Easy Money With Forex: Simple Strategies For Success In San Francisco

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Easy Money With Forex: Simple Strategies For Success In San Francisco – Some currency traders are extremely patient and like to wait for the perfect setup, while others need to see what happens quickly, or they will abandon their positions. These impatient souls make perfect momentum traders because they wait for enough strength in the market to push a currency in the desired direction and hope to piggyback on momentum.

However, once the move shows signs of losing power, a restless speed trader will also be the first to jump ship. Therefore, a realistic acceleration strategy is needed to preserve the benefits of strong exit regulations, while still being able to ride as far as possible. The 5 Minute Momo Strategy does just that.

Easy Money With Forex: Simple Strategies For Success In San Francisco

Easy Money With Forex: Simple Strategies For Success In San Francisco

A five-minute momo finds a momentum or “momo” burst on a very short-term (five-minute) chart. First, traders rely on two technical indicators that are available with many charting software packages and platforms: the 20-period moving average (EMA) and the moving average convergence curve (MACD). The EMA is chosen over the simple moving average because it puts more weight on recent movements, which is required for high-speed trading.

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While the moving average is used to help determine the trend, the MACD histogram, which helps us gauge momentum, is used as a second indicator. The default settings for the MACD histogram used in most charting platforms are: EMA = 12, second EMA = 26, signal line EMA = 9, all using closing values.

This strategy waits for a reversal to trade but only takes advantage of the setup when momentum supports a reversal enough to create a large extension burst. The position is derived in two distinct parts; The first half helps us lock in gains and ensure that we never turn a winner into a loser and the second half tries to catch us up on what could be a huge step without risk. Because the stop has already been moved to the break. Here’s how it works:

Above is our first example of EUR/USD on March 16, 2006, when we see price move above the 20-period EMA as the MACD histogram breaks above the zero line. Although there were some instances of price trying to move above the 20-period EMA at 1:30 p.m. and 2:00 p.m. ET, a trade was not initiated because the MACD histogram was below the zero line.

We waited for the MACD histogram to cross the zero line, and when it did, the trade was initiated at 1.2044. We enter at 1.2046 + 10 pips = 1.2056 with a stop at 1.2046 – 20 pips = 1.2026. Our first target was 1.2056 + 30 pips = 1.2084. It started about two and a half hours later. We exit half of the positions and trail the other half through the 20-period EMA minus 15 pips. The second half is finally closed at 1.2157 at 21:35. ET for a total profit on the trade of 65.5 pips.

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The next example (above) is USD/JPY on March 21, 2006, when we see the price above the 20-period EMA. As in the previous EUR/USD example, there were instances where the price broke above the 20-period EMA before our entry point, but we did not trade because the MACD histogram was below zero.

The MACD happened first, so we waited for the price to cross the EMA by 10 pips and when it did, we entered a trade at 116.67 (the EMA was at 116.57).

The math on this is a bit more complicated. Stop is at 20-EMA minus 20 pips or 116.57 – 20 pips = 116.37. The first target is the entry plus risk amount, or 116.67 + (116.67- 116.37) = 116.97. It starts after five minutes. We exit half of the positions and trail the other half through the 20-period EMA minus 15 pips. The second half is finally closed at 117.07 at 18:00. ET for an overall average profit on a trade of 35 pips. Although the profit was not as attractive as the first trade, the chart shows a clear and smooth movement which indicates that the price action is in line with our rules.

Easy Money With Forex: Simple Strategies For Success In San Francisco

On the short side, our first example is NZD/USD on March 20, 2006 (shown below). We see the price cross below the 20-period EMA, but the MACD histogram is still positive, so we wait for it to cross below the zero line after 25 minutes. Our trade starts again at 0.6294. Like the previous USD/JPY example, the math on this one is a bit messy because the moving average cross didn’t occur at the same time the MACD moved below the zero line as it did in our first EUR/USD example. As a result, we entered at 0.6294.

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Our stop is the 20-EMA plus 20 pips. At that time, the 20-EMA was at 0.6301, so it placed our entry at 0.6291 and our stop at 0.6301 + 20 pips = 0.6321. Our first target is the entry price reducing the amount at risk or 0.6291 – (0.6321- 0.6291) = 0.6261. The target was hit two hours later, and the second half was moved to a stop brake. We then move the second half of the position through the 20-period EMA plus 15 pips. The second half then closed at 0.6262, for a total profit of 29.5 pips on the trade.

The example above is based on an opportunity that developed on March 10, 2006 in GBP/USD. In the chart below, the price breaks below the 20-period EMA and we wait 10 minutes for the MACD histogram to move into negative territory, thereby triggering our entry order at 1.7375. Based on the above rules, as soon as the trade starts, we place our stop at 20-EMA plus 20 pips or 1.7385 + 20 = 1.7405. Our first target is the entry price minus the amount at risk, or 1.7375 – (1.7405 – 1.7375) = 1.7345. It starts after a while.

We then move the second half of the position through the 20-period EMA plus 15 pips. The second half of the position is finally closed at 1.7268, for a total profit on the trade of 68.5 pips. Coincidentally enough, the trade was also closed when the MACD histogram broke into positive territory.

As you can see, the five-minute MOMO trade is an extremely powerful strategy for capturing momentum-based reversal movements. However, it does not always work, and it is important to find an example where it fails and to understand why it happens.

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The last example of a five-minute MOMO trade is EUR/CHF on March 21, 2006. As seen above, the price breaks below the 20-period EMA, and we wait 20 minutes for the MACD histogram to move into negative territory, our entry order at 1.5711. We place our stop at 20-EMA plus 20 pips or 1.5721 + 20 = 1.5741. Our first target is the entry price minus the amount at risk or 1.5711 – (1.5741-1.5711) = 1.5681. The price is trading at a low of 1.5696, which is not low enough to reach our trigger. It then proceeds to reverse course, eventually hitting our stop, a total trading loss of 30 pips.

Using a broker that has charting platforms with the ability to automate entries, exits, stop-loss orders, and trailing stops is helpful when using strategies based on technical indicators.

When trading the Five Minute Momo Strategy, the most important thing is to be wary of trading limits that are too narrow or too wide. In quiet trading hours, where the price only moves around the 20-EMA, the MACD histogram can move back and forth, causing many false signals. Alternatively, if this strategy is implemented in a currency pair with a trading range that is too wide, the stop will be removed before the target.

Easy Money With Forex: Simple Strategies For Success In San Francisco

This trading strategy looks for short-term, 5-minute currency trading charts for a momentum bounce that a market participant can take advantage of, and then a quick exit when the momentum begins to fade.

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The 5-Minute Momo strategy is used by currency traders looking to take advantage of short changes in momentum and can therefore be employed by day traders or other short-term focused market players.

Scalping is the process of entering and exiting trades several times a day to make small profits. The process of scalping in foreign exchange trading involves repeatedly moving in and out of foreign exchange positions to make small profits. The 5-Minute Trading Strategy can be used to help execute such trades.

The 5-Minute Momo strategy allows traders to take advantage of short-term momentum in forex pairs, while also providing the tight exit rules needed to protect profits. The goal is to identify a reversal as it is happening, open a position, and then rely on risk management tools—such as trailing stops—to profit from the move and not jump ship too soon. As with many systems based on technical indicators, results will vary

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