Best Strategies to Day Trade in Forex

Best Forex day trading strategies

According to TU experts these are some of the best strategies for Forex day trading.

Moving average strategy

The Moving Average (MA) strategy is a popular trading strategy used in the Forex market. It involves using moving averages to identify trends and make trading decisions. The strategy works by calculating the average price of a currency pair over a specific period, such as 20, 50, or 200 days. Traders then use this moving average line to identify the market trend. If the price is above the moving average line, it's considered a bullish trend, and if it's below, it's a bearish trend. Another way to use the moving averages is by looking at the crossover of shorter-duration and longer-duration moving averages. When the shorter duration moving average crosses above the longer duration moving average, a buy signal is generated, and vice versa.

One of the main benefits of the Moving Average strategy is its simplicity. It's a straightforward trading strategy that's easy to understand and implement. Additionally, the strategy can be used with other technical indicators, such as the Relative Strength Index (RSI) or the Moving Average Convergence Divergence (MACD) indicator, to increase its effectiveness. Another advantage of this strategy is that it can be applied to any timeframe, making it suitable for both short-term and long-term trading.

On the flip side, one of the main disadvantages of this strategy is that it can be slow to react to sudden changes in the market.

Moving Average strategy

50 pips a day Forex

The 50 pips a day Forex trading strategy is a famous approach among traders looking to make consistent profits by identifying high-probability trades. The strategy involves using a combination of technical indicators, including the Moving Average and Relative Strength Index (RSI), to confirm the trend and identify entry and exit points. This strategy can be applied to any currency pair and generally uses a 15-minute chart for entry and exit signals.

To use this strategy effectively, traders should first look for currency pairs that are trending in a specific direction and have a tight spread. Next, traders should use technical indicators to confirm the trend and identify potential entry and exit points. The Moving Average can be used to identify the overall trend direction, while the RSI can be used to confirm momentum and identify potential overbought or oversold conditions. Traders should aim to enter trades when the price is trading in the direction of the trend and exit once they have achieved their target profit of 50 pips.

50 pips a day Forex trading strategy

In the above illustration, the highlighted area indicates a move of 50 pips on a 5-min time frame. As we can see, catching such moves is easier given the number of times they appear, and so, implementing this strategy is relatively easier.

Breakout strategy

The Breakout strategy is heavily favored in the Forex market. It involves identifying key levels of support and resistance and entering trades when the price breaks through these levels. Traders typically use technical analysis tools, such as trend lines, chart patterns, and moving averages, to identify potential breakouts. The strategy can be applied to any currency pair and timeframe, making it suitable for both short-term and long-term trading.

One of the main benefits of the Breakout strategy is its potential for high profits. When a breakout occurs, the price can move sharply in the direction of the breakout, allowing traders to capture significant profits. Additionally, the strategy allows traders to set clear entry and exit points, making it easier to manage risk effectively.

Breakout strategy

Chart pattern trading

Chart pattern trading is used in the Forex market and involves identifying patterns on price charts, such as head and shoulders, double tops and bottoms, and triangles, to determine potential trade opportunities. Traders using this strategy rely on technical analysis to identify patterns and then use them to make informed trading decisions. This strategy can be applied to any currency pair and timeframe, making it suitable for both short-term and long-term trading.

While the strategy is simple to learn and implement, traders must also be aware of its limitations and manage risk effectively. By using a combination of technical and fundamental analysis, traders can use chart pattern trading to achieve success in the Forex market.

Chart pattern trading strategy

Trend following strategy

The trend-following strategy is a prevalent trading approach used by Forex traders to identify and capitalize on long-term trends in the market. This strategy is based on the idea that markets trend and that traders can profit by following those trends. Trend-following traders typically use technical analysis to identify trends and use indicators such as moving averages, trendlines, and momentum indicators to confirm them. This strategy can be effective in any market condition, whether the market is trending up or down.

One of the main advantages of the trend-following strategy is its ability to capture large market moves. By following the trend, traders can profit from significant price movements, which can lead to substantial profits.

Trend-following strategy

Fibonacci retracement trading

Forex traders use the Fibonacci retracement trading strategy to identify potential market support and resistance levels. This strategy is based on the Fibonacci sequence, a mathematical pattern that appears in nature and has been found to have applications in financial markets. The identified potential areas of support or resistance become levels where traders can enter or exit trades. This strategy can be effective in any market condition and can be used in combination with other technical analysis tools.

One of the main advantages of the Fibonacci retracement trading strategy is its ability to identify potential levels of support and resistance in the market. This can help traders enter or exit trades at strategic levels, which can improve their chances of success. Additionally, the use of Fibonacci retracement levels can help traders identify potential price targets, which can be useful in setting profit targets. Furthermore, this strategy can be used in combination with other technical analysis tools, such as trendlines and moving averages, to confirm trade signals.

