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Forex Day Trading Strategies Stock Market how to make money with an easy Momentum Trading Strategy
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What is the Best Day Trading Strategy?
When the price is in an uptrend, there will be an upward momentum, then the price will lose its upward momentum and will start to come down. But here’s the thing, if the price is really in a good uptrend, there is a high probability that the size of the downward move will be smaller than the upward move. Now keep this in mind for a moment, and watch Bill the first throw a ball. When Bill the first throws a ball from the top of the stairs, it bounces and gains an upward momentum. But this time, when the upward momentum is lost, the ball finds support lower than the previous point. The ball keeps finding support at a new lower point with every bounce. And you can probably tell that movement of the ball falling from the top of the stairs, is very similar to a downtrend in the Forex and Stock Market.
Now here’s the Momentum Day Trading Strategy that I use to make money when the stock market opens.
You see, in the Forex and Stock Market, there are times when price makes a very big move in one direction in just one or few candles. These moves are usually caused by news, events, or by a breakout of an important price level. In the stock market, big one-sided moves are really common and easy to spot. Few minutes after the stock market opens, you can find the stocks that made a big move in one direction by looking at the top gainers and losers of the day. If you find a stock that made a big move after a gap open, it’s even better. Because when a stock opens with an unexpected gap, there is a lot of buying and selling activity at the market open. Here’s what it looks like. On this stock chart, the price opened with a gap up. It opened above a resistance level. When the price was below resistance, traders who took a short position, probably set their stop loss just above the resistance area. But when the price opened with a gap up, they were suddenly in a more than expected loss. Since they shorted the stock, they have to buy to close the position. And when they will buy to close, it will create even more buying pressure. The traders who wanted to go long will also go long after seeing the price above the resistance area.
When this happens, in other words, when price makes a big move in one direction, I like to enter a long position near the end of the first pullback after the big upward move. How do we find the end of the pullback in setups like these? Well, there are different methods for Stocks and different methods while trading Forex, that’s because Forex charts have more market noise on smaller time frames than the Stock Charts in my experience.
For example, here, a big green candle appeared indicating a temporary buying pressure. We want to buy while the buying pressure is still there, but we are not going to buy at the top of this upward move. We will wait for a few red candles to form. In this example, two red candles appeared. And when the first green candle closes above the previous red candle, in this case, that is right here, we take a long trade. When taking a trade like this, I like to set the stop loss below the entry candle and a 1 to 1 reward risk ratio profit target. Since this trade is to capture some of this upward momentum, a tighter stop loss with a 1 to1 reward risk ratio gets me a very high win rate. I think I mentioned in one of the videos last year, that I got multiple green days in a row just by trading with momentum like this. Furthermore, I have made live trading videos trading exactly like this on the Trading Rush Channel. Check it out to see a live example.
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Momentum Day Trading Strategies, 5 min BEST Momentum Day Trading Strategy that I made MONEY with | Forex Stocks Trading Rush.
Just How Does Momentum Spending Work?
Momentum investing normally includes a stringent collection of guidelines based upon technological indicators that dictate market entry and also leave points for particular securities. Momentum capitalists occasionally utilize two longer-term moving standards, one a little bit shorter than the other, for trading signals. Some utilize 50-day and also 200-day moving standards, as an example. The 50-day crossing over the 200-day creates a buy signal. A 50-day crossing back below the 200-day creates a sell signal. A few Momentum capitalists like to utilize also longer-term moving standards for signaling objectives.
One more type of Momentum investing strategy includes complying with price-based signals to go long sector ETFs with the toughest Momentum, while shorting the sector ETFs with the weakest Momentum, after that rotating in an out of the fields as necessary.
What is the very best the Momentum indicator?
This toughness behind the trend is frequently described as the Momentum, and also there are a number of indicators that try to determine it. Several of the better-known the Momentum indicators are the Loved one Strength Index (RSI), the Stochastic oscillator and also the Relocating Ordinary Merging Aberration (MACD).
Still, other Momentum strategies include cross-asset analysis. As an example, some equity investors closely enjoy the Treasury yield curve and also use it as The Momentum signal for equity entrances and also exits. A 10-year Treasury yield over the two-year yield normally is a buy signal, whereas a two-year yield trading over the 10-year is a sell signal. Notably, the two-year versus 10-year Treasury returns tend to be a strong predictor of economic downturns, as well as additionally has implications for securities market.
Furthermore, some strategies include both Momentum aspects and also some basic aspects. One such system is CONTAINER SLIM, made famous by William O’Neill, creator of Capitalist’s Service Daily. Given that it emphasizes quarterly and also annual incomes per share, some might argue it’s not The Momentum strategy, per se.
However, the system normally looks for supplies with both incomes and also sales Momentum and also often tends to indicate supplies with cost Momentum, too. Like other Momentum systems, CONTAINER SLIM additionally consists of guidelines for when to get in and also exit supplies, based primarily on technological analysis.
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