trading strategies that work Archives

How to make sure the trades you take while day trading forex, will have a high probability of making money? Well, here are some steps that can not only make you more money in trading, but also help you find some of the best trading opportunities quickly.

Number 1. If you have watched other videos on the Trading Rush channel, you know we always like to trade in the direction of the trend. And as a trend trader, what we usually look for is the pullback of a trend. In other words, we are looking for the market to give a discount. Most of the time in an uptrend, you will buy at this point, because no one likes to take trades at the top, unless if you are trading the breakout. For example, if there was an apple that went on sale up to 90 percent off every afternoon, many people will buy during the sale right?

Most trend trading strategies will try to give entry signals near this area. If you don’t have a profitable trend trading strategy, check out other videos on the Trading Rush channel. We have even tested them 100 times to find their win rates.

One of the strategies that performed well after testing hundred times was the alligator trading strategy. In this strategy, we use a 200 period moving average to find the trend direction, because even your dog can easily identify the trend direction with a moving average. Furthermore, moving averages acts as a support and resistance on a trading chart, especially the 200 moving average. So your trade will not only have a higher probability of making a profit, but by adding the 200 moving average on your chart, you will make sure not to trade against it.

The second thing you should do to have a high probability of winning, is avoid charts like this. Here, the price looks like a mess. Price action should be easier to read, otherwise your entry signal indicator will give a lot of false signals. On this chart, price is below the moving average and is not flat. Your probability of making money is already pretty good if you trade with the trend, but if the price action is choppy, your trade will have a lower probability of making money. Here, price is making sudden big candles, and these big candles can easily hit your stop loss. Yes you can set your stop loss far away, but then you will have to set your profit target far away as well to get a good reward risk ratio. Setting a big stop loss is not a problem if price actually moves in your favor, but if momentum slows down and if price starts to go sideways, you will be stuck in a trade for a while.

This is very common with low liquidity stocks and forex pairs. Furthermore, you should be very careful, as forex pairs and stocks can have big gaps and can make sudden moves because the buying and selling pressure can greatly vary. To have a higher profitability of success, it is a good idea to stick with major forex pairs and stock with high volume.

And if you are a beginner, trading on major forex pairs only can be highly beneficial as the price action on these pairs are usually smoother and easier to read. Your indicators will also work better.

Third thing that can significantly improve your chances of making more money, is the time of the day. Even though the forex market is open 24hrs on a trading day, you can’t trade all day. There are different market sessions that play an important role in liquidity. During the Asian session, price usually moves sideways and is less active. Price tends to make relatively bigger moves during the London and US sessions. So you will have a higher chance of finding higher quality trading setups. You can even achieve higher reward risk ratios during these sessions. I have already made a detailed video on this topic. Check it out to learn more.

One of the most important things you can do to improve your strategy is to take trades where people are interested in buying and selling. In other words trade near the supply and demand zones. If the price reverses from a price level strongly, there is a high chance that price will react from the price level again, because traders are most likely to buy and sell near that level.

You can use multiple timeframes to draw support and resistance, and I have made a video on how to draw strong support and resistance areas properly, check it out if you want.

The most important thing you need to make money in day trading is a profitable strategy. That’s obvious, but even if you have a strategy that gives a high win rate, you shouldn’t ignore other signs of reversals or trend continuation, especially the candlestick patterns. Candlestick patterns near a support and resistance level, can provide more information about that level. For example, if price forms an engulfing pattern near a support or resistance level, there is a high chance that price will reverse or will move in the opposite direction for a short period of time.

But how do we apply all of these things in the live market? Let’s look at the live market then.

Here, one can say that this is a great chart for trading. The price is smooth enough and the 200 moving average is also indicating a down trend. Furthermore, MACD is also giving an entry signal. And if you analyze the chart even more, one can say that this is the best trading setup and the trade will have a higher probability of making money. You are not half wrong. This trading setup is screaming to take a short position, but if you switch to a higher timeframe such as the 4 hours, you will notice that price is near a strong support area. Almost everyone on higher time frames can see it. In other words, if you take a short position by only looking at your entry time frame, there is a high chance that your trade will go in the opposite direction of your entry. In the 5 steps strategy video, I talk about how to trade using multiple timeframes. So maybe check that video out as well.

