Day traders are those who enter into and exit positions several times per day. Their biggest pet peeve is holding trading positions overnight. They are more concerned with finishing the day without an open position than the actual result of the trade itself. Day traders use a combination of both technical and fundamental analysis. So if you refer yourself to these traders, you might be interested in the following strategies
Heres the secret sauce:
Time frame: 15-minutes and 30 minutes
(news is usually released within the 15-min intervals)
This is a suitable strategy for all currencies.
We compare the forecasted figures with the actual figures. For this strategy, traders go long on the chosen currency when actual figures if the release are much greater than forecasted ones. For example, the Reserve Bank of Australia raises its benchmark. In this case we should go long on the AUD/USD
Long trade up
You should take following steps if you have the balls too
- Choose an affected currency to trade the news.
- Enter long on NZD/USD once the actual figure released is ahead of expectations(if it is higher than the forecasted figure by 20% of more)
- Set a stop loss of 20 pips from the entry price.
- A profit target should be placed 40 pips higher from the entry price. The risk for this trade is 20 pips, the rewards is 40 pips. The risk to reward ratio is 1:2( you can expect 6% return from a 3% risk).
In forex life, everything is topsy-turvy. Even if the news is very bad, you can still earn whaling sums of money. For this strategy,we go short on the certain currency (hit by the news) when actual figures are lower than forecasted ones by a minimum factor of 20%. The “key ingredients ” for this strategy are the same we had for secret sauce strategy.
For example, we get a negative GDP for the US. what we should do is to initiate a short trade on the USD/CAD. We set a stop loss of 20 pips from the entry price and a profit target of 40 pips from the entry price
The risk for this trade is 20 pips. the reward is 40 pips. The risk to reward ratio is 1:2 ( you may gain a tidy 6% return haven taken a 3% risk)