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My 5 Step Daily Trading Routine for Success
Successful trading has a lot to do with routine. Many professional athletes follow an established program each day. Even before each and every action–take golfers for example–the athlete has a pre-shot routine that gets them focused on the important things and clears their mind of all the other noise. Traders also benefit from a routine.
Over the last 14 years of trading, I have developed my own routine. Here is my, George Papazov’s, daily trading routine for success.
Why do most people want to trade? More specifically, why do you want to?
It is either to make money or to have more freedom. Most likely both.
When it comes to trading, the typical fantasy assumes that you will be traveling first class, eating fine cuisine every night and driving exotic cars. Oh, and once in a blue moon you will check the computer screen and “place a trade”.
Reality is much different than fantasy. Successful traders are professionals, and live a life full of routine, discipline, preparation, meticulous planning and execution. Instead of Lambos with race seats, we have high back chairs with gel cushions. Instead of expensive dinners, we enjoy the exquisite meal selections of Uber Eats and hastily-prepared lunches during a quiet moment in the market, and our “travel” is the walking between our monitors and the washroom. Welcome to reality.
To be successful in trading you need a plan and discipline. You need a routine.
Here is what my day looks like. Through this article, I hope to inspire you to create your very own routine.
Note that all times are in EST. Make the necessary adjustments for your own time zone.
Daily Trading Routine 1) Reaching Tranquility 6 am
As traders, we live on the edge on a daily basis. Our job is not to execute tasks for which we are evaluated and then paid for, our sole task IS to get paid! Every day we know our value. We work one of the hardest, most demanding jobs in the world. This is why the most important determinant of how our day will go, is how our day will start. I am a firm believer in positive thought and energy.
My trading day always starts with a 10-minute meditation session as soon as I wake up, while I’m still lying in bed. This allows me to restore my positive balance and release any negative energy I may have bottled up. Once I’ve finished my meditation session I head out to the gym for a workout.
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I come home and shower around 7:45 am, and settle into my trading office.
At this point, there is likely some fiasco that has taken place overnight, either China devaluing their currency, oil prices collapsing, or possibly both. I won’t find out for another couple of minutes.
Instead of getting right into it, I close my eyes and take three deep breaths. I inhale cold, (imagined) ocean air for 3 seconds, and exhale negativity for 5 seconds. When I open my eyes, I am calm and ready to tackle the trading day with a neutral, unbiased, and optimistic mind frame.
Try reaching tranquility in your trading day and see the difference it can make in your results. This on its own is a large contributor to my daily success, not just in trading but also in my life and relationships.
Daily Trading Routine 2) Session Goal Setting 8:45 am
How much money do you want to make? Very few people have an actual answer to that. Okay, how much do you need? Now divide that by 200 trading days in a year. You now have your goal for today.
I usually aim for US$1,000 – $2,000 on Monday to Thursday, and enough to pay for my lunch on Fridays.
This step is so simple, it is often overlooked.
Write down your figure so you know what you are working towards. If you hit the goal within the first 30 minutes of the trading session, will you still stay at the computer? If so, will you reduce your risk capital per trade? These are the things you need to know before you start each day. Such questions should be answered in your trading plan.
Daily Trading Routine 3) Trade Setups 8:50 am
Now that you have your daily goal, you need to find some good trade setups that will help you achieve it. I start my day by listing my favorite 5 trade setups, be it currency, futures, stocks, or options. Some days, it’s all of the above. It takes me less than 10 minutes to find them as I flip through my watch lists. I grumble and mumble until five jump out at me. I don’t chase them.
Once I have narrowed it to 5 trades, I then narrow it once more to just 3 trades.
From here I review my entry triggers, stop losses, trailing criteria, scaling in and scaling out methodology, and the technicals on the charts.
By this time, it is only 9 am. I like to take the time before the open to express my gratitude for my life, my family and everything I have and love. This sounds corny; I get it….until you do it for yourself every morning for 21 consecutive days, and start to witness your life change. Try it, I challenge you, even on weekends.
