Day trading Forex can be one of the most rewarding strategies out there. There are so many ways to day trade Forex, so don’t think this strategy is the only way.
But we like to make things simple. That’s why we have created this simple daily Forex trading strategy, as it will be great for beginners.
We have many articles on day trading, and if you want to get into the basics, our day trading for beginners this article would be a great start!
Before we get into the strategy, let’s first get into what day is trading Forex.
What is Day Trading Forex
Day Forex trading is when you buy and sell on the same day.
For example, if we were to buy EURUSD this morning at 8:00 and then sell it at 14:00, this is considered a daily trade.
So let’s keep digging into why day trading is so popular in the Forex.
How much do forex day traders earn?
Forex day traders can make anywhere from 1 to 5% of the total account every day. Sometimes more, but that requires a lot of risk. Risking too much can crush your account. We have a great article on risk that you can find here if you want to find the best risk management strategy.
What is the best strategy for day trading forex?
The best strategy is the one that suits you best and makes you money! It seems a bit obvious, but sometimes the same traders might trade the same Forex strategy and have completely different results. It’s all about risk and keeping your emotions in check. Don’t be afraid of losing a loss!
Is day Forex trading like gambling?
Many will say that trying to do day trading is comparable to gambling. In a way you’re betting that a particular couple will go up, but I hate the word “gambling.” Get a trading plan together and never trade based on emotions. Leave it to the gamblers!
Can Forex Day Trading Make You Rich?
Forex trading can be very rewarding. If you follow a system that has a great risk for reward and risk management, there’s no reason why you can’t do well. Using a prop trading company is also a great way to day trade Forex because you can trade with a much larger account than usual. We fund Forex traders. All our Forex Master Traders have access to our prop company, so if this is something you are interested in, you can check it out here!
Are there live Prop forex trading rooms?
Yes, as mentioned above, we do a fx live trading room. Our forex day trading system focuses a lot on price action. Our forex master trader coaches will show you exactly how we trade the markets every day. In addition, our live forex trading rooms feature our prop traders, who trade every day. If you want to see live reviews of forex trading chambers you can see it here. This is not a free live trading room. We charge a small monthly fee but, for us, it’s worth it because of the value you get on a daily basis. In our eyes, this is the best forex trading room available right now.
Is Forex Day trading risky?
Yes. Trading is risky, in general. Nothing is a guarantee. All you can do is find a system that works for you and follow it. Tweaking is always necessary as no one has a real “Holy Grail” trading strategy.
Is Forex better than stocks?
The Forex market is much faster than stocks. Most stocks typically don’t move much on any given day. Like stocks, Forex is heavily influenced by news. You are also leveraging a lot more with Forex. If you’re not sure what leverage is, babypips has a great article on this topic
There are many great Forex day trading books. We actually refer to some great books here
I hope some of those questions above interested you in day Forex trading!
We have an excellent Forex day trading strategy for you.
Let’s get straight into the merits!
Simple Forex Day Trading Strategy Rules
Trading tools needed for this daily trading Forex strategy.
Forex Trading Platforms:
- (recommended) Meta trader 4.
You can also try another platform like Tradingview or NinjaTrader, but we always prefer Meta trader for Forex trading.
- 9 Exponential Moving Average (EMA)
- 20 Exponential Moving Average (EMA)
Recommended time interval:
- Time interval M30
The best currency pairs for this Forex trading strategy today.
We recommend that you stick to the 7 major currency pairs which are:
In our example we are using Meta Trader 4 which is the #1 trading platform for Forex traders. We will also use the EURUSD as an example which is one of the most popular Forex pairs for day trading. We break down the best forex strategy with 6 simple rules.
Remember that we like to keep it simple so that it is easy to follow. Also note that this strategy will work over any time frame you prefer to trade it with.
Forex Day Trading Rules
Rule #1: Go to the M30 time frame, then add 9EMA and 20EMA to the chart
This should be quite simple.
In Meta Trader, you can find the EMA under Navigator/Indicators/Moving Average.
After selecting Moving Average, change the MA method to exponential and the period to 9. Repeat again and add the 20 EMAs to the chart.
Rule #2: Find a pair that is tending down (or up).
In this example we will use EURUSD.
Notice how it is going down.
This is what you should look for.
It should reach lower lows (or higher highs for an example of sales).
In our case we got the EURUSD downward trend.
The goal with this strategy now will be to find a break in this upward trend.
So we will
try to find a place to buy because we think this couple will go up.
Rule #3: Draw a trendline
The trend lines are great! If you need help drawing trend lines, feel free to look at this article that we have delved into on how to draw them.
For a downtrend like this, you want to draw a higher trend line as you see above.
We are looking for the price to come and break it.
Rule #4: Once the trend line is broken, find the entrance
Enter the BUY trade when the candle closes above 9 and 20 EMAs after breaking the trend line.
This part is fundamental.
Since this is an example of a buy trade, the candle must close above both EMA 9 and EMA 20.
This is the candle that you could take the buy trade. Remember that these are 30-minute candles. We recommend that you wait for the previous candle to close before entering so that, in fact, it closes above the moving averages.
Rule #5 Set stop loss below 20 and 9 EMAs
We always recommend that you have a Stop loss with any trade you make. Especially on these lower time frames as the price can move quickly.
To place your stop loss, simply place it below both moving averages.
This will give him some space to move around after entry.
Rule #6 Take profit goal
Ideally, you always want to achieve a risk/reward ratio of 2:1 or close to it.
This means that if your stop loss is at 20 pips you should have a target of 40 pips.
When the price stabilizes and continues to touch the last 20 EMAs, take profit then.
This most likely means that a pullback is coming and we don’t want to deal with any pullbacks.
If you try this strategy, do it on a demo account and if you get results let us know below in the comments!
Since this day trading Forex strategy can be both a sell and buy strategy, I want to share an example of selling setup.
When not to use this daily Forex trading strategy.
We advise you to keep an eye on the big news of that day. If there is a news announcement, the market can go crazy, fast. So it’s important to avoid a sudden spike in news. You can simply refer to this as it will show you all the news for the day that will impact certain currencies.
Day Trading Forex vs Stocks
The advantages of day trading Forex is that you will not be marked as a day trader. Also, the markets are much more volatile in Forex, so you can catch a big move in a short period of time.
Day trading Forex is fast and could be very rewarding with the right system! This day’s Forex trading system was just one of the many ways you can do this.
There are thousands of strategies, it’s your job to follow the rules and see if it works for you.
This works great with trending pairs that are slowing steam loss. In the two EURUSD day trading examples above, this is exactly what happened.