Scalping

Scalping is a Forex trading strategy that involves making multiple trades with the aim of making small profits from each trade. Traders who use this strategy hold positions for a very short period, typically between seconds and minutes, and aim to capitalize on small price movements in the market. This strategy requires a high level of focus and discipline, as traders must be able to make quick decisions and execute trades rapidly. Scalping can be effective in markets with high liquidity and volatility and can be used in combination with other technical analysis tools to confirm trade signals.

Scalping strategy

In the above illustration, we see a scalping trade with the help of MACD indicator. A trader would enter the trade at the MACD buy signal (price highlighted by the rectangular box) and exit at the MACD sell signal. Traders ideally use a time frame between 30 seconds to 15 minutes for this strategy, and a scalping trade can last for anywhere between seconds to minutes (based on the signal generated by the indicator being used.)

What is the best day trading strategy for beginners?

For beginners, it is important to start with a simple and easy-to-understand day trading strategy that does not require a lot of technical analysis or experience. According to experts, the following three strategies are most suitable for beginners:

What are the best currency pairs for day traders?

As a day trader, choosing the right currency pair to trade is important for maximizing profits and minimizing risks. The best currency pairs for day traders are typically those that have high liquidity, tight spreads, and low volatility. Based on our research, for beginners, the major currency pairs are the best option as they meet these criteria and are the most widely traded in the Forex market.

The most significant currency pairs in the Forex market are composed of the US dollar (USD) and six other currencies: Euro (EUR), Japanese yen (JPY), British pound (GBP), Swiss franc (CHF), Canadian dollar (CAD), and Australian dollar (AUD). These particular currency pairs are responsible for the majority of trading volume and are characterized by high liquidity, enabling traders to buy and sell them quickly and conveniently at any time.

In addition to liquidity, the major currency pairs also have tight spreads, which means that the difference between the buying and selling prices is relatively low. This is important for day traders as they aim to make small profits from each trade, and tight spreads help to reduce trading costs.

Can I get rich with Forex day trading?

Forex day trading can be a lucrative way to earn money, but it requires a lot of learning, practice, and discipline. While it is possible to get rich with Forex day trading, it is important to understand that it is not a get-rich-quick scheme.

To become successful in Forex day trading, traders need to have a solid understanding of the market, trading strategies, risk management models, and the psychology of trading. This requires a lot of learning and practice, including studying charts and technical indicators, backtesting strategies, and gaining experience through simulated and real trading.

Additionally, traders need to have discipline and patience to stick to their trading plan and avoid making emotional decisions. They also need to have effective risk management strategies in place to minimize potential losses.

So while it is possible to make a lot of money with Forex day trading, it is important to approach it as a long-term investment rather than a quick fix for financial problems. Traders need to be prepared to put in the time and effort required to become successful, and they should never risk more money than they can afford to lose.

In summary, although it is possible to get rich with Forex day trading, it requires a lot of learning, practice, discipline, and effective risk management. Traders should approach it as a long-term investment and be prepared to put in the time and effort required to become successful.

Best Day trading Forex brokers

IC Markets

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Up to 75.93% of the broker’s non-professional clients incur losses when trading CFDs.

IC Markets is a brokerage company established in 2007 in Sydney, Australia. IC Markets group of companies provides access to financial markets across the world. The group has offices located in different regions enabling IC Markets to work with traders from practically any jurisdiction legally and in compliance with the local law. The companies of the group hold the following licenses: Raw Trading Ltd. is licensed by the SFSA, Seychelles, International Capital Markets Pty Ltd by the ASIC, Australia, and IC Markets (EU) Ltd by the CySEC, Cyprus. IC Markets is also a member of the Financial Commission, an independent organization that deals with disputes and has an insurance fund with up to EUR 20,000 coverage per each trader.

Admiral Markets

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The high trust ratings associated with Admiral Markets are one of the primary reasons why they are a top choice. With a minimum deposit of $100, you can get started with day trading without risking too much. Trust is also shown through two tier-one regulators that are associated with Admiral Markets, something that a majority of other platforms tend to lack. In addition to these, Admiral Markets also have two tier-two regulators.

When trading forex with Admiral Markets, there are 47 pairs that you can choose from. The company also gives you access to a range of other trading options and features its own built-in social trading platform. The average spread on EUR/USD trades is 0.6, with an all-in cost of 0.7.

Admiral Markets use the MetaTrader platform as a standard option for its customers. Instead of giving you access to a standard MetaTrader account, a trader profile with the company allows you to access MetaTrader Supreme. This can be used with both MT4 and MT5. The Supreme edition comes with a total of 12 advisors, who are all experts in the forex industry. You also get access to 20 custom indicators, which can greatly help on your journey to becoming a successful day trader.