It is now 9:25 am and I once again take three deep breaths with slow exhales to help me relax before trading begins. I also do this exercise throughout the day when I feel stress creep in.
The bell rings and the bulls and bears are set free for the epic daily battle. DING DING DING!
From this point forward, it is just a matter of executing my trading plan with laser discipline until I hit my daily target, or the market closes. Some days I enter trades earlier than 9:30 am, especially if they are currency or futures positions. These early entries can happen before I head out to the gym, but never before I get my meditation and deep breathing exercises completed.
Daily Trading Routine 4) Scorecard 4 pm
Some people start trading because they think they can get away from having a boss. Well, they are wrong. Your new boss is you. And if you thought you hated your old boss, I have news for you, your new one may actually be worse!
The scorecard session occurs once I meet my daily goals and decide to stop trading, or the session closes for the day at 4 pm.
The scorecard is exactly what it sounds like. I give myself a grade, from A+ to F. How did I do on each trade? How did I do on the whole day? What did I do well and what do I need to work on?
I include screenshots of each trade and commentary as a summary. Some days I will hang my report card on the fridge with a nice little magnet, but rarely do I get A+ all across the board. I am pretty hard on myself some (most) times. Honesty is the first step to progress.
Daily Trading Routine 5) Takeaways
After the scorecard is completed I find some takeaways that I can use to improve my trading or other aspects of my life. What did I learn today while trading? What did I learn as a human? Are any of these lessons actionable, or should they be?
If there are no takeaways, no big deal, call it a good day. If there are, park them in your trading notebook and revisit these takeaways every couple of days to maintain progress and focus on them.
If any of these takeaways require that you or your trading change, start working on an action plan. Decide when you will follow up and get to work. No takeaways means no growth, and no growth is no good.
Final Word on the Daily Trading Routine
That is my exciting daily routine as a trader. In one way I ruined your dreams of quick riches, travel, and unleashed freedom. But my intention was to show you the reality of what is necessary to become a successful day trader with consistent profits.
Remember, the human mind is conditioned to find routine and patterns in everything we do. It is conditioned to automate and create processes on a subliminal level. So stop cheating your brain and give it what it wants.
Try this routine out for size, and feel free to adjust it to fit your schedule and lifestyle. Let us know how it works for you!
Lastly, all of this daily trading routine stuff does not mean you need to be a hermit and avoid fun. Quite the contrary. I love to regularly treat myself and my family. Routine and structure provide the resources to do that. No routine and no structure means fewer resources and a lot more stress…not good!
Most of us trade to live, and do not live to trade. Remember to enjoy yourself and keep things fun. It’s all about finding balance.
Good luck and good trading.
Sign up for my free weekly stock market analysis report, including three great indicators you can use to start improving your trading.
George has over fourteen years of trading experience in currencies, stocks, futures, and options. In 2020, he founded TRADEPRO Academy to offer traders a complete development package.
How to Day Trade the Forex Market In 2 Hours or Less a Day (EURUSD or GBPUSD)
Learn to how to day trade the EURUSD in two hours or less per day. See the best times of day to trade, what time frame to us, and how to enter and exit trades. Learn how to manage risk and plan out each trade. View the examples and then start practicing the method yourself.
The following guide assumes a basic understanding of how the forex market operates. If you are new to forex, check out Introduction to Forex, which provides some background on trading currencies.
Day Trading Forex – Basic Guidelines
Most of my day trades in the forex market are based on these simple concepts. For simplicity, assume I am talking about an uptrend unless otherwise noted. The same concepts apply to downtrends.
- Trade when London and/or the US markets are open. I opt to trade from 8:30 to 10:30 AM EST (15:30 to 17:30 on my charts below), but anytime while London is open is fine. I trade for about two hours per day, that is all.
- I use a one-minute chart.
- Only trade in the direction of the trend.
- Wait for a pullback. The pullback must stall out or show signs the price is starting to move back in the trending direction before reaching a major prior swing low.
