This article is a continuation of my day trading strategies, that I started covering in May. In May, I covered Day Scalper and showed live trading examples in the comments. Catch a Trend and Late Swinger are relatively simple to follow compared to Day scalper for they do not utilize Moving Average Envelopes or complex entry methods.

As I already stated in the Day Scalper article, day trading is not for everyone as it requires discipline and self-control especially near events that increase market volatility. There is no “holy grail” in forex trading and successful trading depends on consistency with a goal of more wins than losses.

Requirements
  • The 2 strategies utilize daily bar charts,
  • I trade the 6 major pairs,
  • They use the New York ‘close’- 17:00 EST (Eastern Standard Time) and 21:00 GMT to analyze the markets,
  • Every entry must have a stop loss – changeable to break-even or trailing profit when conditions allow,
  • When it’s time to close, I must close even if it is in loss,
  • Strict money management - which I covered in the Day Scalper article.
  • The time range is 1 to 3 weeks targeting 300 to 600+ pips. Note that, not all trades will make 300+ pips.
Catch a Trend Strategy

I use this strategy to identify strong momentum in the market using only simple moving averages (SMA) and Average Directional Index (ADX). The moving averages show direction while the ADX shows how strong a trend is. The goal of this trading strategy is to get in a strong trend early and ride it till the end. When I am late getting on a trend, I utilize Late Swinger strategy, which I will also cover in this article.

Indicators used

  • 9-day simple moving average and 18-day simple moving average.
  • ADX with a 14, 14 setting.
  • 5-day ATR (multiply this by 10000 to get pips)


Catch a Trend Buy Trade Setup Conditions
  1. Both the 9-day and 18-day SMA are flat (same), have turned up or one has turned up from the previous day (17:00EST/21:00GMT).
  2. The Average Directional Index has been greater than 16 in the previous 14 days (anytime in the past 14 days).
  3. There is no indication of a bearish divergence.
  4. When an entry day is confirmed, buy at market open (17:01 EST/21:01 GMT).
  5. Place a stop loss on the setup day low minus 2 pips or 102 pips whichever has the lowest risk. So, if the setup day low is greater than 102 pips, use 102 pips instead.



Catch a Trend Buy Trade Management

  1. Close 50% of the position when the price reaches open price + 5-day ATR (Average True Range).
  2. After closing 50% of the position, use a trailing stop at the 72-hour low minus 15 pips. (72-hour low is the last 3 daily bars).



Catch a Trend Sell Trade Setup Conditions
  1. Both the 9-day and 18-day SMA are flat (same), have turned down or one has turned down from the previous day (17:00EST/21:00GMT).
  2. The Average Directional Index has been greater than 16 in the previous 14 days (anytime in the past 14 days).
  3. There is no indication of a bullish divergence.
  4. When an entry day is confirmed, sell on market open (17:01 EST/21:01 GMT).
  5. Place a stop loss on the setup day high + 2 pips or 102 pips whichever has the lowest risk.



Catch a Trend Sell Trade Management

  1. Close 50% of the position when the price reaches open price minus 5-day ATR (Average True Range).
  2. After closing 50% of the position, use a trailing stop at the 72-hour high + 15 pips. (72-hour high is the last 3 daily bars).




Late Swinger Strategy

Same as Day Scalper and Catch a Trend, Late Swinger uses daily bar charts, ADX and analyzes the markets at New York Close (17:00 EST). It aims at getting 300 to 500+ pips from a strong trend, which is already ongoing. It’s complimentary to Catch a Trend and allows entry where Catch a Trend gets stopped out, or if an early trend entry was missed.

Late Swinger Strategy Indicators

  • 40-day SMA (simple moving average)
  • 3-day SMA applied on low (downtrend) and high (uptrend) and not the close
  • ADX 14,14


Late Swinger Buy Conditions

  1. 40-day SMA of setup day should be greater than 40-day SMA of 5 days ago.
  2. Lowest low of the last 10 days is greater than lowest low of the last 35 days.
  3. 3-day SMA (based on low) has dipped down within the last 5 days.
  4. 3-day high is less than 10-day high.
  5. ADX has been greater than 16 in the last 14 days.
  6. There is no indication of a bearish divergence.
  7. When an entry day is confirmed, buy at 3-day high + 2 pips.
  8. Place a stop loss at the lowest low of the last 3 bars (days) minus 20 pips, this includes the setup day.



Late Swinger Buy Trade Management
  1. Close 50% of the position using a limit order when the price hits open price + 5-day ATR.
  2. Use a trailing stop at 3-day low minus 20 pips after 50% close.



Late Swinger Sell Conditions

These are same as buy conditions but in reverse:-
  1. 40-day SMA of setup day should be lower than 40-day SMA of 5 days ago.
  2. Lowest low of the last 10 days is lower than lowest low of the last 35 days.
  3. 3-day SMA (based on high) has turned up within the last 5 days.
  4. 3-day high is greater than 10-day high.
  5. ADX has been greater than 16 in the last 14 days.
  6. There is no indication of a bullish divergence.
  7. When an entry day is confirmed, sell at 3-day low minus 2 pips.
  8. Place a stop loss at the highest high of the last 3 bars (days) + 20 pips.

Late Swinger Sell Trade Management

  1. Close 50% of the position using a limit order when the price hits open price minus 5-day ATR.
  2. Use a trailing stop at 3-day high + 20 pips after 50% close.

Conclusion


While the above trade examples managed to garner over 1000 pips in total, not all trades will be and that’s where consistency and proper risk management comes into play. It's good practice to risk only a small percentage of your account when live trading. Personally, I risk 10% of my account at any time. I am working on implementing these strategies in JForex and they will be available for download in JStore.
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