Momentum Forex Day Trading Strategy

Day trading is a form of trading that allows for opening and closing of positions within a single day.

Intraday traders will liquidate their positions before the market closes for the trading day.

The Momentum Forex Day trading strategy is all about incorporating the strength of the dominant trend and using it effectively to determine favorable day trading market entry conditions.

The end game is using supporting custom indicators like the 100 EMA, Fratelli MACD in addition to the Momentum indicator.

Both the 100 EMA and the Fratelli MACD are deployed in determining the direction of the trend and showing the connection between two moving averages of price respectively.

Let’s see how things pan out going forward.

Chart Setup

MetaTrader4 Indicators: 100 EMA, Fratelli_MACD.ex4 (Inputs Variable Modified; barsCount=400000000), Momentum (Parameter Setting Modified; Period=28)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour

Recommended Trading Sessions: London, New York, Tokyo

Currency Pairs: Any pair

Download

Download the Momentum Forex Day Trading Strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Initiate a buy order if the following indicator or chart pattern gets put on display:

  1. If price is seen to break and stay above the magenta 100 EMA indicator line as shown on Fig. 1.0, price is said to be driven higher i.e. a trigger to buy the designated currency pair.
  2. If the lime dotted line of the Fratelli_MACD custom indicator break above the 100 (see Fig. 1.0), price is said to be taken to the upside i.e. a trigger to buy the stipulated fx pair.
  3. If the dodger blue line of the momentum indicator break above the 100, bulls are said to be driving price higher, hence a buy signal will suffice.

Stop Loss for Buy Entry: Place stop loss below immediate support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules or conditions takes precedence:

  1. If the price closes below the magenta line of the 100 EMA indicator line, the prevalent trend is said to be changing, as such an exit or take profit will do.
  2. If the Fratelli_MACD custom indicator forms a magenta dot that gets dipped below the 100, it is a signal to exit or take profit at once.
  3. If the dodger blue line of the Momentum indicator readjust to fall below the 100 as illustrated on Fig. 1.0, bears are said to be pushing price lower, hence an exit or take profit will do.

Sell Entry Rules

Take up sell position(s) if the following holds true:

  1. If price is seen to break and hover below the magenta 100 EMA indicator line as exemplified on Fig. 1.1, the overall sentiment is said to be bearish i.e. a trigger to sell the selected fx pair.
  2. If the magenta dotted line of the Fratelli_MACD custom indicator dip below the 100 (refer to Fig. 1.1), price is said to be taken to the downside i.e. a trigger to sell the currency pair of focus.
  3. If the dodger blue line of the momentum indicator drives below the 100, bears are said to be pushing price lower, hence a trigger to go short on the selected forex pair.

Stop Loss for Sell Entry: Place stop loss above immediate resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following takes center stage:

  1. If the price closes above the magenta line of the 100 EMA indicator line during a sell alert, the prevalent bearish trend is said to be altering, as such an exit or take profit is imminent.
  2. If the Fratelli_MACD custom indicator forms a lime dot that surges past the 100, it is a signal to exit or take profit immediately.
  3. If the dodger blue line of the Momentum indicator readjust to rise above the 100, bulls are said to be pushing price higher, hence an exit or take profit will suffice.

Sell Trade Example

Fig. 1.1

Free Download

Download the Momentum Forex Day Trading Strategy

About The Trading Indicators

The 100 EMA is an exponential moving average that has its period set at 100 and reduces the lag by adding more weight to recent price.

The Fratelli_MACD.ex4 is a custom indicator that is centered on the common MACD (Moving Average Convergence-Divergence) indicator. The indicator is able to measure the strength or weakness of market trend.

The Momentum indicator is an oscillator that compares when the current price is relative to where price was in the past.

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