Introduction to Day-Trading Strategies
The day-trading strategies are very popular among Forex traders as they provide the chance of making fast and good profits on a daily basis. Day-traders are using high capital leverage and therefore they are exposed to high levels of market risk. Day-Traders are trading any pair among the Forex majors (USD, EUR, JPY, CHF, CAD, AUD, NZD) but they prefer three particular pairs EURUSD, GBPUSD and USDJPY as these pairs are offered with the tightest spreads in the market.
Characteristics of a Day-Trading Strategy
The following Day-Trading strategies are characterized by the high Take Profit / Loss (P/L) Ratio. The P/L ratio in Day-Trading strategies is far greater than in scalping strategies and exceeds it may even exceed P/L=2. Moreover, in contradiction with the scalping strategies you get a far less number of trades on a daily basis (3-6).
■ Daily Trades: 3 – 6 trades
■ Profit/Loss Ratio: 1.5 – 2.5
■ Leverage: 1:50 – 1:200
■ Spreads: very important (max 2.0-2.5 pips)
■ Slippage: very important
■ Overnight Charges: Day-Traders should not keep open positions overnight, therefore irrelevant
■ Upcoming News: they generally avoid trading 30 minutes before and after important news
As in the case of scalping, day-trading should be limited only in low-cost trading opportunities. That means a Forex Day-trader usually selects to trade only the Forex Majors. In the case of a Metals Day-Trader, he selects to trade Gold and Silver.
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Day-Trading Strategies
TRADING STRATEGIES |
ASSET AND TIMEFRAME |
INDICATORS |
TAKE PROFIT AND STOP-LOSS |
MORE INFO |
THE STOCHASTIC DAY-TRADING STRATEGY |
■ M5 time frame ■ EURUSD and GBPUSD ■ 2-4 daily trades |
■ Stochastic Oscillator Settings at 5,3,3 ■ Fibonacci Retracement Standard settings |
■ Take Profit: 40-50 pips ■ Stop-Loss: 15-20 pips
■ Profit/Loss Ratio: 2.5 |
|
BOLLINGER-RSI DAY-TRADING STRATEGY |
■ M5 time frame ■ Forex Majors ■ 5-7 daily trades |
■ Bollinger Bands (i) 12 Periods (ii) Deviations 2 (iii) Shift 0
■ RSI The standard settings (14,9) |
■ Take Profit: 50-70 pips ■ Stop-Loss: 20-25 pips
■ Profit/Loss Ratio: 2.5 |
|
BREAKOUT STRATEGY |
■ Multiple Timeframes ■ Forex Majors ■ Metals and Energy ■ Stocks and Indices ■ 1-3 daily trades |
■ Support/Resistance ■ Chart Patterns ■ MACD/RSI MACD or RSI charts divergences |
■ Variable Stop-Loss and Take-Profit levels ■ Profit/Loss Ratio: Higher than 3 |
|
TRADE THE FALSEBREAK CANDLE |
■ Multiple Timeframes ■ Forex Majors ■ Metals and Energy ■ Stocks and Indices ■ 2-4 daily trades |
■ Closest support and resistance levels ■ A Falsebreak candle. |
■ Take Profit: 200-250 pips
■ Stop-Loss: 80 pips ■ Profit/Loss Ratio: 2.5 |
■ FIND ALSO: ► EA BUILDER TESTER | ► GET STARTED WITH FOREX | ► TRADE SYSTEMS
■ STRATEGIES: ► DAY-TRADE | ► SWING-TRADE | ► SCALPING STRATEGY | ► BINARY STRATEGIES
■ FOREX RATINGS: ► DIRECTORY | ► TRADE SPREADS | ► FOREX SCALPING | ► SWAP RATES | ► FUNDS SAFETY
■ Day-Trading Strategies
ForexExperts.net
FALSEBREAK CANDLE TRADING STRATEGY
"Trading Strategy using Support and Resistance Levels plus a Falsebreak Candle as a trigger"
TRADING STRATEGY
■ Style: Day-Trading Strategy
■ Name: Falsebreak Candle Trading Strategy
FINANCIAL ASSETS
TIMEFRAME
■ M5 timeframe (5-minutes)
■ 5-7 daily trades
INDICATORS & SETUP
This simple strategy uses no indicators instead it uses the close support and resistance levels and a falsebreak candle.
