A Simple Day Trading Forex Strategy – Moving Average Day Trader.
Day trading Forex can be one of the most rewarding strategies out there. There are so many ways to day trade Forex, so don’t think this strategy is the only way.
But, we like to make things simple. That is why we created this simple day trading Forex strategy, as it will be great for beginners.
We have many articles on day trading, and if you want to get into the basics, our day trading for beginners this article would be a great start!
Before we get into the strategy, let’s first get into what day trading Forex is.
Table of Contents hide.
What is Day Trading Forex.
Day trading Forex is when you buy and sell on the same day.
For example, if we were to buy EURUSD this morning at 8 A.M. and then sell it at 2 PM, that is considered a day trade.
So lets keep digging into why day trading is so popular in the Forex community.
How much do forex day traders make?
Forex day traders can make anywhere from 1-5% of the total account each day. Sometimes more, but that requires a lot of risk. Risking too much can crush your account. We have a great article on risk you can find here if you want to find the best risk management strategy.
What is the best strategy for forex day trading?
The best strategy is the one that fits you best and makes you money! It sounds a little obvious but sometimes the same traders could be trading the same Forex strategy and have completely different results. It is all about the risk, and keeping your emotions in check. Don’t be afraid to take a loss!
Is Forex day trading like gambling?
Many will say that trying to day trade is comparable to gambling. In a way you are taking a bet that a particular pair will go up, but I hate the word “gambling.” Get a trading plan together and never trade based on emotions. Leave that to the gamblers!
Can Forex day trading make you rich?
Trading Forex can be highly rewarding. If you follow a system that has a great risk to reward and risk management, there is no reason you cannot do well. Using a prop trading firm is also a great way to day trade Forex because you can trade with a much larger account than usual. We do fund Forex traders. All of our Forex Master Traders get access to our prop firm, so if that is something you are interested in, you can check that out here!
Learn More About Our Forex Trading Community.
Are there any Prop live forex trading rooms?
Yes, as we mentioned above we do a fx live trading room. Our forex day trading system focuses a lot on price action. Our forex master trader coaches will show you exactly how we trade the markets everyday. In addition, our prop live forex trading rooms features our prop traders, trading every day. If you would like to see live forex trading room reviews you can see that here. This is not a free live trading room. We do charge a small monthly fee but, to us, this is completely worth it because of the value you get on a daily basis. In our eyes, this is the best forex trading room available right now.
Is Forex Day trading risky?
Yes. Trading is risky, in general. Nothing is a guarantee. All you can do is find a system that works for you and follow it. Tweaking is always necessary as no one has a true “holy grail” trading strategy.
Is Forex better than stocks?
The Forex market is way faster than stocks. Most stocks typically don’t move all that much in a given day. Like stocks, Forex is highly affected by the news. You also are leveraging a lot more with Forex. If you are unsure what leveraging is, babypips has a great article on this topic.
Forex day trading books.
There are many great Forex day trading books. We actually reference a few great books here.
I hope some of those questions above interested you in Forex day trading!
We got an excellent Forex day trading strategy for you.
Let’s get right into it!
Simple Day Trading Forex Strategy Rules.
Trading tools needed for this day trading Forex strategy.
Forex Trading Platforms:
(Recommended) Meta trader 4.
You can also try another platform like Tradingview, or NinjaTrader, but we always prefer Meta trader for Forex trading.
Indicators Needed:
9 Exponential Moving Average (EMA) 20 Exponential Moving Average (EMA)
Time Frame Recommended:
M30 Time Frame.
Best currency pairs for this day trading Forex strategy.
We recommend you stick with the 7 major currency pairs which are:
EUR/USD USD/JPY GBP/USD USD/CHF AUD/USD USD/CAD NZD/USD.
In our example we are using Meta Trader 4 which is the #1 trading platform for Forex traders. We also will be using the EURUSD as an example which is one of the most popular Forex pairs to day trade. We breakdown the best forex strategy with 6 simple rules.
Remember we like to keep it simple so it is easy to follow. Also note that this strategy will work on any time frame you prefer to trade it with.
