Forex Day Trades – October 07

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Why Trading ‘End-of-Day’ Strategies Will Improve Your Results

What is ‘End-of-Day’ Trading, what will it do for you and how exactly do you trade ‘End-of-Day’ strategies? Continue reading to find out…

When I talk about ‘End-of-Day’ trading strategies, what I am basically talking about is trading based on the daily chart time frame. We are focusing on daily chart candles that are closed out, not candles that are still open. The actual daily close of the Forex market occurs at 5pm New York time, however, not all brokers provide charts that show the 5pm New York close. To make sure you are seeing the true daily close of the market, you need a broker that offers 5 daily bars per week that close at 5pm New York time. Here’s a link to get the right charting platform – New York close charts.

What will trading end-of-day do for you? Well, if you actually do it, it will improve your trading results and greatly simplify the entire trading process. It does this through several channels; it reduces the amount of time and number of variables needed for trading which helps to naturally form the correct trading mindset because you aren’t watching charts all day (most traders’ downfall). Watching charts too long is what causes you to over-think and over-analyze and ultimately over-trade (and lose money). End-of-day trading also naturally helps you with money management and trade management through the set and forget trading approach that goes along with it. It helps to eliminate much of the second-guessing, confusion and emotion that plague most traders.

Essentially, end-of-day trading gives traders a framework, that if properly utilized, allows them to avoid most of the trading mistakes that people make simply due to how we are wired. We are pre-wired, if you will, to seek pleasure and avoid pain, it’s in our DNA. This has served humans well for many, many centuries. However, in the modern world this type of wiring can cause many problems, especially with trading. For example: we naturally want to trade often because it makes us FEEL safe and ‘in control’ and it gives us an injection of endorphins when we hit the buy or sell button because we are full of the hope that we will hit a winner. Then, when that trade turns against us as it sometimes does, what do we naturally want to do? Avoid pain. So, we close the trade out for a small loss, only to then see it move back in our favor and go on to be a would-have-been winner, how frustrating! This is just one example of how we are wired to self-destruct in the market, there are many more.

So, what does end-of-day trading do for you? Multiple things, but perhaps the most beneficial is that it gives you a framework to help you circumnavigate your own tendencies and ‘faulty’ trading wiring. Read on to learn more…

Who’s really in control? (you or the market)

The only thing you can control in trading is yourself. If you over-trade and trade like a machine-gunner rather than trade like a sniper, you are not controlling yourself and you will end up being controlled by the market. The market can affect your emotions in very negative ways that cause you to give your money to it very quickly. The only way to counteract this is by controlling yourself.

The reason many people are attracted to day trading is because they feel more in control of the market by looking at smaller time frames and jumping in and out of positions frequently. Unfortunately for them, they have not figured out that they have the same amount of control as the swing trader who may hold positions for a week or more and only looks at the market for twenty minutes a day or even less. Neither trader has any control over the market, but day-trading and scalping gives traders the illusion of more control. The only thing we really have control over in trading, is ourselves.

What is a good approach to make sure you are controlling yourself and not being controlled by the market? End-of-Day trading!

Here’s how it’s done…

How to trade End-of-Day…

The best way for me to ‘explain’ how to trade end-of-day strategies is to simply show you. The proof is in the pudding, so to speak, so let’s take a look at some of my favorite price action signals and how you can trade them in an end-of-day manner.

OK, first off, we are going to check out how you can trade end-of-day with my inside bar price action pattern. In the chart image below, notice we had an existing up trend before the inside bar(s) pattern formed, and we typically like to trade inside bars with the daily chart trend, so we were looking good. Also, of course, notice we are on the DAILY CHART time frame and the inside bar pattern was closed out before our entry, so we were trading end of day.

Now, here is where the REAL POWER OF END-OF-DAY TRADING comes in…

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In the above inside bar example, you will notice that the trade worked out nicely. This doesn’t always happen of course, because winners and losers are randomly distributed for any trading strategy, but in this case, it was a winner. The most important thing to notice is that you literally had to do nothing but place your entry order, stop loss and profit target and the market took care of the rest. You could have literally gone on a 7-day, 6-night Caribbean cruise, not looked at your trade and come back to a 5R winner by employing set and forget and trading this chart end-of-day.

You have eliminated the most difficult element of trading; trade management. You’ve taken your human emotion out of the equation by trading end-of-day and setting everything up in advance and just letting the trade run. The results speak for themselves!

