Awesome PIPQInd Trend Forex Day Trading Strategy

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Awesome PIPQInd Trend Forex Day Trading Strategy

There are several ways to trade the forex market based on the duration of each trade. Scalpers trade based on minute charts with trades that last only for a few minutes. Day traders on the other hand trade on 5-minute up to 30-minute charts with trades lasting from a several minutes to several hours but never more than a day. Swing traders on the other hand trade on higher timeframes such as 1-hour charts up to daily charts and would hold trades for several days even up to more than a week. Position traders on the other hand would hold trades even up to a few months.

Swing traders and position traders often believe that day trading and scalping is the worst type of trading the forex markets. This is because they believe that price movements occurring on the lower timeframes are too erratic to be traded consistently. Although price spikes occurring on the lower timeframes do tend to disrupt trade plans quite easily, trading on the lower timeframe is very possible and could even be very profitable. Multiple trades could be made available within a trading day allowing traders to profit more often and grow their accounts much quicker.

Awesome Oscillator

The Awesome Oscillator (AO) is a very popular trend following technical indicator which helps traders identify momentum based on average historical price movements.

Traders have long been using moving average crossovers to identify trend direction. They would plot two moving average lines on a price chart and trade trend reversal setups based on the crossing over of the moving average lines.

The AO is technically a momentum oscillator which is based on the crossing over of an underlying pair of moving averages. It computes for the difference between a 5-period Simple Moving Average (SMA) and a 34-period (Simple Moving Average). However, instead of calculating based on the usual close of each candle, AO computes its underlying SMA lines based on the median of each candle.

The resulting figures are then plotted as histogram bars that oscillate around zero. The color of the bars also indicates the strengthening or weakening of the bars based on whether the bar is shorter compared to its preceding bar.

Positive green bars indicate a strengthening bullish trend, while positive red bars indicate a weakening bearish trend. Negative red bars indicate a strengthening bearish trend, while negative green bars indicate a weakening bearish trend.

PIPQInd Indicator

PIPQInd is a custom technical indicator which provides exact entry points based on short-term momentum reversals.

The PIPQInd provides entry signals by plotting arrows pointing the direction of the momentum reversal. However, unlike most trend reversal signal indicators, the PIPQInd indicator also indicates the stop loss level that traders should use. This makes it more convenient for traders because the trade setup is already provided by the indicator itself.

On its own, this indicator can produce decent entries with some unprofitable trade setups. However, when used just as an entry trigger in confluence with other indicators, this indicator can provide high probability trade setups which can help traders consistently profit from the forex market.

Trading Strategy

Awesome PIPQInd Trend Forex Day Trading Strategy is a day trading trend following strategy which is based on the 5-minute chart. It trades on longer term trends on the 5-minute chart, with trade setups based on the confluence of the Awesome Oscillator and the PIPQInd indicator.

The long-term trend is identified based on the slope of a 200-period Exponential Moving Average (EMA) line, the location of price action in relation to the 200 EMA line, as well as the characteristics of price action. Price action trend would be based on whether it is making higher or lower swings.

The Awesome Oscillator should indicate a trending market which is strengthening based on the value of each bar, as well as the color of the bar.

The PIPQInd indicator should then plot an arrow pointing the direction of the trend, which should be in confluence with the AO.

Indicators:

  • PIPQInd
  • 200 EMA
  • Awesome

Preferred Time Frames: 5-minute chart only

Currency Pairs: FX majors, minors and crosses

Trading Sessions: Tokyo, London and New York sessions

Buy Trade Setup

Entry

  • Price action should be above the 200 EMA line.
  • The 200 EMA line should slope up.
  • Price action should be in an uptrend based on price swings.
  • The Awesome Oscillator should be positive green.
  • The PIPQInd indicator should plot an arrow pointing up.
  • Enter a buy order on the confirmation of these conditions.

Stop Loss

  • Set the stop loss on the support line plotted by the PIPQInd indicator.

Exit

  • Close the trade as soon as the PIPQInd indicator plots an arrow pointing down.

Awesome PIPQInd Trend Forex Day Trading Strategy

Awesome PIPQInd Trend Forex Day Trading Strategy 2

Sell Trade Setup

Entry

  • Price action should be below the 200 EMA line.
  • The 200 EMA line should slope down.
  • Price action should be in a downtrend based on price swings.
  • The Awesome Oscillator should be negative red.
  • The PIPQInd indicator should plot an arrow pointing down.
  • Enter a sell order on the confirmation of these conditions.

Stop Loss

  • Set the stop loss on the resistance line plotted by the PIPQInd indicator.

Exit

  • Close the trade as soon as the PIPQInd indicator plots an arrow pointing up.

Awesome PIPQInd Trend Forex Day Trading Strategy 3

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Conclusion

This trading strategy is an excellent day trading strategy based on a trending market.

Day trading strategies are difficult not because of the trade signals are not accurate, but because the pips gained is usually very low to cover for the cost of trading and make it worthwhile. These costs include spreads and commissions. Trading for only a few pips would only allow trading costs to eat up on your profits.

This strategy however is based on a longer-term trend on the 5-minute chart using the 200 EMA line. This allows for deeper retracements with bigger potential profits even as a day trading setup. This in turn allows profitable trade setups to cover for the cost of trading and more.

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