Forex trading strategies are a set of pre-determined rules that you as a trader follow which help you enter or exit the market at the required time with the aim of making a profit ofcourse. Investment companies, hedge funds, banks and traders use trading strategies to allow them make investment decisions. Emotional stress is eased by the use of these strategies in everyday financial market.
This section covers intermediate to advanced strategies that work for me. Some people are charging outrageous amounts of money to teach these systems. I could be charging you the same too but here they are free. I can guarantee that with good discipline and sound learning, you will find the perfect strategy that works for you and unlock the door to success.
The daily method is the name of the game here. To tell you the truth at the early stage of my trading career, I tried all sorts of different strategies; you name it, from oscillators to trend-lines and not forgetting the support and resistance lines. The fact is that as much as I tried to come up with the ultimate method, it all came down to my money management skills.
All those different strategies that I tried did work but I never had time to back-test it to its fullest. I surely was getting frustrated and the only thing that came up in my mind at that time was the Q-word. Yes, I was ready to quit my trading career due to the fact that I couldn’t come up with a strategy that suited my style at that time and made trading less enjoyable than what it ought to be.
Scalping was the only thing I knew as my focus was to make some quick cash. I had no intention of analyzing the bigger time frames. Most of my time was spent on the 1 min and 5 mins chart. If that’s not financial suicide then please tell me what is.
It didn’t take me long to lose my money and my trading account was down from $2000 to $146 in the laps on 2 weeks. Yes and all that because of my trading style.
The reason of this short story is simply to show you that, taking the short route to success doesn’t always work. You’ll agree with me that it is more prudent to see the bigger picture before deciding upon your next move.
This brings us to our strategy, the Daily Method that is incredibly simple and requires only maybe 5 to 10 minutes of your daily trading time. If you have a full time job and can’t be glued to your pc the whole day, well I think that this may help you enjoy the best of both worlds.
Open a chart of your choice. In this example we will use AUD/USD. (Note: this strategy will work with any currency.)
Great, lets outline the step required.
STEP 1
• Add a 13 SMA (red line) on the daily chart
• Add RSI 10. Insert a 50 level line going through the middle (as shown in graph above)
Step 2
• Buy Signals: Wait for a daily bar to open above 13 SMA with RSI above 50-level. (Do not take trade if RSI is not slightly above 50 level, important)
• Sell Signals: Wait for daily bar to open below 13 SMA with RSI below 50-level. (Same rule applies)
That’s it, easy and straightforward. You only need spend a maximum of 10 mins or less per day. Wait for the open of the daily bar and follow those simple rules.
Now, you may place your stop loss 200 pips away. If it’s a buy, you may want to take half the profit to the nearest swing high letting the remaining run while decreasing your stop loss to about 40 pips above your initial entry.
As for the risk to reward ratio, this daily method can rack up great gains, however it needs good money management, hence the reason you may be interested to use the example above to collect your profit.
In the example above, we risked 200pips to make 1500pips in 9 trading days.
If you were trading a standard lot, this would have been a nice $15,000. Not bad for 9 days of work.
Happy trading!