- On the pullback, the price must consolidate (move sideways)–stop falling–for at least 2 bars+ (2 one-minute bars, or more). Buy a breakout above the high price of the consolidation. This requires patience. If the price stalls and then breaks out in the opposite direction of the overall trend then there is no trade. As long as the trend is intact, continue to look for pullbacks, consolidations, and then consolidation breakouts in the trending direction.
- Stop Losses and Targets are set at the start of each day and may be slightly adjusted during the day based on expanding or contracting volatility. Measure the trending price moves between pullbacks, and then subtract several pips from the smaller ones…that is your target on each trade. The stop loss is placed just outside the consolidation on the opposite side of the breakout. In order to take a trade, the expected profit must be at least 1.5 times the risk of the trade. Determine the stop loss and target based on these methods, then see if the reward is more than 1.5x risk. If all is good then proceed. If prior trending moves show that it will be hard for the price to reach a target that is at least 1.5x risk then avoid the trade.
- Exit all position at least two minutes before major news events. For the EURUSD and GBPSUD that includes major news related to the EUR, GBP, USD, and CHF. Don’t trade until after the news is released. Cancel all pending orders before news and when you are away from your computer. Create a day trading routine to avoid mistakes.
Knowing the strategy isn’t enough, and below there are multiple examples of this strategy in action. Price is constantly moving, so we need to be able to plan our trades before and as they are forming. Before a trade is taken we also need to know what we will do once we are in the trade, depending on what the market does next.
Trading Beyond the Hard Right Edge
If you want to really learn how to day trade the forex market (or any market), master “trading beyond the hard right edge.” Most people look at what has already happened on their chart, come up with one trade idea and then pray it works out. Since we can’t see what happens next (beyond the hard right edge of our chart), inexperienced traders tend to think of scenarios they want to happen, or that they fear. Most people gravitate toward one or the other. They think about entering a trade and the price flying in their direction for an easy profit and high-fives from friends. This is fantasy. Or they enter a trade and imagine the price plummeting against them, stopping them out. This is fear. Either of these scenarios are possible, but so are a host of other possibilities, and which one is more prevalent in your mind will bias your trading.
We don’t want to be biased by one extreme view. Rather, we want to consider all possibilities: the price could drop, rally, or do nothing.
If you are very optimistic, you may miss clues that the market is turning against you. If you are very pessimistic you may avoid a good trade, or jump out of it too early. What is missing? Your strategy gets you into a trade, with an initial profit target and stop loss. Once you are in the trade though, it is a different world. All sorts of things could happen. What if the price moves in your favor slightly and then starts to move against you? What if the price moves to within 0.1 pips of your target and then reverses? What if the price does absolutely nothing after you get in…for 10 minutes? You were expecting something to happen, and now that it hasn’t what do you do?
As a day trader you need to consider the various things could happen, and what you will do in each circumstance. This may seem impossible, but it’s not. Actually, there are only a few things that could happen. The price can rise, fall, or move sideways, and it may do it quickly or slowly. The combination of the price moving higher-quickly tells us something different than higher-slowly. A quick downward movement followed by a slow upward movement tells us something different than slow-down and quick-up.
Have a plan for each combination that could arise. It is a fair bit to think about…but you have a lot of time while trading. Placing an order takes almost no time or effort. Hitting buttons is easy. The real effort is the thinking and analysis that occurs before the trade. Once the trade is placed, you should already know what you will do in any situation. Develop your thinking and analysis skills so you can do this on the fly.
How to Day Trade the Forex Market – Active Trade Management
Trading beyond the hard right edge is an advanced form of active trade management. It is a mind frame, where you look at what has happened and come up with scenarios for exactly what you will do (exit, adjust stop loss or target, or change nothing) in various scenarios after you enter a trade. As discussed above, there are only a few things need to consider–direction, size of moves, and speed of moves.
Here are some examples of how I use these three factors to strategize every day trade.