Let’s look at another example…

Now we are going to check out an example of trading the pin bar trading strategy in an end-of-day manner…

In the chart example below, we had a solid and defined trading range in the Gold market when we got a daily chart pin bar buy signal at the bottom of the range (key support level). Actually, we got back-to-back pin bar buy signals at this key support level, so we had plenty of confirmation and confluence for a nice end-of-day trade entry. Coincidentally, we did discuss this exact pin bar setup in our daily members market commentary the day it formed as a potential buying opportunity.

As of this writing, a solid 3R profit was possible from this trade setup, without any involvement needed on your part. You could have entered this trade and let it sit, come back 11 days later and you had a 3R profit in the bank. Now, how easy is it to ignore the market for a week or two while your trades play out? Perhaps not as easy it sounds, but if you want to trade end-of-day, you must believe in the power of patience, in other words, you have to fight your own desire to over-analyze, over-think and over-trade, and you will come out WELL ahead of 90% of most traders.

Before we move on to our next example, here is a little-added benefit of daily chart or end-of-day trading that whilst obvious, needs pointing out…

Many traders prefer to trade off these daily chart signals because it is a less stressful way to trade since you don’t have to ‘wade through’ hours of less-significant price action. Think about it, would you rather sit at your charts trying to find a ‘needle in a haystack’ on the 5-minute charts or sit back and analyze the daily chart time frame and only focus on obvious end-of-day setups?

Don’t be fooled into thinking there are more ‘opportunities’ by looking at the short time frames, it’s just not true. There ARE more price bars, sure, but are they really opportunities? Or are they just noise? Remember, the higher in time frame you go the more significant each bar or candlestick becomes, and the daily chart time frame is truly the sweet-spot for a trader.

Let’s look at an example of trading end-of-day with the fakey pattern…

In the chart image below, we see a fine example of a fakey pin bar combo pattern which formed in-line with the underlying daily chart uptrend in the Dow Jones Index.

Had you entered this fakey near the breakout of the inside bar or pin bar high and stop loss below the mother bar low, you would currently be up a nice 2R reward. The ‘catch’, if you want to call it that, is that you had to sit on your hands for about 10 trading days before you realized that reward.

Most traders were over-trading and blowing out their accounts during those 10 days. Do you want to be the trader who is patiently waiting for high-probability trades to play out, like the ones above, or do you want to be the trader who is trading intra-day during those 10 days? I can guarantee you the trader who entered one trade and waited patiently for it to play out was FAR better off than the guy who day-traded that whole time.

Conclusion

You now understand why end-of-day trading strategies can significantly improve your results in the market, and you also have a basic understanding of how to trade end-of-day. I don’t want to sound like this is easy, but it is far easier to trade end-of-day than the way most traders trade. Most traders trade way too much, they meddle too much with their trades and they expend too much mental energy on their trading. This leads to losses, losses and more losses.

The difficult part of trading lies in conquering your inner demons, not in finding entries or in comprehending how to read a price chart. What I have laid out for you in today’s lesson and what I explain in much greater detail in my trading course, is exactly how I use end-of-day trading strategies to circumnavigate my own faulty human wiring (we all have it) as it applies to trading. By controlling myself and only focusing on that, I can truly take advantage of the incredible opportunities the market offers me, however frequently or infrequently that may be.

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7 Best Indicators For Day Trading Forex

Let’s be honest here, there is a -load of indicators out there that do SO many things, it is almost impossible for you to test and try them all out without drawing a valid conclusion, which is the best indicators for day trading.

I think you’ll agree with me when I say:

It’s REALLY hard to find a trading indicator that does everything in one.

In this article, we are going to highlight what we believe are the best indicators for day trading forex and other assets that are liquid enough to trade each day.

By the end of the article, you will have the exact knowledge to go out and try these indicators for yourself and find out which works best for you!

In fact, some of these same indicators helped me find highly-accurate trading opportunities daily – sometimes taking 20-50 pip trades with little effort… I have even automated some of them into an EA!

So here is the fine tuned list of the…:

7 Best Indicators For Day Trading Forex

#7 – Bollinger Bands

Indicator Type: Lagging, Volatility

Ideal Timeframe: Any

Ideal Trade Style: Scalping

What are the Bollinger Bands?

Bollinger Bands are used to measure a market’s volatility. In trading, they are used as dynamic support and resistance areas.

However, not only are they used to measure the volatility but it’s a mean reversion tool.

This means that when the market is trading 2-3 standard deviations away from the mean, there is a higher chance the market will revert to the mean.

This tactic is what made Pairs Trading popular and hugely successful.

How does it work?

The normal set up for a Bollinger Band is a 20-day moving average, plotted in the middle with a 2 standard deviation plot which creates the lower and upper bands.

