Day Trading: Strategies for Beginners.
Day trading is a worthwhile activity, but you must know what you are doing. There is a technique that will help you succeed at day trading, but you have to first learn what it is. For example, there are many day trading strategies for the beginning trader. When you know what they are, day trading will be much more rewarding and fun because you will be winning. These Day trading strategies are crucial to know if you want to be a successful day trader. Every day trader has at least a few favorite strategies that he falls back on again and again. What works for one person may not work for another, though, so it pays to learn as many as possible in the beginning. As you gain more experience as a day trader, you'll get to know additional strategies, including variations on the ones highlighted above. Before too long, you'll have a selection of strategies that will help you achieve long-term success as a day trader.
Basic Day Trading Strategies.
There are a few basic rules that will help you achieve ongoing success as a day trader. They apply to all day trading strategies. The most important one is to not allow yourself to be ruled by emotion. Emotions have no place in any successful day trading strategy. So-called gut reactions only lead to trouble. One of the reasons that emotions are bad news for day traders is that they can make you deviate from your chosen strategy. This brings us to our second rule, which is to stick with your game plan. No matter which strategy you are following, you need to see it through. Persistence is key. Finally, you must be able to recognize and understand trading indicators. Otherwise, it is impossible to achieve success with any of the most effective strategies.
The Best Day Trading Strategies for Day Traders.
There are dozens of day trading strategies. Avoid becoming overwhelmed by learning these four basic strategies first:
News Trading: When a major news event occurs that affects the stock market, savvy day traders spring into action. Using this strategy is as simple as keeping up to date with current news stories and moving quickly to buy or sell as needed. Range Trading: This is where in-depth research and patience really pay off. Learn the normal high and low range of a specific stock and always trade within it. Pairs Trading: As the name implies, this strategy involves trading in pairs. Choose a category, and then go short on a weak stock and long on a strong one. By making these trades simultaneously, you dramatically increase your odds of achieving remarkable profits. Contrarian Trading: Despite what the current momentum of a stock suggests, this strategy requires you to trade against it. Many beginning day traders struggle with this strategy, but more seasoned traders know that it's a terrific way to make some serious money.
Day Trading Strategies On the Move.
Day trading is all about energy. When I first started implementing day trading strategies, I learned that the only way to be good at it is to find stocks that are on the move. Thankfully, there is a stock that is making a 20 or 30 percent move every day. We have to find those stocks before they begin to move, and I have discovered that these stocks have some technical indicators in common before they begin to move. First, we must ask ourselves what we expect from day trading strategies that are on the move. It’s necessary for the stock to be moving. If they are moving sideways, we cannot work with them. Therefore, the stock must be moving up or down. Stock scanners locate these stocks very well. Then, I can trade the stocks when they are at extremes. This means that the stock is doing something that it hasn’t done all year and that the price action is very clean.
Day Trading Strategies and What You Need to Find.
When you use these strategies, you find that there is something similar about stocks that are moving. We can scan 5,000 stocks and look for similar criteria. This will give you up to 10 stocks each day. These stocks may move 20 to 30 percent in a day, and this is how I make my living.
The first criteria: The float must be under 100 million shares. The second criteria: The daily charts must be strong. That means that the stock does not have resistance nearby and it is above the Moving Averages. The third criteria: The High Relative Volume is at least two times above average. The fourth criteria: This is optional. There will be a fundamental catalyst. A fundamental catalyst may be an announcement made by the FDA. If the stock is moving without a fundamental catalyst, it is known as a “technical breakout.”
How I Find Stocks for My Day Trading Strategies.
I use stock scanners to scan the market for the criteria that I listed above. The stock scanner is highly necessary for putting day trading strategies into effect. The scanners let me know that something is happening. Then, I can check the candle stick chart to find an entry point on the first pull back. A majority of buyers get into the market here, and the stock moves up sharply. As the price begins to move up quickly, you must be able to find the best entry point at the time that it is happening. I do this by performing three different kinds of scans with three different kinds of stock scanners. The three scanners I have are my Pre-Market Gapper scanners, Reversal Trading Strategies Scanners and Momentum Day Trading Strategies scanners. I receive several trade alerts every day from these scanners. I never have to look through the charts manually. The scanners allow me to see all the stocks in their current positions. Stock scanners are the only thing you should use to find the best stocks.
