Simple intraday trading is a trend-momentum strategy that is
designet for day trading but works also for swing.
Currency Pairs: EUR/USD, GBP/USD,
USD/JPY, AUD/USD, GBP/JPY, NZD/USD, EUR/AUD.
Time Frame 5 min or higher.
Sessions for trade for day trading are
London and New York.
Indicator for build the template for
this strategy:
MACD (12, 26, 9)
Awesome,
Set of exponential moving averages,
176-Period Exponential Moving Average
of Close Price (blue),
144-Period Exponential Moving Average
of Close Price (orange),
44-Period Exponential Moving Average of
Close Price (blue),
36-Period Exponential Moving Average of
Close Price (orange).
The chart below is the setup.
EMA with the Trend
We use the moving averages as a guide
to direction and trend- strength .
- When the 144 is above the 176 then
the “overall trend” is up and we only look to take buy trades
(and sell trades when the 144 is below the 176).
- When the 36 is above the 44 then the
“immediate trend” is up and we only look to take buy trades (and
sell trades when the 36 is below the 44).
Before we take a buy trade then the two
above criteria must bemet – or, to put it simply, the 144 must be
above the 176 and the 36 must be above the 44.
Similarly, for a sell trade, the 144
must be below the 176 and the 36 must be below the 44.
Once the above situations occur – we
then look for our specific entries.
The Trade
Now that we have
the moving averages under control and know what to look for in terms
of when to trade and in which direction – it‟s time to focus on
the other two indicators.
There are a number
of ways to use the two indicators – but „V‟ uses
them in what is
quite probably the easiest way I‟ve ever seen.
I‟ll go through
a buy entry...
Step #1 – Make
sure our moving averages are lined-up for a buy-
trade:
Step #2 – We
then wait for the „Awesome Oscillator‟ to fall below
the 0.0-line:
Step #3 – The
final „trigger‟ to the entry is when the MACD then
closes above the
0.0-line:
...and that‟s us
in a trade! However, we do need to place a stoploss on our trade and
take profit too – that is now Step #4 and Step #5.
Step #4
Our stoploss
placement is fairly simple – it‟s not “technical” as with
most stoplosses (which is when we “hide” it behind a significant
technical level).
Instead we use a
rough guide of:
- 10 to 20 pips on
a 5-minute chart
- 15 to 30 pips on
a 15-minute chart
- 20 to 40 pips on
a 30-minute chart
It depends on
which pair you‟re trading as to how large the stoploss is –
you‟ll get an idea of the stoploss size after you‟ve made a few
trades (I promise!).
This is a far more
effective way (read: profitable!) than having to use a larger
stoploss in the usual technical way.
Here‟s the
stoploss used on our current trade:
Step #5
Our take-profit is
as simple as exiting when the MACD crosses back below the 0.0-line
again:
..and that‟s us
out of the trade!
This was a nice,
simple example.
Not every trade
is going to be this perfect (obviously!) – but quite a few are!
So that‟s
basically the system – but I‟m not going to leave you there.
We‟re now going
to go through a number of trades and situations so that you really
understand the system.
Trades
Over the remaining
pages we‟ll go through more examples so that you fully understand
the system.
The following
trades are all similar (which is why this system is so great!) –
but, there are small differences, so they should give you a better
idea of what to expect when you start trading it yourself.
News
Sometimes it is
obvious that some news, or an economic figure, has hit the market –
and an entry signal is produced because of it.
Quite often this
entry signal will not be good to take because news (contrary to
popular belief) can be quite unpredictable. In the example below,
where the time was 13:30GMT when the
entry occurred,
the size of the candle shows us that it was a news- induced signal:
In summary to
news:
Watch the economic
calendar so that you know the market may only be producing a trade
entry because of some news or economic data.
Perseverance
The great thing
about the moving averages we use is that we know well in advance
whether we are going to get a trade – and so don‟t waste time
sitting and staring at charts for no good reason!
The chart below is
the 5-minute GBP/USD - the left-most side of the chart below is
around 06:00GMT which is the London session open.
You can see that
the moving averages are not in alignment – and that it will take a
good few hours until they are. It‟s not until around 12:00GMT that
we can start looking for trade entries:
We do get an entry
– which results in a small losing trade of around 3 or 5 pips:
The market then
ranges for a while and the moving averages go out of alignment.
However, if we continue watching (and because it is the 5-minute
chart) we can get yet another entry within the same day on the same
pair:
In summary to
perseverance:
If you have the
time and opportunity – remember that all is never lost when
intraday trading. Often the markets will totally change their dynamic
before the end of the day and produce excellent opportunities if you
stick to the system!
Testing Exits
You‟re a trader,
right?
That means you‟re
inherently independently minded – sure, listen to what someone is
teaching you (in other words, me!), but try your own ideas too!
We have the
standard exit that we use – but occasionally I will break from this
and go for larger runs.
One that I use
often is the keep a trade (or at least part of it) running until the
end of the trading day – which is usually around
21:00GMT or
22:00GMT.
We can end up with
some big days doing this:
In summary to
testing exits:
Question
everything! Track your results from you trades – sometimes a minor
“tweak” here or there (that no one else but YOU can do for your
trading) can make a huge impact to your bottom- line and towards your
consistent profits!
Bigger Timeframe, Bigger Pips
When you trade the
higher timeframes (30-minute and perhaps even 60-minute) you can
expect to get larger pip runs.
Trading the
5-minute and 15-minute charts you can pretty much expect to be out
within the day.
Here‟s a trade
on the AUD/USD hourly chart – you can see that our exit (if
following our standard MACD crossing back through the 0.0- line
method) is not until the next day:
Note that in this
trade, had we exited at the end of the trading day, we would have
ended up with a similar number of pips.
In summary to
bigger timeframe, bigger pips:
Set your mental
and psychological targets in-line with the timeframe you are trading.
There is no point trading an hourly chart if you can‟t handle
holding a position overnight!
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