All you need to do is: That means the stakes are not as high for them, as they are for a person trading their own capital. 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. The simple truth is. Then it uses the price momentum, support and a resistance zones to spot market reversals. It generates between signals per month.
All trades are entered and held for anything up to several weeks depending on the price action and the market fundamentals. To define the price reversal you need to analyse the price on daily charts first and answer 3 simple questions:.
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. Setup 2 on the chart 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. Setup 3 on the chart 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. Setup 4 on the chart The price declined and reached a support at 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 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. 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 period line is the trend indicator. How do I trade with it? This day trading strategy generates a BUY signal when the fast moving average or MA crosses up over the slower moving average.
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.
Well, If the price bars stay consistently above or below the 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 , , and 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. 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.
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. You can access Heikin-Ashi indicator on every charting tool these days. Lets see how a Heikin-Ashi chart looks like:. 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. SHORT positions should be considered. LONG positions should be considered. Trader needs other filters to weed out false signals and improve the performance. A Trader would now: 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.
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. 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 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. It important to consider fundamental news in the market. I would advise to avoid days like:. See some sample trade setups before and after.
You can then unzip it and place them in your MT4 and have the below charts ready. Swing day trading strategy is all about vigilance! Corrections involve overlap of price bars or candles, lots and lots of overlap! Lets look at some charts for an example. Take the above chart, EURUSD at minute candles, within the green circle we have 26 candles where the price stayed within a point range. As I have marked with the blue lines the price even contracted to a daily move of only 20 points!
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. In green we can see a correction to the downside, notice the slowing downside momentum?
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 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. 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. 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.
How do I trade it? 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!More...