Trading day forex system. One of the key philosophies of my Forex trading approach is to trade “end of day”, and by that I mean trading after the New York close, which marks the end of the current Forex trading day. Many traders email me asking me things like “Why is the New York close so important” and “How do I trade end-of-day.

Trading day forex system

End Of Day Forex Trading Systems

Trading day forex system. It's been a while since I wrote my last official blog post. Vacations and various trips made it tougher to write. At the same time, I started to day trade and that alone is taking up a lot of time. Somehow, I wanted to get back to writing blog articles. I'm coming back with what truly is (for now) my favorite day trading.

Trading day forex system


The rationale behind this desire makes sense. After all, for most things in life the biggest rewards are for the hardest workers; those exhibiting the utmost of control and discipline long enough to properly implement their plan or strategy. By using a very short-term chart, traders expose themselves even more to the t op trading mistake , or t he number one mistake that forex traders make.

So, first and foremost before we get into the process of short-term trading, I want to specify that this is often the most difficult way for new traders to get started. Preferably, new traders will start with longer-term charts and approaches that may be more forgiving, and as they gain experience and comfort they can then elect to move into faster time frames.

The biggest challenge of short-term trading is the same as the top trading mistake. Too few traders looking to scalp actually do so correctly, under the incorrect presumption that trading on really short-term charts gives them enough control to trade without stops.

While keeping your finger on the trigger may give you more control, it means absolutely nothing if prices gap against your position or if a really big piece of news comes out that completely de-rails your trading plan. So, even though you may be watching price action on a five or fifteen-minute chart, protective stops are still needed. Further to this point, traders need to be able to focus on winning more when they are right than they lose when they are wrong.

This can be a huge challenge on really short-term charts where near-term price movements are unpredictable. An additional concern is variance. On a very short-term chart, the opposite is true. Significantly less information goes into each candle, and thereby each candle is less reliable as a forecast of future candle formations.

With all of the above being said, trading on short-term charts is still possible. It just requires that traders utilize even more control and discipline over their trading approaches and risk management.

For new traders that often struggle with risk management, or staying disciplined; the results can be disastrous. But if those boxes are checked, traders can look to exert the upmost of control over their approach with shorter time frames. We can still incorporate analysis from longer time frames into our approaches in an effort to get the best probabilities of success. The first step in the strategy is to add two moving averages based on the hourly chart.

Most modern charting packages can offer the ability to build an indicator on a longer time frame. The indicators that I add are the 8 and 34 period exponential moving averages, based on the hourly chart but plotted on the 5-minute chart shown below. If the faster 8 period moving average based on the hourly chart is above the slower 34 period moving average also based on the hourly chart , then the strategy is looking to go long, and to only go long.

The hourly moving averages work like a compass, showing traders which direction to trade the trend. Once the trend has been identified, and the bias has been obtained, the trader can then look for entries in the direction of that trend; looking for momentum to continue on the 5-minute chart as it has been displayed by our hourly-moving averages.

The trigger for this strategy is another 8 period exponential moving average, but this one is built on the shorter-term five-minute chart.

The large benefit behind the strategy is that just by the very act of price moving in the trend-side direction over the shorter-term EMA, traders are buying or selling short-term retracements in the direction of the momentum. When prices make those short-term retracements, they create swings in price action.

If momentum does continue in the trend-side direction, the trader could be in a very attractive position as prices continue to move in their favor. When the position gets in the money by the amount of the initial stop a 1-to-1 risk-to-reward ratio , the trader can look to move the stop to break-even so that, worst-case scenario should prices and momentum reverse, the trader puts themselves in a position to avoid taking a loss.

Since a 1-to-1 risk-to-reward has been realized and should momentum continue in the trend-side direction, the trader stands to profit considerably more. After the stop has been moved to break-even, and the initial risk is removed from the position; traders can even look to add-to the trade with new positions or new lots in an attempt to build a larger position with a significantly smaller amount of risk.

Before employing any of the mentioned methods, traders should first test on a demo account. The demo account is free and can be a phenomenal testing ground for new strategies and methods.

Would you like to enhance your FX Education? DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. Click here to dismiss. Price action and Macro. While short-term trading is attractive, it can also be dangerous. Short-term traders will often exercise poor risk management, and this can have very negative consequences.

We share a strategy that can be used to trade short-term momentum with a focus on risk. Foundations of Technical Analysis: Classic Chart Patterns, Part I. Oversold and What This Means for Traders. Upcoming Events Economic Event. Forex Economic Calendar A:


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