Active traders must agree with me that day trading is not easy, most especially when your living depend on your profit from the trade. Some surviving tips for you to add to your trading tool box are the following:
Following the Trend: This strategy is used by most trading firms and individuals. It assumes that currencies and securities that have been rising steadily will continue to rise. They then seek to enter the market on what Fibonacci Traders call Retracements or Pull Backs / Corrections. When a trader who is a trend follower discovers or realizes the market Trend is UP he only waits for the price to correct or come down significantly and then joins in the Secondary Trend before it resumes its upward movement. Trend traders assume there are three types of trend in any market; the Primary or Major Trend, Secondary Trend and the Minor or Counter Trend. The primary Trend is the Major Trend of the day or week or month depending on which time frame a trader chooses to trade from and what he considers his BIG picture of the market, while the Secondary Trend is the resumption of the Main Trend after the market has ended its Retracement or Pull-Back. The Minor Trend is movement in a direction that negates the up, then falling prices become a minor trend and most times do not last as long as the primary trend. Quite often, we may notice the minor trend retracing as much as 50% to 61.8% of the previous movement of the main trend before the correction ends.
Playing News: This strategy is to buy or sell a currency or security of a country which has just announced good news for the economy. An example is what happened during the third week of February 2009. president Obama's fiscal Stimulus bill had just been approved by the Congress. The news of this event made waves during the weekend that gave birth to the third week and the week witnessed the US Dollar recording multiple week highs against all the major currencies around the world for three consecutive days. It must be noted that the markets simply moved against all technical forecast because of the information coupled with other fundamental news that were not favorable to the Pound Sterling and the EURO. The following sites are places where you can get news from http://www.forexnews.com etc A great strategy you can learn to profitably apply to your news when trading the news is straddling. This allows you open buy stop and sell stop orders minutes ahead of a crucial news event.
Range Trading: with this strategy a trader seeks to buy when the market ranges into the oversold area at a Support Level and sells in the range again when the market has ranged into overbought area at a Resistance Level. Hedgers also use this when they are not sure of what the market is up to.
Scalping: it is commonly defined as a very quick trade. A scalper may simply operate on either 1 Minute or 5 Minute Time – Frame taking only about 5 pips to 10 pips per trade and enter into many as 50 trades per trading day. The use of multiple and large lot sizes can make this strategy very rewarding as well as risky.