Here is a simple Forex strategy explained by Cory A. Mitchell. Cory is a trader in Canada. He is a Charted Market Technician and a member of the Market Technicians Association as well as the Canadian Society of Technical Analysts. He is a regular contributor to Investopedia and has several articles published in Stocks and Commodities magazine. I like how Cory communicates trading strategies in ”keep it simple” terms and explanations. Technical analysis really isn’t hard if you have someone explain it to you in everyday language like Cory does. I will be publishing more of his recommendations and ideas here at fxstrategyhub.com this month - so be sure to subscribe to the blog feed and check back often! - Ann Pevey, owner/admin - aka “TraderMom”
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Profiting in Forex From a Day Trading Morning Breakout Strategy
Note the high and low throughout the first 30 minutes of trading. If at any point during the day the price breaks the high established in the first 30 minutes go long, if it breaks below the low, go short. The amount that the stock has to break the levels needs to take into account the characteristics of the stock (and that will be up to you). I would avoid currency pairs or stocks that trade in a tight range or have extremely low volatility.
Some traders advocate that if you use this strategy you should hold the purchase (or short) for the duration of the day. This is one alternative. Another option is to use profit targets. One profit target is to add (or subtract) the width of the range to (from) the breakout price. If the difference between the high and low in the first 30 minutes of trading is 50 pips (or say $0.50 in a stock) then your profit target is 50 pips from the breakout price.
You may also choose to implement a trailing stop. Make sure your trailing stop is large enough so you are not pre-maturely triggered out of the trade by normal market movement. Looking at the ATR (average true range) indicator can help you with determining a proper trailing stop.
I trade quite “tight”, if I enter a position and it falls back within the range, I will exit either flat or with a small loss, and then re-enter when it breaks the level again (some who use this strategy stipulate you should hold the position all day once the break occurs). If the stock breaks upward (enter long), and then falls back in range (exit), and then proceeds to break below the lower level you should go short. Often a failed original signal combined with a new trade signal can be very powerful. This again differs from some others who trade the strategy - some prefer that if a stock breaks one level and then moves to break the other level also, the stock should not be traded further. I view this is method as missing out on a valuable opportunity. Again, it is up to you which way you will use the strategy.
A very simple strategy that can be used on hundreds of different stocks (options, futures, commodities) everyday, on any market, as a break out could occur at anytime throughout the day on different securities.
If you would like to know more, are interested in learning how to start trading, need help with trading methods or want to know who to trade with, visit me at http://www.vantagepointtrading. com.
We provide FREE daily forex signals on our blog which show which pairs are likely to move based on different technical analysis methods. The signals are available for all different currency pairs and time frames.
Article Source: http://EzineArticles.com/?expert=Cory_A._Mitchell
http://EzineArticles.com/?Profiting-in-Forex-From-a-Day-Trading-Morning-Breakout-Strategy &id=2252473
Click Here for More of Ann’s Favorite Top Simple Forex Strategies
May 19th, 2009 at 11:06 pm
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June 2nd, 2009 at 11:08 pm
[...] So what is a price action based forex strategy? Basically, like other technical methods, price action strategies have entry and exits based on “rules” ; and the rules are based on actual “real time” currency movements, usually within a specified time frame. Often times the strategy will have specific rules related to a specific currency pair. For example, the following might be considered a price action based strategy (by the way, this is an effective and simple strategy, which I also often refer to in this blog as the New York Open Breakout strategy:) [...]
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Glad you are enjoying the site! – Ann
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July 10th, 2009 at 12:44 pm
Looks interesting. Is this strategy looking at a 60min chart?
July 12th, 2009 at 9:49 pm
Hi Paul, I actually use the 30 minute chart so I can clearly see the upper and lower points of the first 30 minutes of the NY open.
July 12th, 2009 at 10:19 pm
Thank you I’ll try it Monday morning. Good site love how you PIF (Pay It Forward) to others :).
July 13th, 2009 at 8:56 pm
Hey Ann,
Sorry to bug you just want to make sure I’m clear. Do you look at 8am high and 8:30 low in your 30min chart or do you just look at 8:30 high and lows? Today worked perfect but don’t want to make mistakes going forward.
July 13th, 2009 at 10:55 pm
I look at the specific time frame beginning at 8 am New York time and ending at 8:30 am. Also I have only traded this on the EUR/USD. I determine the high and low price during the span of that 30 minutes. So beginning at 8:30 I start looking for an opportunity to trade the break of either the high or low of the first 30 minutes. Overall it is a good strategy and consistently makes way more pips than it loses. But as always, you will have days where it fails and sometime 3 days in a row. So manage your money and do not overleverage the trade
Also be careful on big news release days!
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