- If the trend is strong and the market isn’t giving any warnings signs, I will usually let the price do whatever it wants. My target is likely to get hit, so I leave my stop loss where it is and if I get stopped out I get stopped out. It was worth the risk because everything is moving well.
- If the trend is very strong, I also decide before the trade if I am allowed to adjust my target or not. If I am allowed to increase my gain, where am I going to move the target to? This will be based on the length of prior price swings (we play odds/tendencies, not what we hope will happen). If I adjust my target, and then price pulls back from it, do I get out or let it make another attempt at the new target? Decide what you will do before the trade is even placed.
- Usually, I don’t adjust targets. Maybe 1 in 10 trades is worth adjusting the target for. Remember, the target is based on the lengths of prior swings seen that day, so unless there is very good reason that this particular move is likely to be much bigger than the others (a unicorn) there isn’t usually sufficient reason to adjust a target. If a target is approached, and just barely missed, I usually close the trade immediately. Never let a trade that almost hit your target turn into a loss. This is why you need to plan ahead; if you don’t, it will be very hard to hit that “close” button when profit is evaporating and you are experiencing regret/anger/fear/hope.
- Say the trend is up, and we just a had a very deep pullback, retracing all or most of the prior up wave. The trend is still technically up, but the deep pullback could be the first wave lower of a downtrend (if the price proceeds to create a lower high after..called truncation). So thinking ahead, I say to myself “The trend is still up, so I want to get long using my usual entry method, but I also know that selling pressure is present. Therefore, I will buy to capture any remaining upside momentum, but if the price shows any weakness once I am in the trade I will exit immediately.”
- Various situations call for different exits. For example, if things look pretty good, but not ideal, I will allow the price to make three attempts to move in my direction. If it moves in my direction three times but doesn’t hit my target, I look to exit.
- I may also opt to give it only two chances to go in my favor if the setup is slightly less favorable (trend not as strong). Exit after two attempts if it doesn’t hit the target.
- If the trend is likely over but you are squeezing the last bit of juice out, or if the trade is at an inflection point which could go either way, only give it one attempt. If it moves in your direction and then falters, bail immediately. It is probably a false breakout.
- If you take a trade and it immediately moves against you, there isn’t usually much you can do about that. You get stopped out. When we take a trade we need to let it make at least one attempt (or more) in our direction before bailing on it. If you find this happens to you often, you need to work on entries because something is wrong.
To day trade the forex market successfully you need to read and adjust to market conditions. You decide which direction you are going to trade, and before the trade you decide how to manage that trade. Where you entered is no longer relevant; you can’t do anything about your entry price once in a trade. You adapt to what happens after you are in the trade. Like Napoleon on the battlefield, you have calculated everything beforehand.
How to Day Trade the Forex Market – Trade Examples
Here is the April 14 EURUSD 1-minute chart, along with comments below. I traded for about an hour and a half.
How to day trade the forex market – EURUSD 1 minute (click to enlarge)
This day (two hour period) was dominated by news at 830 AM EST (1530 on chart). The brown boxes mark consolidations in the price which is what we are watching for. I used a 10 pip stop loss and 18 pip profit target on this particular day.
- The first trade was the first slow down after a very strong move higher. This is one where you just look at the upside momentum and decide you need to get in, on a pullback, as soon as the price starts moving higher again. The long trade occurs as the price crosses above high of the sideways movement (high of the brown box). +18 pips.
- Trade 2. The price is still rallying, and then has a pullback (just before trade) and then pops higher again. When it pulls back again, it pauses at almost the same low, showing very little selling momentum. This one you want to give a chance to hit the target. +18 pips.
- Trade 3 and 4. Trend was up. Kept buying. Stopped out on both. Trade 3 never really moved my direction. Trade 4 did move in my direction but then reversed. Cut the losses early. -9 pips and -5.3 pips.