Day Trading Strategies - Reduce Risks.
The following day trading strategies explain how to reduce your risks and increase your chances of making money with day trading.
Chart Patterns Day traders often find chart patterns to be a proven tool for finding entry and exit points for investments. Reliability is improved if the chart patterns are used in combination with technical indicators such as the commodity-channel index (CCI), the rate of change (ROC), the relative-strength index (RSI) and the moving average. Experienced day traders may also use a variety of other technical indicators. This is a famous trading strategy. Technical Indicators As mentioned, technical indicators are vital tools for day traders. These indicators show interesting trends that can be used by a smart trader to realize a solid profit from following complex changes in the stock market. Carefully watching momentum indicators such as the moving average, RSI, ROC, CCI and others over brief periods of furious activity holds the promise of improved profits for virtually any short-term investor.
Naturally, knowing exactly when to enter and when to exit from an investment opportunity is the biggest factor in day-trading profitability. A competent day trader will study longer-term market trends to gain an understanding of what shorter-term changes may mean. Investment instruments typically exhibit demand and resistance zones. Examining a strong demand zone for a particular investment usually will reveal a good entry point for taking a long position. Likewise, examining a strong resistance zone usually will show a good entry point for taking a short position. Paying close attention to such details can significantly reduce the risks and increase the potential upsides for your investments.
Best time Entry One of the most important trading strategies is the right time entry. The most efficient day trading entry tactic is sturdy support and getaway of strong resistance. The lowest risk entry point with the highest return opportunity is when the stock price hits strong support demand zone. Happy Exits Your bank account can grow much larger if you use the right methods for your day trading. Keep in mind that your profits do not actually exist until you sell an investment to take the profits. Unrealized profits from holding on to an investment can disappear at any moment. Strong-resistance, Fibonacci-number, 50MA or 200MA exit strategies all have been successfully used to sell investments in a timely fashion.
Quite a few people seek to make money with day trading strategies , but such activities are highly risky. Investing for the long term by buying and holding investment instruments can make a lot of sense, especially after studying the history of a specific company or industry sector and the market potential of its associated services and products, but day traders tend to only look briefly at a company or investment vehicle before deciding to buy or sell. Many industry experts think this is not much better than common gambling, which is why the Securities and Exchange Commission has tried to protect small-fund investors by placing a number of restrictions on how they are allowed play the stock market in this manner. This article will demonstrate 4 main trading strategies that has been successful.
Successful Day Trading Strategies.
The following trading strategies explain how to reduce your risks and increase your chances of making money with day trading using the right tools as real time news and ToS .
Picking the Instruments You should begin by deciding on your favored instruments for investment . You can choose stocks, indexes, ETFs, options, commodities or futures. Each instrument has its own quirks and risk levels. If you prefer to focus on an entire economic sector such as commercial real estate, then choosing sector-related ETFs is your best bet. Please note that most ETFs show low beta, which means that large changes in the stock market will produce smaller changes in those ETFs. High-beta ETFs that change a lot when the stock market rises or falls are better for day trading. You have to be careful when picking your trading strategy.
In any case, you should decide up front which instruments will work best for your preferred levels of risk.
Stop-Loss Orders Day trading without stop-loss orders is like walking on a tight wire without a safety net. A serious fall can hurt you badly. Before you accept an investment, set up a stop-loss order to prevent the possibility of losing all your money before you realize what is happening. Moving averages and pivot points are good indicators for stop-loss orders. This is a very popular trading strategy. Real Time News One of your most important tools for seeking profits and avoiding losses is a reliable source of real-time news. Impressive numbers of stock-market traders jump every day on the latest news as the basis for deciding to buy new instruments or to sell their current holdings, which means that even a few seconds may make the difference between making money and losing money. Events that instantly affect the stock market may include a report on general economic activity from a government or private agency, a press release about a company’s current earnings, a policy change at the Federal Reserve, a product or commercial-service announcement, a significant political development in a major trading country or a sudden natural disaster.