The main idea for trading Bollinger bands is the fact you look to either take trading opportunities through several means:

  • Mean Reversion back to the 20-day period line
  • Bollinger Squeeze – Breakout of the bands
  • Bollinger Bounce – Price retracement away from the upper bands

Why #7 For Bollinger Bands?

It’s a very versatile indicator for day trading as it works on any timeframe and there are several methods of trading this indicator by itself. Although, it has been around for years – this features at #7 because we believe there are better indicators out there.

You should certainly check out the Bollinger bands if you are looking for the best indicators for day trading.

Taking Action:

Download/Install and have a play around on a demo account.

You will find the Bollinger Bands indicator on almost all platforms, free of charge, thanks to its popularity. We recommend you load up a demo account and see how the markets react to the Bollinger bands using past market data.

#6 – Linear Regression Line

Indicator Type: Leading, Price Swings

Ideal Timeframe: Any

Ideal Trade Style: Scalping

What is the Linear Regression Indicator?

This is one of the most under-utilised tools available as a trader. Following on from Bollinger Bands, the Linear Regression only focuses on showing the mean price.

You look to profit from the market moving back towards the mean price after extreme market movements.

How does it work?

You plot the near term swing high and swing low like you would with the Fibonacci Retracement tool. This will then plot a line – giving you the Mean Price.

Some tools will also plot the extremes like a channel between the prices. This is super useful as once we see the price around the extremes we can start to take note on whether or not the price will move back to the Mean Price as expected.

Why #6 For Linear Regression?

The Linear Regression tool is SO simple and easy to use, just plotting the line (and most, if not all, tools do this for you automatically!)… However, the markets like stability and that is what makes looking for the markets to revert to the mean so appealing. The further away from the mean price, the more likely it is to retrace.

Mean reversion strategies are used by algo traders, so there must be some success behind them, right?! ;-)

Actionable Result:

Download the tool if you don’t have it, or have a play around on tradingview.com. Watch how in the past the market reverts to the mean frequently.

#5 – Parabolic SAR

Indicator Type: Lagging, Price Swings

Ideal Timeframe: Any

Ideal Trade Style: Swing

What is Parabolic SAR?

The Parabolic SAR, sometimes referred to just Parabolic or SAR, is a fantastic indicator that is again wildly misused.

Based on the market producing a parabola (a mathematical symmetry in the trend, think of the letter U shape), day traders would expect the market to reverse when price breaks this indicator’s line.

How does it work?

After the markets have been trending in one direction for a short period, the Parabolic SAR will start to plot where to expect the markets to reverse.

Once price breaks this line, day traders would look to take a trade following a breakout confirmation.

When traders have a position open, some use the Parabolic SAR as a trailing stop loss. This is good as it allows you to lock in profit the longer you are in the trade.

Why #5 For Parabolic SAR?

The Parabolic SAR is #5 on the best indicators for day trading because it can be used as a significant reversal indicator and a trailing stop loss monitor. Markets move fast in lower timeframes, so being able to identify when the market reverses & lock in profits is a necessity.

Actionable Result:

Load up the Parabolic SAR indicator on any platform, it should be on most, if not, all platforms.

Go through different time frames such as 1 Minute, 5-Minute, 15 Minute and have a look how the market reacted to the indicator – you should notice that most of the time, the market reversed after the price broke the Parabolic SAR indicator.

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#4 – Donchian Channels

Indicator Type: Lagging, Price Breakouts

Ideal Timeframe: Any

Ideal Trade Style: Breakouts

What are the Donchian Channels?

The Donchian Channel indicator was originally made infamous after the Turtle Trader‘s experiment.

The indicator is similar to the Bollinger bands we discussed earlier.

The main theory behind the Donchian Channel is that it is used to detect breakouts from defined periods we set.

How does it work?

The most common setting is for 20 periods.

So the breakout occurs if the price trades higher than the higher or lower band.

This is set based on a trading month (20 trading days a month) though, so it would be best to experiment as per your liking/timeframe.

Once the price breaks above the price 20 candlesticks ago, this confirms that the price wants to go higher. The same is true if the price breaks below the price 20 candlesticks ago, this proves the price wants to go lower.

Not only is this a tool to discover potential breakouts but it is also used to tell how volatile an asset is.

The narrower the bands are the less volatile the asset is, likewise the wider the bands are the more volatile the asset is.

Why #4 for Donchian Channel?

Here at Alphaex Capital, we are firm believes in trading breakouts and mathematics.

The Donchian Channel plots the previous highs and lows X periods ago to define when price wants to pursue a direction.

This is what makes the tool so useful, it allows you to focus on the price action and the market data, whilst automatically plotting the highs/lows.

