8 profitable intra-day forex trading strategies you can use right now!
People who succeed at day trading do three things very well:
Jump right to one you like, just click on itRole Reversal Trading StrategyHeikin-Ashi Trading StrategyRSI Trading Strategy, 5 Systems + Back Test ResultsThe Moving average crossover strategyThe swing day trading strategyCandlestick patternsThe Bollinger band squeeze strategyThe narrow range strategyThe 2 period RSI strategyBinary options trading strategy that generates 150% return
Your probably thinking:“How do I find intra-day trading strategies that actually work?”And Are there some day trading rules that will help me to trade forex, commodities, stocks? The reality is this: Few people are actually successfully day trading forex or other markets for a living, That’s the uncomfortable fact of life that marketers don’t like to speak of! And those few people are most probably trading with other peoples money, like traders working for a bank or a hedge fund. That means the stakes are not as high for them, as they are for a person trading their own capital. That being said; There are intra-day trading strategies beginners can use to maximise their chances to stay in the game for the long haul. These can be use in most markets like forex, commodities or stocks. Because, ‘the long haul’ is where someone can turn their initial starting capital, into a retirement nest egg! So, in this article I will show you everything you need to know to get started including:
Then I will tell you,
The simple truth is. MUST READ: Few Things About Risk Management Forex Trader Should KnowSo lets get down to business!1:The Moving average crossover strategy.What is it?
The 20 period line is our fast moving average, the 60 period is our slow moving average and the 100 period line is the trend indicator. And a SELL signal is generated when the fast moving average crosses below the slow MA. So you open a position when the MA lines cross in a one direction and you close the position when they cross back the opposite way. How do you know if the price is beginning to trend? Well, If the price bars stay consistently above or below the 100 period line then you know a strong price trend is in force and the trade should be left to run. The settings above can be altered to shorter periods but it will generate more false signals and may be more of a hindrance than a help. The settings I suggested will generate signals that will allow you to follow a trend if one begins without short price fluctuations violating the signal. On the chart above I have circled in green four separate signals that this moving average crossover system has generated on the EURUSD daily chart over the last six months. On each of those occasions the system made 600, 200, 200 and 100 points respectively. I have also shown in red where this trading technique has generated false signals, these periods where price is ranging rather than trending are when a signal will most likely turn out to be false.
The above chart shows the first positive signal in detail, the fast MA crossed quickly down over the slow MA and the trend MA, generating the signal. The second false signal is shown above in detail, the signal was generated when the fast MA moved above the slow MA, only to reverse quickly and signal to close the position. Although the system is not correct all the time, the above example was correct 6/12 or 50% of the time. We can immediately see how much more controlled and decisive trading becomes when a trading technique is used. There are no wild emotional rationalisation, every trade is based on a calculated reason.
2.Heikin-Ashi Trading StrategyWhat is it? Heikin-Ashi chart looks like the candlestick chart but the method of calculation and plotting of the candles on the Heikin-Ashi chart is different from the candlestick chart. This is one of my favourite forex strategies out there. In candlestick charts, each candlestick shows four different numbers: Open, Close, High and Low price. Heikin-Ashi candles are different and each candle is calculated and plotted using some information from the previous candle:
Heikin-Ashi candles are related to each other because the close and open price of each candle should be calculated using the previous candle close and open price and also the high and low price of each candle is affected by the previous candle. Heikin-Ashi chart is slower than a candlestick chart and its signals are delayed (like when we use moving averages on our chart and trade according to them). This could be an advantage in many cases of volatile price action. This forex day trading strategy is very popular among traders for that particular reason. It’s also very easy to recognise as trader needs to wait for the daily candle to close. Once new candle is populated, the previous one doesn’t re-paint.
How do I trade with it? On the chart above; bullish candles are marked in green and bearish candles are marked in red. The very simple strategy using Heikin-Ashi proven to be very powerful in back test and live trading. My favourite would be a simple Stochastic Oscillator with settings (14,7,3). The reversal pattern is valid if two of the candles (bearish or bullish) are fully completed on daily charts as per GBPJPY screenshot below.
SHORT SETUP LONG SETUP FILTERS MOMENTUM FILTER (Stochastic Oscillator 14,7,3) I strongly advise you read Stochastic Oscillator guide first.Once applied, it will show the overbought/oversold area and improve the probability of success.
A Trader would now: STOP ORDER FILTER
Accelerator Oscillator filter As another tool you could use the standard Accellarator Oscillator. This is pretty good indicator for daily charts. It re-paints sometimes, but mostly it tends to stay the same once printed. Every bar is populated at midnight. How to use it? After Heikin-Ashi candles are printed, confirm the reversal with Accellarator Oscillator. For Long trades: If two consecutive GREEN candles are printed, wait for the AC to print the green bar above the 0 line on the daily charts For Short trades; If two consecutive RED candles are printed, wait for the AC to print the red bar above the 0 line on the daily charts RULES The reversal pattern is valid if two of the candles (bearish or bullish) are fully completed on daily charts as per GBPJPY screenshot below. Don’t enter the market straight after a volatile price swing to one direction. It important to consider fundamental news in the market. I would advise to avoid days like:
Money management:
Strategy examples and screenshots Strategy doesn’t generate much setups, but when it does, they are usually important market tops or bottoms. See some sample trade setups before and after. To get the ready MT4 templates for the setups below please CLICK HERE TO DOWNLOAD You can then unzip it and place them in your MT4 and have the below charts ready Date: 22 May 2013 Trade: Long Date: 21 June 2013Trade: Short Date: 31 October 2013Trade: Short
3. The swing forex day trading strategy.What is it? Swing day trading strategy is all about vigilance! “And what’s a correction?” I hear you ask. Take the above chart, EURUSD at 240 minute candles, within the green circle we have 26 candles where the price stayed within a 100 point range. How do I trade with it?