Subscribing to a penny-stock news-reporting service can be useful, but the quality and reliability of such services may vary greatly. Some day traders set up a suite of custom searches at a major search engine that returns a steady stream of relevant news.
Time Over Sales Closely monitoring real-time sales data is critical. If unusually large orders for an instrument appear at the current asking price or above it, then you can take advantage of this by entering longer positions. Waiting for the strong demand behind this behavior to further increase the instrument’s asking price can result in a hefty profit. Likewise, seeing unusually large orders at the current bid price or lower quite likely means it’s time to enter short positions and to abandon longer positions for that instrument. This sort of potentially profitable event does not happen often, but patiently waiting for such opportunities is the most likely path to success with trading strategies.
A Simple Conclusion.
No matter what day trading strategies you adopt, consistency is the key. Make a plan, and stick with it. Even penny-stock trading falls under the same rules. Traders who keep their hearts still and their eyes open will always do better than wild traders who don't think first. Stay calm and focused, and you will find your way to wealth.
Learn about unfailing methods to become successful in trading business.
Explore our priceless strategies that will make a qualitative leap in your trading career.

Best Technical Indicators for Day Trading.
With loads of technical indicators, here's how to narrow it down to a few.
The MACD, RSI, moving average, Bollinger Bands, stochastics, and the list goes on, but what are the best technical indicators for day trading? Day traders need to act quickly, so trying to monitor too many indicators becomes time consuming, counter productive and is actually likely to deteriorate performance. When day trading--whether stocks, forex or futures--keep it simple. Use only a couple indicators, maximum, or not using any is fine too.
Consider these tips to find the best day trading indicator(s) for you.
Day Trading with Indicators or No Indicators.
Indicators are just manipulations of price data or volume data, therefore many day traders don't use indicators at all. Indicators aren't required for profitable trading. Practice trading based on price action and there is little need for indicators. That said, an indicator does help some people see things that may not be obvious on the price chart. For example, the price is trending higher, but it is losing momentum. To someone not used to reading price action (analyzing how the price is moving) this may be hard to see, but indicators can make it more obvious. Unfortunately, indicators come with their own sets of problems, signaling a reversal too soon or too late (see Don't Trade MACD Divergence Until You Read This).
Indicators aren't inherently bad or good, they are just a tool and therefore whether they are detrimental or helpful depends on how they are used.
Many Trading Indicators are Redundant.
Many indicators are almost exactly the same, with slight variations. One may be based on percent movements while another is based on dollar movement (PPO and MACD). Also, indicators may be part of the same "family." Examples of this include the MACD, stochastics and RSI.
While they may appear slightly different, usually just using one is enough. Having all three on your chart isn't going to improve the odds of your trades, because all these indicators are going to give you pretty much the same information most of the time.
Even a moving average (MA) and a MACD can give the same information. If you use a MACD (12,26) indicator and also add 12 and 26-period MAs to your price chart, the MACD indicator and MAs will tell you the same thing. In fact, all the MACD does is show how far the 12-period moving average is above or below the 26 period moving average. When the MACD crosses above or below the zero the line, that means the 12-period moving average crossed above or below the 26-period. If you added these indicators to your chart they would always confirm each other, because they are using the same input.
If you opt to use indicators, only pick one from each of the following four groups (if required, remember indicators aren't need to trade profitably). Even picking only one from each group could lead to redundancies and clutter, without providing additional insight.
Oscillators: This is a group of indicators that flow up and down, often between upper and lower bounds. Popular oscillators include the RSI, Stochastics, Commodity Channel Index (CCI) and MACD.