Now if we look at this chart, you can tell that this also has a smooth price action. Furthermore, the price is above the moving average, so it’s an uptrend, and MACD is about to give an entry signal. And, if we switch to a higher timeframe, we can see that the next strong resistance is far away. Right now, price is reacting from this weak resistance. When the MACD gives a signal, price has enough room to move up before touching the support area. This setup has a higher probability of making money.

So here’s the key points to note from this video.

Number 1. Trade with the trend, because trend is your friend.

Number 2. Avoid trading on less liquid stocks and forex pairs. If you are a beginner, trading only on major forex pairs is a good idea.

Number 3. Time of the day makes a big difference in forex trading. Forex spreads can change and markets can become more or less volatile depending on the market session.

Number 4. Buy and sell where people are already buying and selling. In other words, take trades near the support and resistance areas.

Number 5. Use other indicators like the candles patterns and the multi timeframe analysis to filter some of the bad trades.

Get App

Patreon

YouTube

Tag: trading strategies that work

Can these 5 steps make you more profitable in Trading Well, In this video, I’m not only going to show you some of the most useful trading techniques, but I’m also going to execute it in live market, so you can actually see how it will look when you will trade with real money. Also, checkout other strategies videos in the strategies tested hundred time series, where we tested different strategies 100 times to find their win rates, because some of the data mentioned in this video is based on that series, and don’t forget to subscribe to the Trading Rush channel, after all you don’t want to use a strategy that doesn’t even work.

If you have been trading for a while, you have probably realized that not all trading charts are worth trading. There are times when you should take more trades, because the market is perfect for booking big profits. But then there are times when you should completely avoid trading, because if you do, you might end up with multiple losing trades in a row.

Instead of immediately looking for new trades, the first thing you should do is analyse if the market is worth trading or not.

So when I started recording this video, the forex pairs were not really that good for taking trades. As you can see, on the Euro USD pair the 200 period moving average was looking flat, and the price was crossing it multiple times in a short amount of time.

If you have watched my previous videos, you know I use and recommend using a 200 period exponential moving average to find the long term trend, because it’s the easiest way to find the trend, and if we take trade in the direction of the long term trend, we can achieve greater reward to risk ratios, in other words, we can make more money.

So, on these forex pairs, I’m looking for a chart, where price is staying above the 200 period moving average for a while, and where the moving average is not looking flat. Furthermore, the price action should look cleaner. For example, look at these two charts. Here, the first chart looks much cleaner than the second chart. On the first chart, the price is staying above the moving average, and is not looking flat. This kind of chart is perfect for beginner traders, as the price action is easier to read, and your stoploss won’t get taken out because of a choppy price movement.

Just like the Euro USD pair, the GBP USD and GBP JPY were also looking choppy. Even though they were below the moving average, the price action was not cleaner like the price action we saw in the example.

Many people lose money by taking too many losing trades in a bad market. If your charts look similar to these, you should probably avoid trading at that time.

When I started recording this video, most of the forex charts were looking like this. So instead of taking trades in these choppy conditions, I closed the charting platform and came back later when the price action was smoother.

Few hours later, the price action on the NZD USD pair was much cleaner. The price was above the moving average. Furthermore, the 200 period moving average was not looking flat.

Once you filter the bad charts, and find a good forex pair, it’s time for the step 2, where we will use the multi-time frame analysis to find more information about the chart. By more information I mean the points of interests where price has a higher probability of reacting. Sometimes, when you trade on a smaller timeframe, you might end up taking long trades, at a strong resistance level that is clearly visible on the daily time frame. This lack of information can make you lose money.

