2 purposes to the daily trade strategy is to monitor trades as a benchmark to weeklies or to trade for extra pips.
Daily trades contain definitive ranges, weekly trades contain definitive ranges. All known in advance and truly an exact mathematical science. But to trade both correctly in tandem required many months to figure and factor and an extraordinary detail to monitor both trade systems.
Both trades weekly and daily are based strictly on moving averages. The difference to day trades is I transpose central bank interest rates to currency prices. Based on the range of prices to each currency pair because every currency pair contains different ranges, I devised a trading strategy.
For day trades, we are trading not for example, EUR/USD.
We are trading the range of EUR/USD Vs USD/EUR. For GBP/USD, we are trading GBP/USD Vs USD/GBP. USD/CAD Vs CAD/USD. JPY/EUR Vs EUR/JPY.
EUR/USD for example maybe shown 1.1258 but USD/EUR is actually 0.8882. Seems wide but its not true when factored to daily ranges. GBP/USD at 1.2558 is actually USD/GBP at 0.7963. Seems wide but not when factored to daily trades. Its the range most vital to currency and all market price trading. Its the point most missed by multitudes upon multitudes of traders. And banks included. Don’t think for one instant banks know what they are doing to trades. A few are good but most don’t know squat.
By trading the complete currency pair reciprocal arrangements and complete opposites, its impossible for the currency price to trade outside its ranges. GBP pairs are the only unusual exception to the range rule. But it doesn’t happen often.
Day trades are timed to trade from 2:30 am EST to 10:00 am EST. We have 7 1/2 hours to trade the same prices. We don’t trade after 10:00 am EST because the central banks enter the market starting with the ECB at 10:00 AM then BOE at 11:00 AM EST. Bank of Canada at 12:00 Noon and Fed at 12:30. Then don’t forget the Germans at the Frankfurt Fix.
The ECB may set prices at one price but the BOE can come into the market and completely change the ECB price. The Bank of Canada can come into the market and change both the ECB and BOE prices. The change maybe much or quite small or possibly no change will exist.
Why we don’t trade this period after 10: am EST is because ranges may or may not radically change. The change in prices requires a new calculation to factor entries and ranges. This must be done quickly every hour or every 1/2 hour. Its not worth the trouble to trade particularly when we just ended official day trades from 2;30 am to 10:00 am EST. Profits were earned and we’re done for the day to day trades.
Secondly, I cannot stress this point enough. The smart FX guys and central bank traders have computers already factored to prices from 10:00 am ECB to Fed at 12:30. These guys can beat the holy hell out of a day trader or an unsuspected day trader who understands nothing about FX or prices. Prices from 10:00 am ECB to 12:30 Fed can move quite fast and far and its the computer guys running the overall prices. Its near impossible to compete with these guys and gals.
The computer guys take from day traders the best of the traded price and its done so quickly, most don’t know they were beat out of 20 and 30 pips. With each Central bank to set prices becomes a brand new day trade and the trade is fresh and hot off the presses. With every central bank to set prices, the computer guys take quickly and automatically 20 and 30 pips. What’s left for day traders is scraps and trades not worth a dam because pips must be earned rather than given freely from fresh trades.
To ranges ask this question. EUR/USD dropped from X price or rose from X price. EUR/USD may rise but USD/EUR is responsible for the fall. EUR/USD may fall but USD/EUR is responsible for the rise. EUR/USD doesn’t trade on its own. If it did, we wouldn’t have day trades cause ranges would be something like 20 pips if we’re lucky.
The current USD/EUR Vs EUR/USD relationship runs about 30 pips to USD/EUR and about 25 Pips for EUR/USD.
With ranges established, now we trade. Ranges are contained at bottoms and upper target.
2 ways to trade the day trades. Short at or near upper target or long at or near bottoms. Next is to trade the break of the long short line.
The long short line is a fix price and its recommended to trade the break of this line in the direction of the weekly trades. GBP last week’s trade for weeklies was long so GBP/USD day trade long on break of the long short line worked well for extra pips. Also GBP/USD Long at bottoms worked just as well.