■ Support and Resistance form a basic demand and supply price range
■ A Falsebreak Candle provides the trigger to trade it
TRADING SIGNALS
This is how you may implement the Falsebreak Candle Strategy:
First of all we must define the range by determining major support and resistance levels.
■ (↑) Long Trades
1. Wait until the price of an asset reaches an important support level.
2. Wait until there is a candle with a shadow below the support level and a close above the support level. This is called a falsebreak candle.
3. As the falsebreak candle is confirmed open a Long Trade.
■ (↓) Short Trades
1. Wait until the price of an asset reaches an important resistance level.
2. Wait until there is a candle with a shadow above the main resistance level and a close below the resistance level. This is also a falsebreak candle.
3. As the falsebreak candle is confirmed open a Short Trade.
TRADING ORDERS
■ Take Profit: 200-250 pips
The Take-Profit depends on the extend of the range between support and resistance. Take-Profit is placed 5-10 pips below the resistance in case of a Long-Trade and 5-10 pips above the support in case of a Short-Trade.
■ Stop-Loss: 80 pips
The stop-loss is placed below a falsebreak in case of a Long-Trade or above the falsebreak in case of a Short-Trade
■ Profit/Loss Ratio: 2.5
CHART: Falsebreak Candle Strategy
■ FIND ALSO: ► EA BUILDER TESTER | ► GET STARTED WITH FOREX | ► TRADE SYSTEMS
■ STRATEGIES: ► DAY-TRADE | ► SWING-TRADE | ► SCALPING STRATEGY | ► BINARY STRATEGIES
■ FOREX RATINGS: ► DIRECTORY | ► TRADE SPREADS | ► FOREX SCALPING | ► SWAP RATES | ► FUNDS SAFETY
■ Falsebreak Candle Day-Trading Strategy
ForexExperts.net ©
THE STOCHASTIC TRADING STRATEGY
Day-Trading the Forex Majors using the Stochastic Oscillator and the Fibonacci Retracement
TRADING STRATEGY
■ Style: Day-Trade Strategy
■ Name: The Stochastic Day-Trading Strategy
FINANCIAL ASSETS
■ Forex Majors (Preferably EURUSD and GBPUSD)
TIMEFRAME
■ M5 time frame (5-Minutes)
■ 2-4 daily trades
INDICATORS & SETUP
This strategy combines the Stochastic with the Fibonacci Retracement
■ Stochastic Oscillator
-Settings at 5,3,3 instead of the standard setting (14,3,3)
■ Fibonacci Retracement
-Standard settings (.618, .500, .382 and 0.236)
TRADING SIGNALS
This is how you may implement the Stochastic Strategy:
■ First of all, we apply the Fibonacci levels and then we receive signals from the Stochastic.
1. Marking the narrowest crucial support and resistance levels in order to apply the Fibonacci retracement
2. After we receive signals from the Stochastic Oscillator
■ (↑) Long Trades
Each time EURUSD reaches an important Fibonacci level as support and the Stochastic is found at 20 and rising we enter a Short (Bearish) trade.
■ (↓) Short Trades
Each time EURUSD reaches an important Fibonacci level as resistance and the Stochastic is found at 80 and falling we enter a Short (Bearish) trade.
TRADING ORDERS
■ Take Profit: 40-50 pips
■ Stop-Loss: 15-20 pips
■ Profit/Loss Ratio: 2.5
CHART: The Stochastic Strategy (EURUSD)
■ FIND ALSO: ► EA BUILDER TESTER | ► GET STARTED WITH FOREX | ► TRADE SYSTEMS
■ STRATEGIES: ► DAY-TRADE | ► SWING-TRADE | ► SCALPING STRATEGY | ► BINARY STRATEGIES
■ FOREX RATINGS: ► DIRECTORY | ► TRADE SPREADS | ► FOREX SCALPING | ► SWAP RATES | ► FUNDS SAFETY
■ The Stochastic Day-Trading Strategy
ForexExperts.net ©
BOLLINGER-RSI DAY-TRADING STRATEGY
Trade the Forex majors by combining the Bollinger Bands and RSI
TRADING STRATEGY
■ Style: Day-Trading Strategy
■ Name: Bollinger-RSI Trading Strategy
FINANCIAL ASSETS
■ Forex Majors
TIMEFRAME
■ M5 timeframe (5-Minutes)
■ 5-7 daily trades
INDICATORS & SETUP
As the name of the strategy suggest we shall use two indicators, Bollinger Bands and RSI. This is an easy to implement trading strategy which may prove considerably profitable given the right market conditions.