Volume: Aside from basic volume, there are also volume indicators. These typically combine volume with price data in an attempt to determine how strong a price trend is. Popular volume indicators include Volume (plain), Chaikin Money Flow, On Balance Volume and Money Flow. Overlays : These are indicators that overlap the price movement, unlike a MACD indicator for instance which is separate from the price chart. With overlays you may choose to use more than one, since their functions are so varied. Popular overlays include Bollinger Bands, Keltner Channels, Parabolic SAR, Moving Averages, Pivot Points and Fibonacci Extensions and Retracements. Breadth Indicators : This group includes any indicators that has to do with trader sentiment or what the broader market is doing. These are mostly stock market related, and include Trin, Ticks, Tiki and the Advance-Decline Line.
There is little need for more than one oscillator, breadth or volume indicator. You may find uses for a few overlays though, helping to indicate trend changes, trade levels and areas of potential support or resistance. Master using price action and overlays and you likely won't have need for the other types of indicators.
Combining Day Trading Indicators.
Consider picking picking one or two indicators to help with entries and exits, respectively. For example, an RSI could be used to help isolate the trend and entry points. In an uptrend, the RSI should be extending above 70 on rallies and staying above 30 on pullbacks. This simple guide can help confirm the trend, highlight trading opportunities, and see when the market may be changing trend direction.
A moving average, ATR Stops (Chandelier Exits) or Moving Average Envelopes could then be applied to the chart (overlays) to aid in exits. For example, one of these could be used as a trailing stock loss on trending trades. If the trend is up, look to exit if the price falls below the line (which will be below the price as the price rises).
This is just one example of how indicators can be combined. Which indicators are chosen depends on how a trader trades, and on what time frame. Calibrate each indicator (via the indicator settings) to the specific assets, time frame and strategy being traded. Default setting on the indicator may not be ideal, so alter them to make sure they give the best signals for the trades being taken. Indicator settings may require adjustments occasionally as market conditions change over time.
Final Word On the Best Indicator for Day Trading.
Unfortunately, there is no single indicator that is the best for day trading. Technical indicators are just tools, they can't produce profits. Profits require a trader to use their indicators and price analysis skills in the correct way (see Day trading False Breakouts). This takes practice. Whatever indicators you decide to use, limit it to one to three (or even zero is fine). Using more indicators is redundant and could actually lead to worse performance.
Know your indicator(s) well: What are its drawbacks? When does it typically produce false signals? What good trades does it miss (failure to signal)? Does it tend to give signals too early or too late? Can the indicator be used to trigger a trade, or does it just alert you too a potential trade (good timing or poor timing)?
Know those things about the indicators you use, and you will be on your way to using it more productively.

Day trading technical strategies

Gold daily chart.
Since time in memorial, gold has played an important role in the financial market. It has been synonymous with luxury and power. In the past, it used to make religious idols, honor monarchs and serve as currency. In the United States, the dollar was pegged to gold until 1971 when this peg was removed. To date, the Federal Reserve and other central banks around the world hold huge deposits of gold for emergency purposes. After the great depression, the Roosevelt administration fixed the price of gold at $35/ounce. This was removed by the Nixon administration in 1971 leading to a 2,200% gain in its price resting at $800 before going down to $260 in 1999. After this fall, gold began a bull run and is today trading at $1,136. These fluctuations are very important for traders who can make a lot of money in the process. In this article, I will explain a few strategies to help you trade gold spot prices.
Fundamental and intermarket factors.
As a commodity, gold prices depend on a number of factors such as supply and demand. In addition, monetary and fiscal decisions play an important role in pricing gold. In a strong economy, there is increased confidence for investors to buy gold. As a result, the price keeps on going up. The better the returns in the bond and stocks market leads to higher returns in gold prices. Historically, a strong dollar leads to strong gold and vice versa. As a day trader, you need to have a holistic approach about the fundamentals so that you can know when to enter and exit a trade. Presently, the Federal Reserve is contemplating raising interest rates. As the year progresses, I expect that the price of gold will fall in anticipation of the tightening measures.
