How to strategize forex day trading along with the forex market situation

forex day trading on the internet has become so popular nowadays when sometimes ago, only major financial institutions and companies involved in trading forex. But now some traders trade in the forex market as a hobby while other traders make a living with forex trading.

To come out with the best strategy for forex day trading, you need to understand these four different situations.

The first one is gradual movement day - the market movement is slow if the currency price begins at 200ma, rise to no more than 20pips, and then go back over to 200mA on the same day.

When the gradual movement day happens, over and over again it will cause a normal movement day and also signifies that currency value is stable. With this in mind, you can tweak your forex trading strategy accordingly.

Second situation is normal movement day – this is when the currency price begins to some extent above or below 75ma, rises a bit, then go back over to 75ma.

This event can be a sign of that the currency is steady and is giving you an idea that you do not need to tweak your positions.

Thirdly, quick movement day – this is when the currency price is to some extent above or below 21ema, rise or the opposite, and then go back over to 21ema.

This condition signifies upward movement trend causes by certain economic reason that affecting the currency of the country of origin. However, these movements can be good or worse for you. Therefore, a more detailed research of the movement of the currency of the motherland is necessary in order for you to determine the next steps.

The number four situation is huge scale day – it happens when the up and down of the price of the currency scale is 20pips away from each other. This signifies the volatility of the currency and it may be good or bad for you. So, your strategy must be efficient in order to deal with any possible occurrence.

One of the strategies that is regularly used by the day traders when they do forex day trading is to buy and sell the same currency pair, the same lot, at the same time. Meaning that, you trade long or buy command and short or sell command positions simultaneously for the same currency pair at the same time.

For instance, you buy 1 lot EUR/USD at 1.4245 and sell 1 lot of EUR/USD at 1.4240. There is a difference between the buy and sell price which we often called as spread. The rationale for the buy and sell of the same currency pair, the same lot, and at the same time is that you are hedging your positions. The currency pair’s rise or fall movement will give you a winning chance. Put a stop loss at 5 pips and take profit at 15 pips for both commands.

If the price rises up, your take profit command which you set up earlier will automatically close your buy command or long position as soon as when it touches a gain of 15 pips. As for the sell command, the stop loss command which also you have set up earlier, will automatically close your position in order to make sure that you only lost 5 pips. So you make a profit of fifteen pips minus five pips which equals to ten pips. For this example, the buy command which makes you gain gives you the basis of 15 pips. And your stop loss command helps you to detain a profit of 10 pips. So, if you trade with 1:100 leverage, 10 pips profit means a $ 100 profit out of a $ 1,000 capital.

Do not trade with no stop loss command, or else you will lose your capital at any time. If the currency pair price decreases, your stop loss command will shut your long position at 5 pips loss, and the take profit command will shut your short position when it touches 15 pips which gives you a net profit of 10 pips.

If you do day trading in the forex market, and you are only looking and monitoring at the 5 minutes and 15 minutes charts then big possibility that your account will vanish pretty soon.

If you keen to get an idea of the forex market and signs of the currency price current movements, it is vital for you to analyze several charts and various indicators at the different period of time.

Instead of letting your charts crowded and mess with multiple signals that can leads to confusion, you may just use these two which are MACD (with default settings) and 200 EMA (Exponential Moving Average).

Then you can monitor your charts with this sequence; firstly, daily chart, secondly, 4 hours chart, and finally, an hour chart.

When you read each chart take a close look at these two features; is MACD crossing from top to bottom, or is it above or below the water line, and whether the price is above or below the 200 EMA.

Although it is not necessary to have them all arrange in these three period of time frames in order to be successful in forex day trading, but if you want to be always careful, try to catch big possibility of profiting trade as well as try to avoid as much risk as possible, then you should watch out MACD on the 4 hours and 1 hour charts and the price is on the 200 EMA must be in concurrence.

The daily chart is beneficial to view more and spotting the major levels of support and resistance. It can be seen obviously on the daily chart. So, if you spot on the daily chart that the currency price is in 100 pips from the major level of support or resistance you should jot down the figure.

Then, reduce the range to the shorter period of time frame and monitors as whether that level is in line with other forex trading signals like pivot points or Fibonacci levels. Once this task completed, then you can monitor the 15 minutes chart as well as the 5 minutes chart for your most correct enter position point.