Short-term trading is one of the most popular trading approaches adopted by retail traders because it gives you instant gratification. If short-term trading is not your thing and you position yourself on the opposite side of the trading strategies spectrum, like being a swing trader we encourage you to take a look the MACD Trend Following Strategy- Simple to learn Trading Strategy.
While this short term trading strategy can be used by only focusing on the price action short-term trading tips you can anytime modify it and add some indicator to filter some of the false signals.
The best short term trading strategy is a pure price-action strategy, but if you want to use indicators you need to know how to choose the most accurate indicators for short term trading. Our team at Trading Strategy Guides has put together a step-by-step guide with the most popular Forex indicators here: The Big Three Trading Strategy.
What indicator are we using for this strategy this short term trading strategy? Our first short-term trading tip is that to understand price action you have to understand the underlying cause that makes price action patterns work. This short term trading strategy uses a specific pattern that is derived from a very well-known strategy used by Hedge Funds.
If the price break to a new day high, one would buy, and conversely, if the price would break to a new day low, one would sell see Figure below. The way you should count the lows is quite simple.
Each time the market is making a daily low you can start counting. The rule of thumb is that you only count daily lows that are lower than the previous counted daily low. A picture is worth a thousand words, so here you have an example: In the above example, we pointed out, how to correctly count the Daily lows.
As soon as we break above the day moving average you buy at the market. The combination of the day low pattern and the day moving average is the secret to our powerful short term trading strategy. Incorporating the day MA in your day trading system is one of the best short-term trading tips you can receive. We got our entry, but we still need to determine where to place our protective stop loss and take profit orders, which brings us to the next step of our short term trading strategy.
The best short term trading strategy employs a very rigid stop loss method. If the market breaks above the day EMA and it reverses and breaks below that swing low, then this means trouble and it is reason enough to close the trade at a small loss.
This is the best short term trading tips the market can give you if you listen to the price action. In the next short term trading tips we will learn where to take profits: In the figure below you can see an actual SELL trade example using the best short term trading strategy. We hope that this short term trading tips will help you become a better trader. Like every other strategy presented here at Trading Strategy Guides , you have to use strict money management rules.
This short term trading strategy is a perfect example of how one can simply reverse engineer a losing trading system and turn it into a profitable system. If you want to learn more short term trading tips on how to conquer the Forex market or any other market we highly recommend to spend no more than 5 minutes and read How to Profit From Trading- Make Money Trading Today!
This article has attracted a lot of attention from our trading community. Hi, seems easy to use but on D1 time-frame placing stops below or above the recent low or high makes the stop really huge, something like pips which makes poor risk to reward ratio.
Is it possible to use this strategy on lower time-frame of H1-H4? When you start counting days from day 1, do you take the lowest or highest point swing low or swing high? What if once you start counting, market starts ranging up and down 20 MA line? Can you give more examples? Steps For the Best Short Term Trading Strategy Rules for Buy Trade Our first short-term trading tip is that to understand price action you have to understand the underlying cause that makes price action patterns work.
Please, see the chart below: Conclusion We hope that this short term trading tips will help you become a better trader. Thank you for reading!More...