1 month chart of Gold and EURUSD.
Technical strategies.
For day traders, price movements are key to make sweet returns in gold trading. In many cases, gold will follow a certain trend. Therefore, it is your responsibility as a trader to find the trend and enter a position. To identify a trend, trend analysis is very important. Luckily, there are tools (indicators) which can help you in this. For short term trades, you simply want to identify the support and resistance levels. Trendlines also play a very significant role in confirming other technical indicators such as those generated by MACD and Relative Strength Index (RSI). In my experience, I have identified the best strategy as one where I wait for the trendline to be breached before I make my entry position. To create an upward trend, the best strategy is to connect a series of rising bottoms and finding a support opportunity. On the other hand, a downward trend is created by joining a series of highs. Another technical strategy to use is that of moving averages because they are simple to use and easy to generate. The best buying position is when the shorter term, faster moving average passes above the slower one. Also, you can sell when the faster average crosses below the slower average in a trending market. To execute this strategy in the best way, you need to first understand the type of market, whether it is a trending market or a range bound market. Other trend analysus indicators you can use include: Bollinger bands, envelopes, and standard deviation. Identifying a divergence is also very important. A good indicator to help you in this is the Relative Strength Index (RSI). Quite often, the RSI will hit highs and lows as gold price turns either down or upwards. To place a trade, you should always try to find a confirmation of the divergence. Confirmation leads to an increase in confidence. With increased confidence, the result will be a better trade.
The Bottom-line.
To make sweet returns in trading gold, you need to understand the key factors that lead to price movements. In addition, having a good understanding about the economy will help you make confident results. After understanding the macro conditions, you should now focus on technical analysis. By understanding the trend, and knowing how to identify the divergence, you will be at a good position to make good entry and exit decisions.

9 profitable intraday trading strategies (that you can use right now)
9 profitable intra-day forex trading strategies you can use right now!
People who succeed at day trading do three things very well:
They identify intra-day trading strategies that are tried, tested. They are 100% disciplined in executing those strategies. They stick to a strict money management regime.
Jump right to one you like, just click on it.
Momentum Reversal Trading Strategy.
Role Reversal Trading Strategy.
Heikin-Ashi Trading Strategy.
RSI Trading Strategy, 5 Systems + Back Test Results.
The Moving average crossover strategy.
The swing day trading strategy.
Candlestick patterns.
The Bollinger band squeeze strategy.
The narrow range strategy.
The 2 period RSI strategy.
Binary 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?
All you need to do is: set aside a few minutes of your day to tackle one of the following forex day trading strategies which I outline for you below.
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:
Awesome forex day trading strategies that are used successfully every day. The main chart patterns associated with these forex trading strategies. Instructions for implementing the strategies.
Then I will tell you,
The simple truth is.
Learning to use and implement a basic intra-day trading strategies can cut your losses by 63% immediately and will increase your profitability chances in the long run.
MUST READ: Few Things About Risk Management Forex Trader Should Know.
So lets get down to business.
1.Momentum Reversal Trading Strategy.
#1 The strategy seeks trading opportunities through the combination of fundamental and technical analysis.
#2 It requires a trader to analyse the fundamental aspects of the traded currency to establish mid to long term trend first. Then it uses the price momentum, support and a resistance zones to spot market reversals.
#3 The strategy allows to enter the market at low risk and provide a large profit potential through advanced money management.
#4 All trades are planned in advance to give a trader enough time to enter the market every time. Most trades are placed as pending limit orders often executed during London’s session.
#5 The strategy works well on all major US Dollar crosses. It generates between 1-5 signals per month. All trades are entered and held for anything up to several weeks depending on the price action and the market fundamentals.
#6 The strategy has been traded in live markets for the last 15 months and its performance is clearly documented in the performance section.
The strategy uses a few indicators only:
Stochastic Oscillator ( multi-time frame) Support and resistance Fibonacci retracements.
