Areas of market consolidation near the resistance and support levels and how to use them in trade.
30 Pips A Day Forex Trading Strategy
Today I am going to tell you a story of a guy named Fred who managed to earn $1,000,000 with just 40 trades. Very impressive, I agree. Here is one of the strategies he suggests. It’s called a 30 pips a day forex trading strategy. You know that GBP/JPY is rather volatile currency pair that can make big swings (from 100-200 pips). So, our aim is not to capture all this price margin in the course of a trading session, but just 30 pips. Once we are done with embellishment of a story, we can proceed to real things – the description of the strategy.
- Choose GBP/JPY currency pair
- Switch to the 5 minutes’ screen
- Add some indicators to your chart: 10 and 26 exponential moving averages (EMA)
How to trade:
If 10 EMA intersects 26 EMA and goes up, we are facing an uptrend. If 10 EMA intersects 26 EMA and goes down, there is a downtrend. After we found the EMA’s crosses, we should identify traders’ action zone (a reversal zone, a zone of buying or selling depending on what the market main trend is). It occurs at the end of the minor rally in the dominant bullish trend
Imagine that the market main trend is down, there could be some minor rally in a downtrend market. That price rally (short-term upward price move) usually ends in a traders’ action zone when the price starts falling in the direction of the main trend again. A similar in logic, but opposite situation also happens if the market is bullish.
Your actions in the case of a downtrend:
- You notice that 10 EMA crosses 26 EMA and goes down.
- You don’t sell immediately after the formation of the cross; you should wait for a retrace.
- Then, you sell immediately when a candlestick gets into the traders’ action zone halfway between the 10 EMA and 26 EMA.
- You place a stop loss at 15-20 pips.
- Your take profit target is 30 pips.
Your actions in the case of an uptrend:
- You notice that 10 EMA crosses 26 EMA and goes up.
- You don’t buy immediately after the formation of the cross; you should wait for a retrace.
- Then, you buy immediately when a candlestick gets into the traders’ action zone halfway between the 10 EMA and 26 EMA.
- You should place stop loss at 15-20 pips
- Your take profit target is 30-40 pips