- Trade 5. We now have a little downtrend, but we can see the price is still respecting the 1.0655 area (horizontal line). Given the overall moves higher, going short isn’t even a consideration yet. Buy again when the price stalls at support and then moves higher. The price just about reached the target and then pulled away from it. Closed immediately. +14.9 pips.
- Trade 6. Didn’t actually take this one. But it was similar to trade 5…but with the added benefit that just before this trade the price made a short-term higher high (at 16:58 relative to the minor high at 16:42). That would have been another profitable one.
In less than two hours of trading we had 5 trades: 3 winners and 2 losers, for a total of 36.6 pips. Assume you have a $2000 account and risk 1% (can lose up to $20 on each trade). With a 10 pip stop loss you can trade 2 mini lots to stay within this risk tolerance. Therefore, your daily profit is 36.6 pips x $1 (how much a mini lot is worth per pip) x 2 (how many mini lots you are trading) = $73.2, or 3.66%. With a $10,000 account, you make $366 for two hours work. Once consistent, you can increase risk to 1.5% or 2% per trade (no need to go higher than that), pushing your revenue to $732 on a $10,000 account. That’s based on one strategy…the forex strategies guide has many more.
Here is the April 15 EURUSD 1-minute chart (I learned a new trick in MT4–if you drag an order from your account history onto the chart it will put the trade levels for that trade on your chart).
How to day trade the forex market – EURUSD (click to enlarge)
On April 14 we had lots of “clean movement”. On April 15 we had a Euro conference begin right around the time I started trading (1530 on chart) and that created some price whipsaws. Best to avoid…but as we can see I did take one trade in there…
- Based on swings prior to the first trade I opted for a 14 pip target and 8 pip stop loss.
- We can see the price moving mostly sideways but in a very jagged way. Just before the first trade the price tried to move lower, but failed. It rallied paused, and I bought when the price broke above the brown box (I manually draw these…for you…I don’t’ draw them while I am actually trading). This trade was almost 10 pips onside, and then I took a full loss on it. I make mistakes too. Given the choppy nature we were seeing, I should have bailed much earlier. The reversal was very fast, so maybe it is a flat trade, but at worst should have only been only a -5 or -6 pip loss. This is a slightly different strategy than the one discussed above–I wanted in because the price had just had a false breakout, and not necessarily because of the overall trend (like all other trades).
- Trade 2. Sharp move in our direction, little pullback to near old resistance (range top), pause, enter as price starts moving higher. Classic! +14 pips.
- Trade 3. Pretty much the same. The price is now moving a little sideways, but the price held above the prior swing low, and all the elements are there so I am triggered in. +13.6 pips (entry price had slippage slightly reducing profit on trade–target stays at originally planned level despite the slippage).
- x: I marked a box and put an x under it. This slowdown/stall is way too close to a recent high. This trend has been running up and a deeper pullback is likely.
- NFs: tried to get long twice, but to no avail. Price kept dropping. This why we wait for the price to move back in our direction. It never broke above the brown box, so no trade. By the second NF you can see my comments…I am basically saying I will only give this trade one chance to go (if it fills, which it didn’t) because by this time the price had retraced the whole last leg of the rally, indicating weakness.
- The price then lulls a little and it is almost 10:30 AM EST (1730 on chart) so that was it for the day.
Overall, in less than an hour of trading we had 3 trades: 2 winners and 1 losers, for a total of 19.6 pips (a bit higher if I don’t make that mistake on the first). Assume you have a $2000 account and risk 1% ($20 on each trade). With an 8 pip stop loss you can trade 2.5 mini lots. Therefore, your daily profit is 19.6 pips x $1 (how much a mini lot is worth per pip) x 2.5 (how many mini lots you are trading) = $49, or 2.45%. With a $10,000 account, you make $245 for an hour of work….you don’t even need to give up your day job. Once consistent, you can increase risk to 1.5% or 2%, pushing your revenue up to about $490 on a $10,000 account (for this particular day).
To learn more about how to day trade forex, including basics to get you started (order types, currency pairs to focus on, defining trends…), 20+ strategies and a plan to get you practicing and successful, check out my Forex Strategies Guide for Day and Swing Traders eBook.