Forex day trading rules.
Rule #1: Go to M30 time frame, then add the 9EMA and 20EMA to chart.
This should be simple enough.
In Meta Trader, you can find the EMA under Navigator/Indicators/Moving Average.
Once you select Moving Average, change the MA method to exponential and the period to 9. Repeat again and add the 20 EMA to the chart.
Rule #2: Find a pair that is trending down (or up).
In this example we are going to use EURUSD.
Notice how it is trending down.
This is what you should be looking for.
It should be hitting lower lows (or higher highs for a sell example).
In our case we got the EURUSD trending down.
The goal with this strategy now will be to find a break of this trend to the upside.
So we will attempt to find a place to buy because we think this pair will go up.
Rule #3: Draw a trendline.
Trend lines are great! If you need help drawing trendlines, feel free to look at this article we went in depth on how to draw them.
For a down trend like this, you want to draw an upper trendline like you see above.
We are looking for price to come up and break it.
Rule #4: Once Trend line is broke, find entry.
Enter the BUY trade trade when candle closes above both 9 and 20 EMA after the trend line break.
This part is critical.
Since this is an example of a buy trade, the candle must close above both the 9 EMA and the 20 EMA.
This is the candle you could take the buy trade. Remember these are 30 minute candles. We recommend you wait for the previous candle to close before you enter so it, in fact, does close above the moving averages.
Rule #5 Set the stop loss below both 20 and 9 EMA.
We always recommend you have a Stop loss with any trade you take. Especially on these lower time frames as price can move rapidly.
To place your stop loss, simply place it below both of the moving averages.
This will give it a little room to move after entry.
Rule #6 Take profit target.
Ideally, you always want to hit a 2:1 Risk to reward ratio, or close to it.
Meaning, if your stop loss is at 20 pips you should have a 40 pip target.
When price levels out and continues to touch the bottom 20 EMA, take profit then.
This most likely means a pull back is coming and we don’t want to deal with any pullbacks.
If you try this strategy out, do so on a demo account and if you get any results let us know below in the comments!
Because this Day trading Forex strategy can be both a sell and a buy strategy, I want to share an example of a sell setup.
Day trading Forex Trade Examples.
When not to use this day trade Forex strategy.
We recommend you keep an eye on the big news for that day. If there is a news announcement, the market can get crazy, fast. So it is important that you avoid a sudden news spike. You can simply reference this as it will show you all the news for the day that will impact certain currencies.
Day Trading Forex vs Stocks.
The advantages of day trading Forex is that you will not be marked as pattern day trader. Also, the markets are a lot more volatile in Forex so you can capture a big move in a short period of time.
Learn More About Our Forex Trading Community.
Conclusion.
Day trading Forex is quick and could be highly rewarding with the right system! This Day trading Forex system was just one of many ways you can do this.
There are thousands of strategies, it is your job to follow the rules and see if it works for you.
This works great with trending pairs that are slowing losing steam. In the two EURUSD day trading examples above, that is exactly what happened.
You were in and out of the trades in one day.
If you liked this Simple Day Trading Forex strategy please leave a comment below!
Thanks for reading.
TradingStrategyGuides.
With over 50+ years of combined trading experience, Trading Strategy Guides offers trading guides and resources to educate traders in all walks of life and motivations. We specialize in teaching traders of all skill levels how to trade stocks, options, forex, cryptocurrencies, commodities, and more. We provide content for over 100,000+ active followers and over 2,500+ members. Our mission is to address the lack of good information for market traders and to simplify trading education by giving readers a detailed plan with step-by-step rules to follow.
Let us know what you think of this day trading strategy!
Daniel Annan says:
Great Strategy and well and detailed explain I have enjoy using your strategy and working well for me.. Thanks so much.
awesome! Thanks for sharing Daniel!
Sorry, doesn’t work well. You’ve cherry-picked the examples above. Your Stop-Loss setting is so arbitrary – not clear at all.
Sorry to hear that. Please list all of the “cherry picked” examples and we can remove anything that does not follow the strategy.
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