Trading in the foreign currency market
Since the 1970s, when fixed exchange rate regimes began to be replaced with floating exchange rates, whereby the exchange rates of any two national currencies varies according to the market value, forex trading has become a popular and profitable form of investment. Like any business venture, however, there is always a certain amount of risk involved, and indeed the higher the value of the possible returns on investment, the higher the possibility of loss in case
of failure. Let us outline for you some of the most effective forex day trading strategies that you can follow to minimize your losses and maximize your earnings.
About day trading
In day trading, all of the positions are opened and closed within one day. It is one of the simplest forms of trading in any asset, with the charts and indicators on which it is based being no less simple. Since, after you receive the trading signal, you may have only a minimal period to think through all your options, you should adopt only the simplest forex trading strategies.
Indicators for forex day trading strategies
There are three major indicators in forex day trading: Heiken-Ashi candlesticks, EMA10 and EMA30.
Heiken Ashi candlesticks
In the field of day trading, a candlestick is a chart whereon the four prices (high, low, opening, closing) of a given security on a given day are displayed. Heiken-Ashi candlesticks (Japanese for average bar) are valuable for figuring out both the short-term trends and the “buy and sell” signals for a given currency. The “stick” can be either red or blue to indicate a bearish or bullish market respectively, a factor which is also indicated by whether the stick has only a lower or upper shadow. The position of the “shadow” may also be neutral — the shadow on both sides — and should then be taken as a sign that the trend is currently reversing, particularly if such sticks occur frequently; such is among sound forex day trading strategies.
EMA10 and EMA30
EMA stands for exponential moving average, which gives more weight to the most recent available data than does a simple moving average. EMA10 should be significantly below EMA30 for short positions, and significantly above it for long positions. The area between them is known as the pullback zone, and the Heiken-Ashi candlestick should be in this area. One of the best forex day trading strategies is to place a stop loss — an order to close a position if and when a certain threshold is reached — at the value of either EMA30 or, if fixed, twenty pips. The take profit should be fixed at forty pips.
The right stocks for forex day trading strategies
The types of stocks in which you trade forms another big part of one’s forex day trading strategies. Since both processes — buying and selling — are to take place within one day, the stocks or indices should have high liquidity, and the investor should also take note of small variations in prices in order to amass large quantities of capital.
Using candlestick charts like those described above, the next of one’s forex day trading strategies means looking for the following three things:
*volume spike — when the value level or price goes up significantly in a short amount of time
*previous support at a given value level — the capacity to remain there or higher
*the level 2 situation, which should indicate all the orders that are currently open, and their sizes
Sound forex day trading strategies involve seizing on any opportunities like these whenever they present themselves.
Software solutions for forex day trading strategies
Software is now available that can make forex day trading strategies much easier to work out. In particular, using Forex PipJet by MegaDroid Robot is one of the top forex day trading strategies you can use.