In this example, I’m on the 5 minutes timeframe. So to find the important levels that many people can easily see, I will switch to the daily timeframe. Here, I will draw the strong support and resistance levels that I can see. Since we are using the 5 minutes timeframe to enter trades, switching to the daily is not really necessary according to some people. But I like to do it to make sure I don’t end up taking short trade on a smaller timeframe at a strong daily support.

If you don’t know how to draw strong support and resistance areas, check out the support and resistance level video on the Trading Rush channel, it has some good examples that you will find helpful.

As you can see, the price couldn’t cross the resistance level, and also reacted to the support level. Since we are trading on a 5 min timeframe which is much smaller than this, we can say that there is enough room for us to take long and short trades on the 5 min timeframe. Right now, we are not on a strong support or resistance level.

Once we have identified the areas on the daily timeframe, switch to the 4 hours timeframe, and look for other clearly visible areas. As you can see, the price is currently near a support level.

If we switch to the 30 min timeframe, we can clearly see that the price reacted to that support level.

Now if we switch to our entry timeframe which is 5 minutes, we will have more information than before. First we only knew that the price was in an uptrend. But now, we also know that the price is near a support level.

Now in the third step, we will use an entry signal indicator. I’m using the MACD indicator in this example. MACD strategy was one of the best trading strategies, that we have tested in the strategies tested 100 times series. If you want to learn more about it, check out the MACD video on this channel.

As you can see, the MACD has not given an entry signal yet. But we can tell that it is going to, because the momentum is slowing down. I have also made a second MACD video, where I explained how to use the Histogram to our advantage. Check that video as well.

Since patience is the key, I waited for the MACD to give an entry signal which was around 20 minutes later. As you can tell by looking at the histogram value, the MACD has given a crossover. It is a small crossover, so it can be difficult to see on some mobile screens. The entry according to the MACD strategy, is at the closing price of the crossover candle, or at the opening price of the next candle. If you use a different entry signal indicator at this step, take entry according to your entry strategy. Now remember, in the third step, we are not executing the trade yet, because there is one more thing you have to calculate.

In the fourth step, you have to calculate the position size by looking at your stoploss strategy. A lot of new traders make the mistake of setting a bad stoploss. Your stoploss has to be far enough from the entry so the price have enough room to wiggle around before going in your favor. And you have to decide where you want to set your stoploss before taking the trade. That’s because to get a consistent loss amount, you have to calculate your position size using your stoploss distance.

I have explained more about this in my ATR indicator video, and in the part 7 of small account challenge series. Check them out if you want to learn more.

According to the MACD strategy, the stoploss goes just below the swing low, which also happens to be below the support area in this case.

In the step 5, it’s time to set the profit target. In this example I’m going to use a fixed profit target, which will be 1.5 times greater than my risk. To get a 1.5 to 1 reward to risk ratio, I can simply multiply my stoploss by 1.5 to get my profit target.

Once you have calculated all of these values, you can enter the trade. It might look like it takes a lot of time to calculate the stoploss, position size, and profit target before executing the trade, but it only takes few seconds once you get a hang of it. Furthermore, even if you are trading on a smaller timeframe like 5 minutes, you will have enough time to calculate everything properly.

Once you have taken the trade with a stoploss and profit target, you can simply close your trading platform if you are not looking for new trades. Once you have taken a trade, there is not really a point in staring at your chart. The price is either going to touch your stoploss, or your profit target.

In this case, the live trade I took using the MACD strategy was profitable. Furthermore, it went exactly how we predicted, and even reacted to the resistance area we drew using the daily timeframe. With only 5 simple steps, we were able to execute a profitable trade.

That’s all. Now you know a little bit more about trading. Liked the video if you liked it. Subscribe and ring that notification bell for more trading videos, and check out other videos on the Trading Rush Channel to find some of the best trading strategies that actually work. And thanks to all the Patrons for supporting the Trading Rush channel on Patreon. Thanks a lot.