5 steps to make profits in forex trading using day trading strategy
In the ever-volatile and lucrative world of Forex, day trading stands tall as an incredibly effective strategy. Foreign exchange is a very turbulent field, with prices seeing constant change every single day. Though at the outset, most fluctuations seem haphazard and random, every movement obeys a certain trend. With practice, these trends can be capitalized on.
Patterns are a deciding factor in Forex trading; depending on your ability to capture and capitalize on trends, you will either emerge victorious, or unsuccessful. We will see 5 strategies that have a healthy chance of surfacing in FX markets. Either one or more than one of said strategies has a guaranteed chance of emerging on each trading day. With a good control over said setups and knowledge of their occurrences, traders can capitalize better in Forex trading markets, and go home with consistent winnings!
A profitable trade is defined by a trader’s ability to study price movements. Knowing where the trade starts, hikes, and ends, will help hugely. Several novice traders end up getting emotional over the lost capital and start overtrading. Having strong knowledge of a currency’s growth and limitations prior to entering trades will be pivotal in becoming a successful trader.
Here are 5 Forex Trading Setups to Have a Profitable Venture Day Trading:
1) Reversal-Consolidation Breakout
The beauty of Forex trading can be seen, when markets birth a major price shift in one direction, and almost immediately, a bigger move follows in the opposite! Traders refer to this as a reversal. The mistake here is that several traders are glued on the first price shift; when in reality, the following movement is of much higher value. When you see a drop off, let’s say, $0.50, don’t let it distract you; because, the market is going to hike up again to $0.70, and you will have been hasty. Watch for a price pullback, consolidate and go long.
2) Impulse Pullback Consolidation
Every trade session begins with an impulse, a strong unidirectional move. In the first 15 minutes of a trade opening, prices see pullbacks and form consolidations. As a smart trader, your job is to monitor this impulse wave and wait for a breakout in the opposite direction. If a price falls off the open, you will see a pullback and consolidation below opening prices. If the price rallies in the open then the same will be seen above the opening price. The latter triggers a long trade. This trend is effective only when the consolidation is small in comparison to the impulse wave.
3) Reversal at Support and Resistance
Support/resistance is a range, not an accurate position in the charts. A profitable move to make in FX markets is to look for a trade setup near support or resistance. The importance of these two elements is that they indicate the occurrence of reversal or breakout. Keeping this in mind let a consolidation present itself near a support or resistance. The day trading strategy is quite different from the 1 Minute Forex Scalping Strategy.
4) False Breakouts
False breakouts patterns help make a smart trader. A typical example is when using the impulse pullback, you expect a drop in prices, and a false upwards breakout confirms it. When the price breaks out on the bottom of the consolidation, a short trade can be pursued.
5) Strong Area Breakout
Trading breakouts above resistances and below supports is a daring move, however, amply rewarding. There is no complex concept involved, just watch for levels that push the price back. A price may rally and fall continuously trying to breakout, and after several attempts when the prices sees an increment, it might mean an uptrend or a shift in market movements. This breakout doesn’t always indicate the coming of a major move.
Day trading is one of the most engaging Forex trading strategies. From start to end, it will keep you hooked and running. Implementing this strategy puts you in a tight position. The timeframe is limited, there is no room for error, and missteps will throw you away from profits! Working on shorter timeframes is always a scary process because the flexibility can be very minimal, giving you no scope for diversifying. However, day trading is one of the most-used strategies today, with tremendous room for growth. With proper research, accompanied by the implementation of a stellar strategy, you will find immense success.
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