Setting the Bollinger Bands and RSI:
■ Bollinger Bands
(i) 12 Periods instead of the standard 20 periods
(ii) Deviations 2
(iii) Shift 0
■ RSI
-The standard settings (14,9)
TRADING SIGNALS
This is how you may implement the Bollinger-RSI Day-Strategy which can also be used as a scalping strategy.
■ (↑) Long Trades
When EURUSD reaches the lower Bollinger Bands and RSI is found 30 or lower you execute a Long (bullish) trade.
■ (↓) Short Trades
When EURUSD reaches the upper Bollinger band and RSI is 70 or higher you execute a Short (bearish) trade.
TRADING ORDERS
Setting the Bollinger-RSI Scalping Strategy:
■ Take Profit: 50-70 pips
■ Stop-Loss: 20-25 pips
■ Profit/Loss Ratio: 2.5
CHART: Bollinger-RSI Day-Trading
■ FIND ALSO: ► EA BUILDER TESTER | ► GET STARTED WITH FOREX | ► TRADE SYSTEMS
■ STRATEGIES: ► DAY-TRADE | ► SWING-TRADE | ► SCALPING STRATEGY | ► BINARY STRATEGIES
■ FOREX RATINGS: ► DIRECTORY | ► TRADE SPREADS | ► FOREX SCALPING | ► SWAP RATES | ► FUNDS SAFETY
■ Bollinger-RSI Day-Trading Strategy
ForexExperts.net ©
Price Breakout Strategy
Breakout trading means entering a violent trend in its early stages. The aim of this strategy is to take advantage of a major price move, and to trade it by being exposed to limited downside risk.
What is a Breakout?
A breakout means that the price of an asset starts to moves outside a defined price level. This price level may be a support or resistance level, a channel, a trend line, a Fibonacci level, a pivot point and etc. Breakouts are important because as they are followed by strong price swings.
But be aware that most of the times, breakouts are false. However, there are times when breakouts are real and then your positions can be really profitable.
Types of Price Breakouts
Price breakouts, in general, are divided in continuation and reversal breakouts:
(i) Continuation breakouts
(ii) Reversal breakouts
Continuation breakout
In the case of a continuation breakout, the price of an asset breaks an established price level (usually previous high) and continues to trend. The goal is to take your profit near the next local high. The longer the accumulation of prices before the breakout the stronger the breakout shall be.
Reversal breakout
The goal of trading reversal breakouts is to spot the last stage of an existing trend. The end of a trend usually occurs when the price has reached overbought levels or it has been stopped by an important support or resistance level. The aim for breakout traders is to get in at the early stages of this new trend. The reversal breakout trading is very difficult to prove profitable for inexperienced traders. The vast majority of reversal signals prove false.
The problem of lack of volume data
Stock traders know well that when you are trading stocks, breakouts must be accompanied by significantly increased volume. The problem in the Forex market is that traders do not have access to aggregate volume data. This is a disadvantage for Forex breakout traders.
False Breakouts and Conspiracy Theories
In general, a false breakout occurs when the price of an asset crosses through a major support or resistance level, but then the price suddenly retreats back.
There are many theories that Institutional Players (large investment Banks) are behind these false breakouts in order to push their clients to their stop-loss orders and make easy money. In any case, a false breakout means that the market does not respond as traders have anticipated.
Techniques for Avoiding False Breakouts
There are many ways to avoid false breakouts and to filter your trades. The disadvantage of filtering your trades is that you shall get in later than other breakout traders. The advantage is that will avoid at least 60% of all the false breakouts.
Here are some tips to avoid False Breakouts:
BEFORE THE BREAKOUT OCCURS
(1) Seek for Volatility. Volatile markets provide much more reliable breakouts. You can use ATR indicator on MT4 (Average True Range) or you can use an online tool seeking for high recent volatility:
http://www.myfxbook.com/forex-market/volatility
(2) Check for potential price patterns or price formations that may be formed.
(3) Confirm the new price momentum using a momentum indicator (i.e. MACD)
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