After establishing your bias and long term trend through Commitments of Traders report, it’s time to switch to daily charts and look for a price reversal phase.
To define the price reversal you need to analyse the price on daily charts first and answer 3 simple questions:
Has the market been clearly falling or rallying recently? Is the weekly and daily stochastic showing overbought or oversold levels on daily charts? Is the price trading around major support or resistance zones?
In the USDJPY chart above you can see four examples of the price being in a reversal phase.
Setup #1 on the chart.
Weekly and daily stochastics are above 70 zone and the market has been in a substantial rally prior to that. A trader should be marking this zone as bearish and switching to intraday charts to seek a bearish reversal price pattern.
Similar to setup #1, price, after a few days of rally, it came back up to an overbought stochastics zone ( above 70) and is now trading around a major resistance zone. A trader will be marking this area as bearish and switching to intraday charts to seek a bearish reversal price pattern.
Once again, the momentum is now overbought and the price is forming a clear resistance. A trader will be marking this area as bearish and switching to intraday charts to seek a bearish reversal pattern.
The price declined and reached a support at 117 area. The momentum is now oversold. A trader will be marking this area as bullish and switching to intraday charts to seek a bullish reversal price pattern.
The above setups will be attempted only in the direction of the trend established by the trader during a fundamental analysis. The fundamentals were pointing to the downside in USDJPY. The first 3 setups would be considered and the 4th would be either ignored or entered as a counter trend position with a lower lot size.
Fore more information CLICK HERE.
2:The Moving average crossover strategy.
Moving average indicators are standard within all trading platforms, the indicators can be set to the criteria that you prefer.
For this simple day trading strategy we need three moving average lines,
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.
This day trading strategy generates a BUY signal when the fast moving average ( or MA) crosses up over the slower moving average.
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 first false signal in the above example broke even, the next example lost 35 points.
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.
Notice how the price moved quickly away from the trend MA and stayed below it signifying a strong trend.
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.
3.Heikin-Ashi Trading Strategy.
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:
Close price: Heikin-Ashi candle is the average of open, close, high and low price. Open price: Heikin-Ashi candle is the average of the open and close of the previous candle. High price: the high price in a Heikin-Ashi candle is chosen from one of the high, open and close price of which has the highest value. Low price: the high price in a Heikin-Ashi candle is chosen from one of the high, open and close price of which has the lowest value.
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.
You can access Heikin-Ashi indicator on every charting tool these days.
Lets see how a Heikin-Ashi chart looks like:
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.
The strategy combines Heikin-Ashi reversal pattern with one of the popular momentum indicators.
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.
Once the price prints two red consecutive candles after a series of green candles, the uptrend is exhausted and the reversal is likely. SHORT positions should be considered.
If the price prints two consecutive green candles, after a series of red candles, the downtrend is exhausted and the reversal is likely. LONG positions should be considered.
The raw candle formation is not enough to make this day trading strategy valuable. Trader needs other filters to weed out false signals and improve the performance.
MOMENTUM FILTER (Stochastic Oscillator 14,7,3)
We recommend to use a simple Stochastic Oscillator with settings 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.
Enter long trade after two consecutive RED candles are completed and the Stochastic is above 70 mark.
Enter short trade after two consecutive GREEN candles are completed and the Stochastic is below 30 mark.
To further improve the performance of this awesome day trading strategy, other filers might be used. I would recommend to place stop orders once the setup is in place.
In the long setup showed in the chart below, the trader would place a long stop order few pips above the high o the second Heinkin-Ashi reversal candle.
The same would apply to short setups, trader would place a sell stop order few pips below the low of the second reversal candle.
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.
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:
Move position to break even after 50 pips in profit. Move stop loss at the major local lows and highs or if the opposite signal is generated. Let your winners run. Stop loss 100 pips flat or use local technical levels to set stop losses. Every trader is advised to implement their own money management rules.
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.
Date: 21 June 2013.
Date: 31 October 2013.