As trading sentiment can change like the wind during the day, this helps protects day traders from whipsaws and allows them to take advantage of sharper market moves.

Actionable Result:

Without having to download anything, you can find this on Tradingview.com. Go have a play with the indicator and switch the settings from 20 periods to something that matches your timeframe. For example, if you trade 1 minute – try 60 periods which gives you the price high/low over the last hour. Or for 15 Minute you could try 8 periods to give you the high/low of the last two hours.

#3 – Fractals

Indicator Type: Lagging, Price Breakouts

Ideal Timeframe: Any

Ideal Trade Style: Breakouts / Swings

What are Fractals?

Fractals are a 5 candlestick pattern that is used to detect reversals in price, once the pattern has emerged the indicator prints an arrow depending on the fractal pattern, giving either a buy or sell signal.

Fractals are a great way to quickly denote when the price is breaking the structure or highlight key points in the market where you should have a view on either buying or selling the market – depending on the fractal pattern.

How does it work?

There are two types of fractals:

  • An upwards fractal – has at least five continuous bars and the highest high is in the middle of the 5 bars. E.g) h h Hh h h (h = high, Hh = Higher high).
  • A downwards fractal – has at least five continuous bars and the lowest low is in the middle of the 5 bars. E.g) l l Ll l l (l = low, Ll = Lower low).

You look to take a trade when price breaks above the fractal pattern for a buy, or below the fractal pattern for a sell. I.e) When the market creates a new Higher high or Lower low after the fractal.

Why #3 for Fractals?

Fractals can be awesome.

As you will have noticed, a lot of our indicators in the list require some form of breakout strategy. Fractals allow you to easily identify potential trading opportunities and you can effortlessly combine fractals with any of the other indicators in this list to provide valid trading signals every day.

Actionable Result:

You can quickly view fractals on tradingview or MT4 – see how they respond to the market yourself. Why not try combining the fractals indicator with another indicator for the list like the Ichimoku or Donchian Channel?

#2 – Ichimoku

Indicator Type: Lagging, Everything

Ideal Timeframe: Any

Ideal Trade Style: All

What is the Ichimoku Kinko Hyo?

The Ichimoku Kinko Hyo indicator is one of my favourites.

It means equilibrium in Japanese, and it is an all-in-one indicator with a proven track record.

The beauty of this indicator is that it has 2 ways to trade it that any type of trader can use. These consist of:

  • Trend following
  • Breakout trades

Given its versatility – this is one of our best indicators for day trading

How does it work?

Kijun Sen (blue line): Also called a baseline, this is calculated by averaging the highest high and the lowest low for the last 26 periods.

Tenkan Sen (deep red line): This represents the average of the highest highs and the lowest low for the past nine periods.

Chikou Span (green line): This is called the lagging line. It is today’s closing price plotted 26 periods behind.

Senkou Span (red lines): The first Senkou line is plotted by averaging the Tenkan Sen and the Kijun Sen then printing it 26 periods ahead.

The second Senkou line is calculated by taking the average of the past 52 periods highest highs & the lowest lows and then this is plotted 26 periods ahead to give us a future price indicator.

This gives us our dynamic support and resistance levels.

The Senkou span acts as dynamic support and resistance levels.

If the price is trading above the Senkou span, then they act as 2x support levels.

If the price is trading below the Senkou span, then they act as 2x resistance levels.

The Kijun Sen (blue line) acts as an indicator of potential future price movement.

If the current price is trading higher than the Kijun Sen (blue line), it could continue to trade higher. If the price is below the Kijun Sen (blue line), it could keep trading lower.

The Tenkan Sen (red line) is an indicator of the markets current trend.

If the Tenkan Sen (red line) is rising or falling, this signals that the market is trading in a trend.

If the Tenkan Sen (red line) is plotted sideways this signals that the market is trading in a range.

Lastly, a buy signal is generated if the Chikou Span (green line) crosses the current price in the upwards direction. A sell signal is generated if the Chikou Span (green line) crosses the current price in the downwards direction

Why #2 for Ichimoku Kinko Hyo?

The reason why this is #2 instead of #1 in our rankings of best indicators for day trading is that it’s an all-in-one system. We believe you need to be a bit more fluid when it comes to trading and the Ichimoku will lock you into its methods, albeit they are excellent, so we went with something very powerful when combined with other indicators.

Plus, it’s a messy indicator which can sometimes hinder spotting price action developing.

Actionable Result:

Set up the Ichimoku on your platform and have a look at its performance over the past 12 months. Digest how it’s done with different asset pairs, specifically any JPY crosses and EUR crosses.

