The daily timeframe gives an opportunity for longer-term traders to profit from the Forex market. The following strategy is to be used on the daily chart only, on which it can generate great trading opportunities and profits.
Since it is based on a relatively large timeframe, patience will be needed when trading this strategy as not many trades will be generated compared to trading strategies based on smaller timeframes. The advantage is that the strategy is very simple and almost anyone can use it to take trades and profit with it.
It consists of several simple rules which when followed will provide good trades and offer the potential for profit. It’s recommended to use it on the major pairs only because chart patterns work better due to the good liquidity and volume on these currency pairs. The strategy can be enhanced by combining it with other tools and indicators as we shall see later in this article.
Four trades that were generated by this strategy are shown on the chart below.
Indicators to be used:
The Stochastic oscillator can also be used to get an additional perspective on the momentum in the market but is not necessary for this strategy. A “nice” bullish or bearish crossover from inside the oversold or overbought area on the Stochastic can be additional confirmation that a trade setup is a good opportunity to buy or sell.
Trading conditions of the strategy:
Long trade entry:
Long trade stop loss:
Long trade exit and targets:
The chart below shows an example of a long trade taken with this Forex strategy
Short trade entry:
Short trade stop loss:
Short trade exit:
Here’s an example of a short trade:
Things to keep in mind when trading with this Forex strategy:
Related education and FX know-how:
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