4. The swing forex day trading strategy.
Swing day trading strategy is all about vigilance!
The trader needs to be on guard to notice a correction in a trend and then be ready to catch the ‘swing’ out of the correction and back into the trend.
“And what’s a correction?” I hear you ask.
Simple. Corrections involve overlap of price bars or candles, lots and lots of overlap!
A trending price makes progress quickly, corrections don’t.
Lets look at some charts for an example.
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.
As I have marked with the blue lines the price even contracted to a daily move of only 20 points!
A swing trader would be on HIGH ALERT here! Contracting price, lots and lots of overlap.
This presented a very high probability that the price was going to continue in the trend that had started the previous week.
The trade would involve selling when the first candle moved below the contracting range of the previous few candles, A stop could be placed at the most recent minor swing high. ( Orange Arrows )
Another example of a swing trade is shown in the chart below.
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.
We want to wait for the price to show a sign of reversal, at the end of the correction, two separate candles moved above the upper blue line.
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.
The risk here was about 30 points, the gain was about 600 if you managed to ride it all the way up!
Swing trading is a little more nuanced than the crossover technique, but still has plenty to offer in terms of money management and trade entry signals.
5.Candlestick patterns.
MUST READ: Candlestick patterns – 21 easy patterns ( and what they mean )
Engulfing patterns happen when the real body of a price candle covers or engulfs the real body of one or more of the preceding candles.
The more candles that the engulfing candle covers the more powerful the following move will likely be.
There are two types. Bullish and bearish.
The bullish engulfing pattern signals a bullish rise ahead and the opposite is true for the bearish engulfing candle.
In the above chart I have circled the bullish engulfing candles which led to price rises immediately after.
Well, the bullish engulfing pattern is a precursor to a large upward move.
So, when you see an the engulfing candle taking shape you should wait for the following candle and then open your position.
Your stop should be placed at the low of the engulfing candle.
The bearish engulfing pattern signals a bearish price decline ahead.
In the above chart I have circled the bearish engulfing candles which led to price declines immediately after.
Again, the more candles that the engulfing candle covers the more powerful the following move will likely be.
It is the same principle as the bullish pattern, just the flip side of the coin!
The bearish engulfing pattern is also a precursor to a large decline.
So, when you see an the engulfing candle taking shape you should wait for the following candle and then open your position.
Your stop should be placed at the high of the engulfing candle.
The ‘long shadow refers to the length of the line from the closing price on a candle to the high or low price of that particular candle.
The ‘shadow’ should be at least twice the length of the real body of the candle.
These shadows tend to occur at turning points.
And they tend to lead to large price moves!
As with the rest of the candle stick patterns, we wait for the long shadow candle to close and we place our trade at the open of the next candle.
Your stop should again be placed at the extreme high or low of the shadow candle and trailed to follow the trend.
A candle forms a ‘hammer’ when the real body of the candle sits at one end of the candle leaving a head and handle!
Again these candles tend to form at price reversals giving a strong signal for traders.
Its the same trick!
We wait for the long hammer candle to close and we place our trade at the open of the next candle.
Your stop should again be placed at the extreme high or low of the hammer candle.
and again trailed to follow the trend.
6.Support and Resistance.
Role Reversal Day Trading Strategy.
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.
Support and Resistance are psychological levels which price has difficulties to break. Many reversals of trend will occur on these levels.
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.
It important to mention, support and resistance is NOT an exact price but rather a ZONE . Many novice traders treat the support and resistance as an exact price, which they are not. Trader must think of support and resistance as a ZONE or AREA.
These levels are probably the most important concepts in technical analysis. They are a core of most professional day trading strategies out there.
Let me introduce you to the “Role Reversal”. Let’s see how can you use it in your every day’s trading.
Role Reversal is a simple and powerful idea of support becoming a resistance (in the downtrend) and the resistance becoming a support (in the uptrend).
Let see how this plays out in the uptrend.