Now we are on to what we believe to be the best indicator for day trading, #1 spot is taken by an indicator that you may never have heard of – but quickly able to grasp…

#1 – Hull Moving Average

Indicator Type: Lagging, Any

Ideal Timeframe: Any

Ideal Trade Style: Any

What is the Hull Moving Average?

Never heard of this moving average?

That’s because it is unique in what it does, and we find that it helps predict movements sooner than a simple moving average.

The Hull Moving Average was developed to eliminate the lag between the indicator and the price, and it does a fantastic job doing so!

Even better than the Weight Moving Average and the Exponential Moving Average

How does it work?

It works exactly as you would expect as normal moving average where the moving average is plotted on the average close over the past X amount of periods.

Why #1 for Hull Moving Average?

The Hull Moving Average is the fastest and smoothest available moving average and is an absolute must if you want one of the best indicators for day trading.

You can use any type of moving average strategy, but with much higher success and accuracy.

To us, it’s a no brainer if you want to use moving averages as part of your day trading.

Actionable Result:

Download the Hull Moving Average or check it out using Trading View.

You should then plot the other moving averages such as the simple, EMA and WMA and view how much of a difference the Hull Moving Average is vs. the others.

Not only that, try a simple crossover strategy – you will see the signals are more accurate and earlier.

Conclusion:

We’ve ranked 7 of the best indicators for day trading that we believe would not only be easy to learn and implement but help you find better trading opportunities each day.

All of the indicators are useful for different scenarios, so there is no need to single one out.

Which trading indicator are you going to try?

Get The Strategies To Go With These Indicators… Eliminate The Guess Work & Get Instant Access To Our Library

There is no holy grail strategy, but there are battle-tested strategies that have been around for centuries that I believe you would benefit from. We provide the best-proven way to learn new trading strategies and implement them successfully in the forex markets.

With our 100% done-for-you trading strategies, the service will give you the knowledge of finding highly accurate trading opportunities without the mistakes that often come with finding out what works.

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USDCHF – October 7th 2020

Should price action for the USDCHF remain inside the 0.9560 to 0.9600 zone the following trade set-up is recommended:

  • Timeframe: D1
  • Recommendation: Short Position
  • Entry Level: Short Position 0.9580
  • Take Profit Zone: 0.8910 – 0.8950
  • Stop Loss Level: 0.9800

Should price action for the USDCHF breakdown below 0.9560 the following trade set-up is recommended:

  • Timeframe: D1
  • Recommendation: Short Position
  • Entry Level: Short Position @ Retracements in the trend; sell orders during rallies
  • Take Profit Zone: 0.8910 – 0.8950
  • Stop Loss Level: 0.9800

Should price action for the USDCHF breakout above 0.9600 the following trade set-up is recommended:

  • Timeframe D1
  • Recommendation: Long Position
  • Entry Level: Long Position @ 0.9610
  • Take Profit Zone: 0.9790 – 0.9830
  • Stop Loss Level: 0.9510

Open your PaxForex Trading Account now and add this currency pair to your forex portfolio.

Day Trading Forex Live – Advanced Forex Bank Trading Strategies

Simple Day Trading System For Forex Traders – September 2020 Trade Results

September was by far the toughest month of trading I have had all year. If you have been watching the month end trade recaps since I started doing them in May we have had fairly easy trading months to this point. This month we had a major reduction in the amount of trades we typically see as well as a lower win/loss ratio. Even still the month ended up producing a +6% gain considering all trade for both NY and London.

There were two trades that I was not going to include in the month end review. One was the EUR/USD short from the 2nd of September. There are two reasons I included the trade when I didn’t think I would as I said in the preview the day after. The first and most important reason is when I had originally talked about this trade the following day, I had measured the size of the level wrong. Looking back at that trade the new level had nearly a 60 pip move down to initially form the level, and had well over the 1.5 hour price separation minimum as per the rules. For those of you who are not members, we use something called “time and price separation” for creating a new level from which we will trade. The criteria has 100% mechanical rules and therefore its not a discretionary decision it is a simple matter of measuring both criteria to determine a valid new level from one that is not. The second reason I included the trade is I also include a losing trade that I took from a level that technically didn’t have the time and price separation criteria. Although it didn’t hit the time and price separation I felt it was fair to include it as I personally took the trade. With that being said if you remove both of those trades the month end results would be reduced by 2%.

If you have not seen the last 5 months worth of trading results using the bank trading strategy then you can view them in the Recent Trades section of the site. Additionally, if you have any questions on any of the trades taken feel free to send us an email and I will happy to provide some feedback.

Want to learn the bank trading strategy, join our weekly live training room, talk to members in our forum, and have access to lifetime support? Learn more here.

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