Again we are working on the EURUSD 240 minute chart. In green we can see a correction to the downside, notice the slowing downside momentum? Notice all the overlapping price candles? The entry point in this trade would be a little harder to execute, although the principle is the same. This showed that the price was now gearing up for reversal. A trader would buy the open of the following candle and place a stop at the lowest point of the correction. 4.Candlestick patterns.MUST READ: Candlestick patterns – 21 easy patterns ( and what they mean )
Bullish engulfing pattern.
What is it? How do I trade it?
Bearish engulfing pattern.
What is it? How do I trade it?
Long shadow pattern.
What is it?
Hammer patterns.
What is it? How do I trade it?
5.Support and ResistanceRole Reversal Day Trading StrategyWhat is it? To start I needs to assume that you know what is the support and Resistance in Forex trading. If not see few simple definitions and examples below.
The harder for price to cross a certain level, the stronger it is and the profitability of our trades will increase. The most basic form of Support and Resistance is horizontal. Many traders watch those levels on every day basis and many orders are often accumulated around support or resistance areas.
These levels are probably the most important concepts in technical analysis. They are a core of most professional day trading strategies out there. As per definition of an uptrend, the price punching through the resistance and pullback before it makes another higher high.
Once the resistance is broken to the upside, it becomes a new support level. Resistance changes its role to support, hence the name “Role Reversal”. The same principle applies to downtrends. If the market is in downtrend, the price will punch through supports making new lower lows. The broken support becomes new resistance and offers opportunity for short positions. Sometimes the price will pull back a bit further than just the former support or resistance. It might retrace toward other important technical levels. I like to combine pure price action with other major, widely used leading indicators. My favourite would be: Pivot Points and Fibonacci retracements. After many years of using these tools, I can say with confidence, they are pretty accurate. The popularity of these tools makes them so responsive. You could also establish few levels of entries for example: If you are looking to buy the market after the price made fresh high, you would be waiting for the price to retrace towards role reversal, Fibonacci Level or moving average. As you are pretty confident, the price is moving higher, you don’t know how far the price will pullback. If it’s an aggressive day, the price can only come back to 20MA and shoot for new high again. Another day, the price can dip as far as 38% Fib retracement. You can divide you position into 3 equal parts and set limit orders based on the logic above: If you like this strategy and want to learn more about it, I advise you join Wayne McDonell Forex Today Strategy Session videos. Wayne is most definitely the master of role reversal trading. I advise you watch all his videos. There is something to learn for you in each one of them. 6. The Bollinger band squeeze strategy.
Bollinger bands are a measurement of the volatility of price above and below the simple moving average. John Bollinger noted that periods of low volatility are followed by periods of high volatility, so when we notice the Bollinger bands ‘squeeze’ in towards each other, we can infer that a significant price movement may be on the cards soon. So, the Bollinger band squeeze trading strategy aims to take advantage of price movements after periods of low volatility. I urge you to read: Bollinger bands ( the COMPLETE how-to guide! )How does it work? The above chart is the EURUSD 240 minute chart. How do I trade it? A SELL signal is generated when a full candle completes below the simple moving average line. 7. The Narrow Range Strategy.What is it? The narrow range strategy is a very short term trading strategy. The strategy is similar to the Bollinger band strategy in that it aims to profit from a change in volatility from low to high.
A suitable candle would consist of a ‘ Chubby’ look with an opening and closing prices close to the days high and low as shown in the chart below.
HOW do I trade it?
Your stop is placed at the low or high of the Narrow candle and trailed to suit.
8. The 2 period RSI strategy.
This strategy is pretty simple really.
In general this is a very aggressive short term strategy as you can see by the amount of signals that are generated in the chart shown. As such this aggressiveness will be caught out by a ranging market and may lead to several losing trades in a row. The aggressive nature of the strategy should be matched with an equally rigorous stop loss regime.
HOW DO I TRADE IT? As in the chart above, when the RSI moved above 90 the first BUY signal was generated and the first position was opened, the RSI then triggered another BUY signal and another similar position was opened.
In the End!Day trading, and trading in general is not a past-time! Trading is not something that you dip your toes into now and again. “the excuse doesn’t matter; the cold hard number is that only about 4.5% of traders who start day trading will end up being able to make something of it.”BUT, by recognizing the difficulty and learning some basic trading strategies you can avoid the pitfalls that most new traders fall into! The honest truth of the matter is this, most new traders get involved because they see huge profits straight ahead by simply clicking BUY .
As in the story I told above, trading based on hearsay or some popular narrative will lead you to almost certain doom!
By using a day trading strategy, you remove the emotional element from the trading decision.
So often new traders place a trade without even placing a stop loss position! An error which can lead to catastrophic losses.
Please let me know, which intraday trading strategy is your favourite in the comment section below. I will expand of the most popular ones. |
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