Once the price is making higher highs and higher lows we call it uptrend. Technical trader must assume the price is going to go up forever and only long trades should be considered. Once the uptrend is defined, the lowest strategy to trade is – buy on pullbacks.
As per definition of an uptrend, the price punching through the resistance and pullback before it makes another higher high.
“Role reversal” concept comes handy for bulls in this scenario.
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”.
After making a new higher high, the price in uptrend must correct. It is likely to correct to the new support level. This can present an excellent buying opportunity for bulls.
We don’t know where exactly price will resume an uptrend. Risk management must be applied.
Trader must remember to treat support and resistance levels as ZONES rather than exact price.
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:
1/3 at 20MA, 1/3 at role reversal, 1/3 at 50% Fib retracement. This way you lower the risk and increase the odds of getting filled.
7. 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! )
The above chart is the EURUSD 240 minute chart.
The Bollinger band indicator should be set to 20 periods and 2 standard deviations and the Bollinger band width indicator should be switched on.
When trading using this strategy, we are looking for contraction in the bands along with periods when the Bollinger band width is approaching 0.0100 or about 100 points.
When all the conditions are in place, it signifies a significant price move is ahead as indicated within the green circles above.
A BUY signal is generated when a full candle completes above the simple moving average line.
A SELL signal is generated when a full candle completes below the simple moving average line.
Stops should be placed at the high or low of the preceding candle, or, to allow for a maximum loss of 3% of your trading capital, whichever is the smaller.
8. The Narrow Range Strategy.
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.
It is based on identifying the candle of the narrowest range of the past 4 or 7 days.
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.
Quite often you will find two or more narrow candles together this only serves to contract the volatility and will often lead to an even larger breakout of the range to come.
Once a narrow candle is identified we can be reasonably sure that a volatility spike will be close at hand.
Your stop is placed at the low or high of the Narrow candle and trailed to suit.
9. 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.
The merits of the system shine when the market begins to trend in a particular direction. In this case Extra BUY or SELL triggers can be used to add to positions.
Those positions should be closed when an opposing signal is generated.
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.
Both trades were then closed when the RSI moved back below 10.
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.
Day trading is hard work, time consuming and frustrating at the best of times! It is no wonder that over 93% of people that try it, lose money and give up!
“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 .
Believing they will wake up the next morning a newly minted millionaire! What actually happens goes more like this.
Your friend has just opened a trading account, he claims to have made a hundred dollars in ten minutes, he just sold the EURUSD because the U. S economy is so great right now, it said so on TV!
So you go home, lodge a $1000 into a trading account, SELL the EURUSD at $5/ point.
You wake up the next day and the market has moved against you by 200 points, and your account is wiped out!
Lets look at the facts. There are three main reasons behind the high failure rate of new traders, and you can avoid them easily!
As in the story I told above, trading based on hearsay or some popular narrative will lead you to almost certain doom!
The value of using a tried and tested trading technique is immense, and will save you from loosing your hard earned savings.
By using a day trading strategy, you remove the emotional element from the trading decision.
A trading strategy requires a number of elements to be in place before trading.
So, when those elements are in place, you place the trade.
It is a binary decision rather than an emotional decision. All other actions are off the table, by following a trading technique you avoid the cardinal sin of trading, that is, over trading.
So often new traders place a trade without even placing a stop loss position! An error which can lead to catastrophic losses.
Money management can be as simple as using the 3 / 1000 rule.
That is: never ever ever ever risk more than 3% of your capital on any trade.
And never risk more than 1000 th (or as close to) of your capital per point.
Now, I’ve given you the tools, so get to it, and start trading profitably!
Please let me know, which intraday trading strategy is your favourite in the comment section below. I will expand of the most popular ones.
Author: Roman Sadowski.
I truly believe the journey to profitability and freedom is a function of hard work, commitment, persistence and boring routines.
There is no magic to trading. I believe in making calm rational decisions what, when and how to trade based on a decade of intense learning.
2 Comments.
Very good and valuable information thanks for sharing.
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