Here are a few more chart examples, this time from the GBPUSD 1-minute chart.
Here is a chart from July 27. As the US session begins the price is ranging in a small band, which isn’t attractive for trading. By 16:20 (a little more than an hour after the US opens) though we have seen a strong move down, indicating the start of a downtrend. During the first two hours of that downtrend I have drawn three potential trades. These were picked because there was a pullback and a consolidation. There were other pullbacks with no consolidations, and other consolidations with no pullbacks. The three trades highlighted had both. Waves had been moving about 10-12 pips prior to our trades, so a 10 pip target is realistic, along with a 5 to 6 pips stop loss. No problem on any of the trades this day; take home 30 pips, multiplied by however many lots you are trading.
Days like the above are fairly easy. When there is a trend, we continue to trade it until there is evidence of a reversal. At that point, we wait for another signal. But not everyday has a beautiful trend. Sometimes the price action is much choppier, and if you don’t pay attention you can lose a lot of money in a hurry chasing big moves that never come. NOT TRADING WHEN CONDITIONS AREN’T RIGHT IS JUST AS IMPORTANT AS TAKING ADVANTAGE OF OPPORTUNITIES THAT DO ARISE.
The next charts shows the day prior. The London and US overlap session was a snooze, as traders awaited the Fed Interest Rate Announcement later in the day (Tip: if there is a big announcement later in the day, the morning is often fairly quiet as major institutions await the news). One thing to always note is the y-axis. On the chart above the price moves about 90 pips. On this day, the price moved about 30. So those move that look big, actually aren’t. I recommend that you always set your y-axis to about 80 or 90 pips (may change a bit over time), as this will keep movements in perspective from day to day.
Once the US session gets going, the price drops, but then bounces above where the decline began. No short. We then get no consolidations which would offer us a long trade. The price then drops below prior swing lows, negating any long trades. By this point…about 16:15 we can see that average wave is only about 4 pips. That isn’t big enough for us. We typically need at least a few pip stop loss, so if we can only expect to make a few pips, the reward:risk isn’t there.
Also, notice how a trend never really gets going. The price doesn’t move in one direction, pullback and consolidate. Rather, it reverses course abruptly (moving past a prior swing high/low), or doesn’t provide an opportunity to get in. If there is no good setup, don’t trade.
On days like the above, once you see the market isn’t moving very well, it is probably best to step away after an hour or so (especially if you know there is a major news announcement later in the day). If you sit there all day, you are going to be tempted to trade. Instead, if you sit there for an hour and the market is absolutely dead, go do something else for a few hours, and then tell yourself you can come later and see if there are any opportunities in the US session (especially if a news announcement is coming out), or just wait until the next day. If you trade during the London session, and it is dead, stop after an hour and come back and check your charts once the US session begins.
Not finding a good trading opportunity sucks, especially when you sit there all morning. But you know what sucks even more? Losing your capital on trades you know you shouldn’t be taking, which then messes with your head and reduces the capital you have to throw at good trades which may come tomorrow or the day after.
Below is another trading day example. This time, a nice strong trend is in play. On this chart, I have added in a few comments about deeper pullbacks. When you have a very strong trend with long trending waves, like in the chart below, it is reasonable to assume that some pullbacks will be more complex or deeper than others. Those deeper pullbacks are often forecast by the price moving above recent minor swing highs (downtrend, or dropping below minor swing lows in an uptrend) and the occasional weaker wave in the trending direction. These are pieces of evidence that tell us to be a bit more cautious and maybe wait for the next consolidation before trading (assuming overall trend remains intact). They don’t indicate a major reversal though. For that to happen, the price needs to fail to follow through in the trending direction, like it eventually does at the far right of the chart.