Last week’s GBP weekly trade profited 212 pips and day trades was all extra pips added to 212.
Day trades are traded twice daily. This means from Sunday to Friday 10 rounds of day trade shorts, 10 trades, 10 opportunities to earn extra pips. And 10 trades refers to 1 currency pair. We trade 8 currency pairs per day which means 16 trades per day, or 160 trades per week.
Most important to day trades are average lines and most vital to price continuation or bounce. The continuation fail line is also an average line and it must break higher in order for the price to trade to upper target. But price may reverse short from the continuation fail Line.
The overall purpose to day trades is not 1 trade for X pips then exit and forget about the currency pair. Its more profitable to trade multiple longs and shorts and continuously for 7 1/2 hours.
For example, EUR/USD may bottom during Europe trading but rise in America, or EUR/USD may top in Europe and bottom in American trading.
The guides to continuation fail and upper target and to bottoms are average lines. Every point offered in the price series is an average line. The whole system of trading is to trade moving averages because the central banks trade by moving averages.
An example from yesterday and to weekly trades.
Long Short Line 1.1319
most Important 1.1272 and 1.1281 vs 1.1326, 1.1333, 1.1341, 1.1347, 1.1361, 1.1368 and 1.1376
Bottom. 1.1262 achieves by 1.1291 and 1.1276
Upper target 1.1376
Continuation fail 1.1347
Break Point 1.1147
Weekly trade this week short 1.1288 and 1.1312. EUR/USD at 1.1288 and 1.1312 missed and surpassed entry.
Where to next is day trade 1.1376 and 1.1347. EUR/USD traded to 1.1345 and continuation fail line.
Short 1.1345 without question. Then short to next points 1.1341, 1.1333, 1.1326. Good to exit 1.1326 for 19 pips profit.
Upon break of 1.1319 at long short line, enter short again and EUR/USD traded to lows 1.1302 for 17 pips.
The gamble strategy would be hold the first short trade in anticipation of the 1.1319 break for a continuous trade.
Either way, the day trade profited 36 pips and extra pips to start the week while waiting for weekly trades to achieve targets.
The other option was trade long from the long short line at 1.1319 and trade to 1.1345 then reverse short. That’s 26 pips and added to shorts at 36 pips means +62 pips.
Another strategy is trade for quick pips. EUR/USD is running at 7 pip intervals. A long or short trade works for 7 pips on any break of the series of prices.
Another option and smartest avenue is hold the 1.1345 trade to weekly target. Many ways exist to trade the day trades and I leave the options open for traders so to trade their own personal styles. Some don’t like or want day trades but weekly trades only because they aren’t addicted to daily screens. Its a question of trading style and personal life obligations.
If a price ever leaves it price ranges on day trades then the price must trade back to it range. If yesterday, EUR/USD broke above its upper target at 1.1376 then every pip above 1.1376 is free money as the price must trade back inside its ranges. This means must trade to 1.1376 and far below. The next big point below 1.1376 is continue fail line at 1.1345.
Same scenario for break of bottoms. Every price below bottom is free money and price must trade back to bottom and above. Next points to above bottoms are 1.1262, 1.1272 average line and then 1.1281 and 1.1291.
Prices don’t break upper targets and bottoms often but when it happens, its truly a free money trade and a trade to enter heavy to grab the most of the free money.
The new design to day trades since 2016 is trade news announcements. This from the BOE and outlined in great detail under Sonia reforms. 3 announcements exist. UK, Europe and 8:30 am EST United States trading. This is the best chance to profit on day trades and profit quickly.
Was weekly 1.1288 and 1.1312 really a miss to weekly entries. Yes for non day traders but no to day traders.
Notice 1.1347 at continuation fail line and EUR/USD traded to 1.1345. The 2 pips failure informed EUR was dropping. If for example, EUR/USD traded to 1.1349 then dropped significantly. The 2 pip violation informed to long drops because EUR/USD is heading higher than 1.1347 to near 1.1376 upper target. The 2 pip topside violation told us, EUR/USD is going higher.
To see day trades from pre interest rate revamp in 2016, see 2015 day trades on my site here. Giant difference to day trading.