but if there has been news, or it seems particularly strong, you can set your take profit for a higher pip value and just use a trailing stop to get as many pips as you can. (Or if want to be conservative, place a TP for 20 pips and watch for another pullback later in the trading day.)
Stop Loss: A good stop loss would be between 5-10 pips. When you start with the Cornflower Blue trading strategy, you may want to give yourself a little more room (in other words, widen your stop loss) initially, but as you learn to streamline your entrance timing, a smaller stop loss will be sufficient.
A few additional tips when trading with the Cornflower Blue Strategy:
1. Even though you want the 1H to be your main chart, if you flip up to the 4H, and down to the 30M and 15M, you can see if the 8, 12, and 24 EMA’s are all on the same side of the 72 EMA. This will help to confirm the trend direction and its possible strength.
2. Wait for the first 5-10 minutes for a new candle to indicate its possible direction, and then place your trade if it’s heading in the direction of the trend.
3. If your candle slows down, and your price pauses or stalls, you may want to consider exiting the trade (or at least lightening up on your position).
Contrary to what you may have heard, you don’t always need a large amount of pips from each trade to be a successful Forex trader. Risking a small amount per trade and gaining a small amount of pips consistently over time can make you rich quicker than you may realize.
Consistency is the key, though, and to be consistently profitable you must know at least one profitable trading strategy and become an expert at it. All it takes to be a successful trader is a good money management strategy, psychological discipline, and proficiency in at least one profitable trading strategy.
The great thing about the Cornflower Blue strategy is that is an extremely simple, yet reliable method of trading Forex on any major pair. It is great for beginners because of the simplicity, and because teaches you to identify trends, which will be helpful with other methods of trading as well. You won’t have to risk much, but you can potentially gain a lot of pips, without a lot of stress and worry, using this trading method.
Edit: If you’d like to try a more robust trading strategy, check out Day Trading Forex Live. These trading lessons include many profitable trading strategies. The course also includes lessons on the other two elements of successful trading, i.e., psychological discipline and money management.