Additional Notes on Day Trading the Forex Market
I recommend using a daily stop loss and a loss from top. If you lose 3% (three trades risking 1%), stop trading. Read Day Traders: How and Why to Use a Daily Stop Loss for more details. Once you master this method, this should be a rare event. We call it “blowing up” (when you lose three trades right off the bat and have to stop trading). You should only blow up once every month or two.
On days were volatility is lower, your stop loss and target will be a bit smaller. But by continuing to risk 1% (or 1.5% or 2%), your position size will increase. If you’re well practiced you still should be able to make a good daily income, no matter if volatility contracts or expands. Be aware of super tiny stop losses though, and huge positions sizes…that can spell disaster (see Reducing the Risk of Catastrophic Trading Losses).
For day trading forex, use an ECN account with near zero spreads, and pay the small commission if you plan on day trading forex regularly. When volatility shrinks the tight spread becomes more important. When it is quieter, the spread becomes much more of an obstacle, because if it is quieter our targets are going to be smaller. Our payoff relative to the spread decreases. On really quiet days, or days where you don’t see valid trade setups, you have to be content not to trade. Save your capital for better opportunities.
When daily movement in the EURUSD is below 70 pips, day traders tend to struggle a bit more because there is less movement than when the pair is making 100+ pip moves per day. If overall volatility in the EURUSD is really, check out Find Day Trading the EURUSD Tougher Lately? for some possible solutions.
My order is poised in anticipation of a trade. Assume I want to buy. I set up a buy stop order (don’t confuse buy stop with a stop loss order–the stop loss order is attached to our buy stop order) with a 8 pip stop loss and 14 pip target (or whatever it is on that particular day). I then place it way above the current price (so it doesn’t accidentally get filled before I want it to). When a slowdown forms, I drag the order–with stop loss and target attached–down to the entry price I want (just above brown boxes on charts). That way, my order will trigger as soon as the price moves out of the brown box. If you use market orders and are even a second delayed the price could be well away from the entry point we want (not good!). You can set this up using an MT4 plugin, discussed here. If you trade with a broker that supports NinjaTrader–a great trading platform–that will also work well.
From looking at these examples, day trading may seem easy. It isn’t. It will take 6 months to a year of practicing two hours a day (including a few hours on weekends going through charts, reviewing, self-assessing and working on problem areas) before you will likely be able to trade like this consistently (see 5 Step Plan for Forex Trading Success). What you are basically doing is planning your trades before the market even moves to your entry location. You have an idea of where you want your trades to take place before the market even approaches that area. If the market doesn’t go there, you don’t trade. If the market does something unexpected, you adapt and hatch a new plan. You are always thinking ahead, strategizing exactly how will get in and out of trades (based on all the price movement evidence for, or against, your trade)…before the trade is even placed. This is mentally taxing, which is one reason I only trade two hours a day (when I day trade). It is a skill and it takes a lot of work to develop…and maintain (if you don’t trade for a while, you’ll be “rusty”).
Don’t let a losing trade or two throw you off. Focus on what is happening, plan and then jump on opportunities. Keeping the mind busy with important trading tasks will keep your sabotaging emotions at bay.
Some days you may have 8 or 9 trades. Other days only one or two. Some days your stop loss will be 20 pips and your target 35…other days your stop will be 3.5 pips and your target 6. Adapt..and have fun! That‘s how to day trade the forex market, the EURUSD, or any forex pair.
Here’s a video that provides some additional tactics you can use to find the trend and trade it.
By Cory Mitchell, CMT
To learn more about how to day trade forex, including basics to get you started (order types, currency pairs to focus on, defining trends…), 20+ strategies and a plan to get you practicing and successful, check out the Forex Strategies Guide for Day and Swing Traders 2.0 by me, Cory Mitchell, CMT.
I can’t cover everything in one article. Post your questions, as that lets me know what to focus on in future articles.
Your Daily Routine For Market Analysis Checklist
Article Summary: At first, traders can feel overcome by the amount of data that appears on the Economic Calendar relative to the currency pair they’re trading. There are a few major events you need to be on the lookout for relative to your currency pair that will be looking to trade or already trading to see if it’s time to exit the trade or stay in relative to your trade or potential trade. Here is a checklist you can use to make sure you catch the lion’s share of news relative to your trading.
