Whether you’re an old hand or a beginner forex trader, it’s important to have a few go-to strategies up your sleeve for those days when your favorite pairs are showing near-zero volatility. Even if your preferred currency pair is active, the price direction can be hard to read at times. Those are the most opportune moments for day trading forex enthusiasts to try a few of the most popular approaches. As in every market, there are effective rules for day trading and forex prices can move in unexpected directions, and even the best, most careful techniques will result in losses. But the goal is to have a plan. Don’t ever go into a position without having any idea of what results you’re aiming for. Fortunately, many new and experienced forex aficionados use methods like the 1-Hour MACD, the 1-minute scalp, and the 7 A.M. Candlestick to take advantage of particular market trends and situations. Here are details about each one.
The One Hour MACD Approach
Every beginner’s guide to forex lists one or two of the better-known intraday trading strategies. For newcomers, it’s essential to understand that a given technique or system is not a guarantee of success. But structure is a good thing because it helps you approach the markets with a plan in mind. To implement the one-hour MACD, all you need to do is set charts to the one-hour time frame and keep your eyes on the MACD (moving average convergence divergence) indicator. When the MACD registers a value above zero, you enter a long position. The trickiest part of this tactic is deciding where to set stop-loss and take-profit points. In general, set your upper limit, or take-profit, value at a multiple of your loss range. Mathematically, that gives you more room to earn than to lose capital, provided the trade goes in your direction.
Scalping on One Minute Charts
For day trading mavens, the scalp is a long-time favorite. Some prefer immediate feedback and a fast ability to know the results of the transaction. To try the approach, set your software program or mobile app to one-minute charting on the relevant currency pair. Then, eyeball the price action and try to get a feel for the general direction of the trend. Avoid being impatient because it can take a while on choppy days for an obvious up-or-down trend to show itself. When it does, that is the suggested time to enter. As in the one-hour MACD method, the setting of loss and profit points is up to you. However, many scalpers seek to beat the spread by earning just a few pips more than whatever it was. Say the spread at your moment of entry was five pips. In that case, a scalper might aim to close a position after it earns between eight and 12 pips or after it loses five.
The 7 A.M. (GMT) Candlestick Tactic
The short explanation of the 7 A.M. Candlestick method is to wait for the candle to form. Use the GMT time of 7 a.m. on a one-hour chart. Then trade in the direction of the breakout above or below that candle. If there’s no breakout, then don’t enter a position. If there is, enter and set stops you feel comfortable with. Many people use the endpoints of the candlestick for setting stops.