The AUD/USD Forex day trading strategy combines trend and momentum to establish a vibrant trend-following trading system that shows quick reaction to changes in trend with minimal lag.
This day trading does well in generating reliable market entry and exit signals.
Traders can transform this forex strategy into one that works great for the CFD and Stocks markets.
As long as you’re a day trader, this strategy is designed all the way to offer quality day trades.
MetaTrader 4 Indicators: ADX Candles.ex4 (Inputs Variable Modified; ADXPeriod=24, Colors Modified; #4=Lime, #5=Red), Big Trend.ex4 (Colors Width Modified; #0=2, #1=2), Money Flow Index.ex4 (Parameters Modified; Period=22)
Preferred Time Frame(s): 5-Minute, 15-Minute, 30-Minute
Recommended Trading Sessions: Any
Currency Pairs: AUD/USD + any other pair
Buy Trade Example: AUD/USD (Australian Dollar / US Dollar), M15 Chart
Long Entry Rules
Initiate a buy entry if the following indicator or chart pattern gets put on display:
- If the lime candles of the ADX Candles custom indicator show up on the activity chart as seen on Fig. 1.0, the overall market sentiment is said to be bullish, hence a buy alert will do.
- If the light blue Big Trend indicator line runs fairly below the candlesticks as shown on Fig. 1.0, price is said to be pressured higher, hence a trigger to go long on the stipulated currency pair.
- If the magenta Money Flow Index Metatrader 4 indicator line breaks above the 50.00 horizontal level as depicted on Fig. 1.0, bulls are said to be driving price higher, thus a signal to buy the forex pair of interest.
Stop Loss for Buy Entry: Place stop loss below previous swing low support.
Exit Strategy/Take Profit for Buy Entry
Exit or take profit if the following rules or conditions takes precedence:
- If while a bullish trend is ongoing, the ADX Candles indicator pops up a red candle on the price chart, it is pointing to weaning bulls power, hence an exit or take profit stance will suffice.
- If the line of the Big Trend indicator reverts to tomato while a bullish trend is running, bulls power is said to be halting i.e. a trigger to exit or take profit forthwith.
- If the magenta line of the Money Flow Index indicator dips below the 50.00 horizontal level while a bullish trend is on course (see Fig. 1.0), a bearish reversal is said to be looming, thus a trigger to exit or take profit straightaway.
Sell Entry Rules
Enter a sell order if the following holds true:
- If the red candles of the ADX Candles custom indicator get displayed on the price chart as illustrated on Fig. 1.1, bears are said to be driving sentiment i.e. a sell alert is duly recommended.
- If the tomato Big Trend indicator line runs somewhat above the candlesticks as exemplified on Fig. 1.1, price is said to be dragged lower, as such a signal to go short is apt.
- If the magenta Money Flow Index indicator line breaks below the 50.00 reference level as demonstrated on Fig. 1.1, bears are said to be pushing price lower, thus a trigger to sell the currency pair of focus.
Stop Loss for Sell Entry: Place stop loss above previous swing high resistance.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following takes center stage:
- If the ADX Candles indicator pops up a lime candle on the price chart (checkout Fig. 1.1), it is signaling diminishing bears power, hence an exit or take profit stance will do.
- If the line of the Big Trend indicator changes to light blue during the course of a bearish trend, bears are said to be closing their positions increasingly, thus an exit or take profit stance is advised.
- If the magenta line of the Money Flow Index indicator surges above the 50.00 horizontal level while a bearish trend ongoing, a bullish reversal is said to be coming up, thus a trigger to exit or take profit without delay.
Sell Trade Example: AUD/USD (Australian Dollar / US Dollar), M15 Chart
About The Forex Technical Indicators Used
The ADX Candles custom indicator superimposes its color on the candlesticks, giving traders clearer information regarding bullish (lime) and bearish (red) candlesticks.
The Big Trend custom indicator is a moving average line with an adjustable default period of 80, with a minimal price lag error.
The Money Flow Index or MFI is a Metatrader 4 forex indicator that gauges the rate at which money is pumped into a currency pair and then taken from it.
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