Last blog post you were introduced to the concept of Forex trading and trending days, Today you’re going to learn how Forex trading on trading days works.
How Forex Trading on Trading Days Works?
The best chart for trading Forex on a trading day on is a 15-minute or 30-minute chart.
When trading Forex on a trading day, your best bet is to trade the formation of an upper bell curve or a lower bell curve. You will find additional security in that trade if you look for a convergence (a price where more than one indicator signals a buy or a sell) – First, draw all of your trendlines.
Second, set your Fibonacci lines from the last swing. Try to imagine the market forming an upper (lower) bell curve – if it did, would it be at a convergence price? – If so, prepare to trade that convergence.
For example, you draw your trendlines and find, based on your outer trendline that the market is in an overall uptrend. You will then be looking for a lower bell curve to form.
Find the market’s last up swing and, from there, draw your Fibonacci number lines. You can anticipate that the retracement of that up swing (the left side of the lower bell curve) will bounce at the .382, .618, or .786.
Say that you find the .786 is at the outer trendline – you have just found a convergence (there are two educated reasons for the market to bounce at this price). You now have two good reasons to believe that the market will bounce, forming the tip of the lower bell curve, at the .786 (also the outer trendline).
Create a market order to buy at the .786 (also the outer trendline and the tip of the lower bell curve) and anticipate the market to carry you to near the session’s opening price (on this type of trade you should expect a 50-90 pip profit).
You have just traded a convergence that offered you three educated reasons to buy: a .786 Fibonacci line, an outer trendline, and a lower bell curve on a trading day.
Remember to trade in the direction of the trend! – Do not sell at the beginning of the lower bell curve, planning to get out at the tip; instead, buy at the tip of the bell curve, where you have two other good reasons to buy, trading in the direction of the overall uptrend.
7 Rules for Trading on a Trading Day
As always, there are several general rules for trading Forex on a trading day:
- Check to ensure that no fundamental announcements will be released during this trading session.
- Draw a horizontal line at the opening price of the session – you can expect the market to close near that price.
- Find and draw all of your trendlines – In order to trade the bell curve in the direction of the trend, you need to accurately understand what that direction is.
- Look at the price where the market opens and anticipate a 50 to 90 pip move upward or downward from that price. Look for a .618 or .786 Fibonacci trendline convergence as an upper or lower bell curve forms. If you find a convergence price, set up a trade there, planning to buy or sell at the tip of the bell curve.
- Locate all of your levels of support and resistance – Set your stop loss at the last level of resistance (support).
- Practice sound money management – If the trade presents too much risk for you, don’t trade.
- Create a Forex trading plan – Trade the plan – Traders get in big trouble when they become emotionally invested in a particular trade and so hang on too long to a losing trade. Even if you follow all of the trading rules and trade all of your indicators correctly, you will lose on some trades, just as any business takes losses as well as profits. By sticking to your trading plan you will maximize your profits and minimize your losses.
Now that you know how trading Forex works on a trading day, tomorrow I’ll show you the procedure for trading Forex on a trending day.
If You Want to Become a Successful Forex Trader, You Must Join AndyW Club.
In AndyW Club you can get exclusive Forex trades and signals notifications via dedicated APP, E-Mail or Telegram that based on fundamental and technical analysis. Click Here and Join AndyW Club Today – You Can Cancel Anytime, No Questions Asked!