Players large and small come into the Forex market every day. Small traders have the advantage of not answering to clients or investors but often have the disadvantage of covering a lot of information in a short period of time. Some individual traders, because they’re overwhelmed by the amount of data, decide to focus solely on Forex Price Action ( register here for FREE online course on Price Action) because they hope to minimalize the amount of analysis needed to trade but it is often helpful to know the news.
Large traders or institutions have a heavy staff on hand to maintain their trading operations. Institutions with trading desks have economists on hand as well as technical analysts, traders, and risk managers to try and keep everyone performing at top efficiency. Luckily for you, most major data points are easily accessible and with a simple routine you’ll be able to call down your daily analysis to make sure understand the pulse of the market you’re trading and what’s potentially on the horizon.
What developed the Night Before?
If you’re trading any of the Asia-Pacific currencies like the JPY, AUD, OR NZD it’s important to know what happened while you were sleeping in the US. If you’re trading from that part of the world, then it would be helpful to know what happened in the US whether it is jobs numbers, CPI, or a Central Banker speaking about interest rate or stimulus policy. The easiest way to see what happened is through the Economic Calendar or reading the DailyFX Daily Market Briefs that breaks down the three trading sessions of the day.
Learn Forex: DailyMarket Briefs Can Update You on Major Overnight Developments
What Other Markets Are Moving?
As the world market’s become more and more intertwined you need to understand what’s moving and why. So that you don’t think the tail is wagging the dog, it’s helpful to understand that when other markets are moving strongly there is often an underlying move in the Currency Markets. This is because all markets are priced in currency and if people want to move out of an investment fast, the currency often is sold to move money abroad.
Learn Forex: The Nikkei 225 move was built on a foundation of JPY weakness
(Created using FXCM’s Marketscope 2.0 charts)
Multiple Time Frame Trendlines or Support & Resistance Levels
While this type of analysis can be done less frequently, it is no less important. Once a week or if there is a significant daily move, it is important to check support and resistance levels of the markets or trendlines that the market has been following in the fulfillment of the current trend. Once in a while a larger time frame will show a different pattern than a smaller time frame and you can choose which you want to trade on based on your risk profile.
Learn Forex: Multiple Time Frame Chart Analysis Can Help You See Upcoming Levels
(Created using FXCM’s Marketscope 2.0 charts)
This type of analysis can also help you set profit targets or stop exits on your trade. If you would like to know what your $ profit or loss would be on the trade should one of your exits get hit, you can use our FREE Risk Management calculator on www.fxcmapps.com .
What High Importance Events Are Coming Up?
This is an important question that every trader with open positions should be able to answer. Answering this question last Friday could have helped you avoid the 170 pip gap over the weekend on the Cyprus news. The two tools you can use regarding this question is the DailyFX Economic Calendar with the filter set to high, or our DFX News Plug in from the App Store which will show you news events on the charts.
Learn Forex: DailyFX.com Economic Calendar for Week of 3/17/13
Courtesy of DailyFx.com/ Calendar
Learn Forex: Following Gap from EU Leaders on Cyprus Bailout
(Created using FXCM’s Marketscope 2.0 charts)
By staying abreast of upcoming news you can limit the amount of shock to your account from a geopolitical announcement which can shake up the Currency Market. Combining upcoming major news announcements with multiple time frame chart patterns can also help you see when a currency pair may be ripe for a sell off or ready to continue the trend. All of these things are invaluable to a trader’s toolbox.
Developing the routine and organization to be on top of major market moving events will take a while. But make no mistake; it is worth it to you to know what’s coming up in light of what happened over the weekend with the EURUSD. Lucky for you, Dailyfx.com has done the hard work of gathering the data so that all you need to focus on is to understand and apply the news.
—Written by Tyler Yell, Trading Instructor
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