Forex day trading strategies
Daily Forex Trading Strategy for Traders
Daily Forex Trading Strategy – Many people who start forex trading tend to be interested most of the time, which is commonly called daily forex trading. There are many popular trading strategies used by day traders. But due to the inherent nature of day trading, many of these strategies do not provide positive long-term benefits.
Although there are some advantages in using short-term trading periods. The overwhelming drawbacks make day trading difficult for most people. This is because it engages in the type of trading associated with this trade.
For example, some traders believe that they are not emotionally adaptable to the various pressures of day trading. Or maybe they don’t want or can’t have enough time for the success of their day trading program. In addition, many new traders are also struggling to fulfill their dream of getting rich in fast trading currencies.
Being a day trader may seem attractive at first glance, but it makes sense that novice traders pay close attention to what they are going to do as a trader. And evaluate their probability of success and determine whether or not day trading will be identical to their desired lifestyle.
The next section of this article will cover the main aspects of daily forex trading. And how can you have a better chance of winning against the bad odds that many Forex traders will face when they enter the market.
Pros and Cons of Daily Forex Trading
Choosing a daily Forex trading strategy has its advantages and disadvantages for the average forex trader. Before trying to develop a daily Forex trading strategy, it is wise to review the pros and cons and determine if you can tolerate the losses to get positive results for your Forex trading business.
You may also want to research what day trading strategies have been used in the past by some successful traders who are willing to make their methods and techniques public.
Why Daily Forex Trading Is So Interesting
First, here are some of the more profitable reasons why daily Forex trading can make sense to someone interested in currency trading:
- Reduced Market Exposure – Taking short positions throughout the trading day, when you can focus on market developments, avoiding the added risk of holding daily positions in the market the next day. Exposure can be very expensive because it causes not only stop-loss orders but also significant skid orders.
- Shorter withdrawal periods – Most traders using the system believe they will suffer a series of lost trades over time. Because the number of transactions involved in a failed process like this tends to be the same. Traders will generally pull out of a trading recession much faster than traders in the long run. Having a shorter payback period after a withdrawal can be very important for those who trade for a living.
- Quick Tip – Day traders quickly find out if their trading decisions are good or bad. This may be suitable for the most impatient of people who are often curious. Whether the trades they do will win or lose.
- Higher activity levels – Traders who like to trade and stay active often find that day trading gives them greater business engagement which they value the most.
- Simple decision making – Many daily Forex traders use simple decision-making methods as a necessity. Because they have to make quick decisions to enter or exit the market.
Day Trading Strategies Also Have Disadvantages
On the other hand, the choice of day trading strategy can also have disadvantages, including the following disadvantages:
- Higher transaction costs – Day traders tend to trade more than long-term traders because they enter the market and exit throughout the day. Because each transaction involves the payment of a spread of transactions and maybe even an intermediary commission. These fees can add to and subtract from the overall profitability of your trading activity.
- The impact is more important than the downside – Because day traders are generally more active. Although they will also tend to have more stop-loss orders executed. This means that they generally run a greater risk of order slippage when market spreads exceed their levels. So the stop loss cannot be executed as expected.
- More and more business activities are involved – Daily trading/trading systems usually carry out more transactions. As a result, some people find that having more time to trade means less time available for other activities in life.
- More attention is needed – Because day trading usually looks for opportunities to enter and exit the market throughout the day. This means they often have to take a closer look and spend more time on market activity.
- The need for fast decision making – To take advantage of the lower intraday market movement. Day traders usually have to make simpler and faster decisions than long-term traders. This requires quick thinking and answers which can create more pressure for a trader.
- Higher Cost Market Monitoring Software and New Information Services – Day traders generally need to stay aware of the markets. This often involves investing in systems that allow them to monitor the market and related financial news in real-time.
The advantages and disadvantages above are some of the main considerations in determining whether using a daily Forex trading strategy will suit your personality and lifestyle choices.
Forex day trading strategies Commonly Used by Traders
In a trading strategy to be consistent, there are many aspects, such as trade entry signals, risk management, positioning, and when to exit profitable trades.
1. 50 pip strategy
When liquidity is high, this strategy takes advantage of the initial volatility in the forex market. GBP/USD and EUR/USD are the two most suitable currencies to trade with this strategy. When the candlestick closes at 7:00 AM GMT, the trader can open two positions.
If one of the two prices is active due to a price change, the other position will be automatically canceled. The profit target should be set at 50 points, and once formed, set a stop loss of around 5-10 PIP above or below 7 am GMT. This is necessary to anticipate possible risks.
After setting all the conditions, immediately enter the market and let everything run its course. Day traders and position traders are best suited for the two short-term strategies. However, short-term transactions carry significant risks, so it is important to use risk management.
2. Daily Chart Strategy
Compared to the 1-hour trading strategy (or short time frame), the daily chart has less noise. If the time frame is extended, a chart or chart like this can provide 100 pips per day, so that every potential result can be obtained from several transactions.
The resulting trading signals are more reliable and the profit potential is greater. Traders don’t have to worry about news releases and price fluctuations. To use this strategy, the trader must be able to see the trend. Both are repeated (happens continuously).
The main principle is to find long-term fluctuations in trends, which can be identified by studying forex data over 180 periods. Next, determine the swing up and down. By applying price data to the current chart, traders can identify the direction of the market.
3. Trading 1 Hour
Traders or Traders can use the 60-minute trading strategy. The most suitable currencies for this strategy are EUR/USD, USD/JPY, GBP/USD, and AUD/USD. For this, traders need the 100 Pip momentum indicator and arrow indicator, all of which are included in MetaTrader 4.
To make a buy, if the blue line crosses the red line from below, and the 100 Pip momentum indicator gives a buy signal, and the arrow indicator represents a green arrow, then the trader can place a long order. Stop loss is located below the latest support line. Close the trade after 30 PIP and get profit when the arrow indicator signal shows a red arrow.
In selling, if the blue line crosses the red line from above and the 100 Pips momentum indicator gives a sell signal, the trader can go short. The arrow indicator represents the red arrow. Stop loss is located above the red line or the latest resistance line. After 30 o’clock, or when the arrow indicator signals green, close the trade.
4. Weekly Trading
While many trades are made daily as volatility provides opportunities for profit over narrow time frames, weekly trading strategies provide greater flexibility and stability. Weekly candlesticks provide detailed information including five daily candlesticks and trends influencing market trends.
So in this strategy, traders need an exponential moving average (EMA) indicator. The last day of last week’s candlestick chart closes above in the EMA values and then checks when the high of last week’s candlestick broke. When the price reaches the breakage price, set a stop loss at the close of the H4 candlestick.
The stop-loss order should be placed near the minimum point, i.e. between 50 Pips and 100. Then use the previous high to calculate whether the nearest minimum is less than 50 points. This is where the range of movement from last week is used as the profit or profit range.
5. 4 Hours Trading
The profitable trading method is the 4-hour trading strategy. For this reason, the 4-hour daily forex trading strategy is best suited for swing traders. This strategy uses the 4 hour time frame as the base chart for viewing trading signals, and the 1-hour time frame signal chart for determining actual positions.
Always keep in mind that the time of the signal chart should be shorter than the base chart. Two MA lines are needed, one MA with 34 periods and the other is MA with period 55. To see if the trend is worth trading, the MA line should be linked to price action.