Forex Day Trading: System, Rules, Indicators, Alerts

In this article we will show traders an effective forex day trading system that is profitable. All indicators, rules and alert systems will be described, with example trades. We will also show traders how to improve on day trading results by focusing on the higher time frames across 28 currency pairs.

What Is Forex Day Trading

The classic definition of a day trade is to open and close a trade on one instrument on the same trading day. The forex market is a 24-hour day continuous market, so we would modify this definition to one trade open and closed in the same trading session or movement cycle. This is because the forex market has two trading sessions every day. The the main trading session and the Asian trading session, which are the best time to trade the forex market. You can day trade in either session.

An Effective Forex Day Trading System

One big mistake for forex traders to avoid is the use of technical indicators when day trading. Forex day traders need a reliable, momentum based system to get their pips faster, then exit the market in a shorter period of time. Each trade entry must maximize pip totals. The Forexearlywarning trading system is adaptable to day trading.

Indicator Set And Alert Systems

Now we will show traders what indicators to use, how to set them up, and how to be notified when day trades are happening, in real time, across 28 currency pairs. Look at the indicator below, The Forex Heatmap® forex heatmap. This indicator gives live trading signals for 8 currencies and 28 pairs. The example you see is for the CHF pairs. The CHF is weak on all pairs against the major currencies. This is a clear sell signal for the CHF/JPY.  Also, the CAD/CHF moved up strong.

The CHF/JPY dropped about 80 pips on this trading day. A forex day trade could have netted about 40 pips of that fairly easily. Getting 40 pips on a day trade is more than most forex day traders make in a week scalping the same pairs over and over. This is one intraday movement cycle and the combined pips of all CHF pairs on this day was in the hundreds of pips. So clearly, day trading 28 pairs is possible with this trading system.

Forex Day Trading

Forex Day Trading

Part of your indicator set for forex day trading would be a good set of trend indicators. Forexearlywarning provides all traders with a set of free forex trend indicators. Look at the image below to see how they look on the intraday time frames.

Forex Day Trading Chart

Forex Day Trading Chart

Our mobile app is shown below. The Forexearlywarning mobile app scans the market across 8 currencies looking for valid entry and day trading signals. When our forex mobile app algorithm sees consistent signals, it notifies the trader/end user via push alert on their cell phone or mobile device.

Forex Day Trading Alerts

Forex Day Trading Alerts

The CHF weakness push alerts go to your phone, then you can check the trends and heatmap signals to see if a forex day trade is possible. We also have several other professional forex alert systems that notify day traders when the market is moving.

A Simple Set Of Rules For Forex Day Trading

So now we can write down a set of forex day trading entry rules. The trader would set up the proper alert systems, like our mobile app. Then, when the alerts hit, mostly in the main trading session or after forex news, we would check the heatmap signals and support and resistance levels to see if a day trade is possible. The day trader would focus on the smaller intraday time frames like the M5, M15 and M30 time frames for day trading, an example chart is above.

Money management rules for day trading are fairly simple. If the trade stalls or goes nowhere within the first 30 minutes in the trade we would exit with a small gain or loss. If the trade proceeds into positive pips, the trader would exit with a profit or when the prifit target is reached. Day traders should always trade with a stop order.

Day Trading The EUR/USD 

The most popular pair to day trade is the EUR/USD. Forex traders focus on this pair due to the liquidity and low spread. This pair is also popular with scalpers.

There are four possible scenarios for successfully day trading the EUR/USD. For buying the EUR/USD, the EUR must be consistently strong or the US Dollar must be consistently weak. For selling, the EUR must be consistently weak, or the USD must be consistently strong. An even better scenario is when one currency is strong and the other one is weak, in this case the movements will be very strong. 

Day Trading EUR/USD

Day Trading EUR/USD

In the example above, the EUR is consistently strong across the seven other major currencies, so this should be a great live signal for day trading the EUR/USD. When the EUR is consistently strong you can get movement cycles that are much stronger than traders can get with technical indicators. If the EUR/USD is quoted at 1.2020, a 1% movement is about 120 pips, and your EUR/USD day trades are safer and much more productive as far as potential pips. The Forex Heatmap® is a very strong tool for EUR/USD day traders to use.

Excellent Alternative To Forex Day Trading

If the forex market is ranging on the smaller time frames, in ranges of under 100 pips, we believe forex day trading is a viable method of trading. But if the forex market is trending across many pairs on the larger time frames, or ranging in wide ranges, we believe there is a better way to trade the forex market than day trading.

In a trending or wide ranging market we urge traders to utilize all 28 pairs composed of the 8 major currencies for increasing the number of trading opportunities, instead of getting stuck forcing trades into the EUR/USD. Always go with strongest movers, momentum and best trading signals. If the market is trending you can make more pips for almost no extra effort.

Look at the trade example above on the CHF/JPY. In a tight ranging market of less than 100 pips, we would likely advise exiting the trade as a short term day trade. However, if the CHF/JPY is in a strong downtrend on the D1 time frame, or ranging in a 250 pip range, we would advise scaling out lots and holding on to some lots. The CHF/JPY can then continue lower in the trend or range to the next major support area. The trader can continue to profit from the remaining lots with almost no additional effort, keeping the breakeven stop in place.

Forex day traders need to be aware of the other forex trading styles. When the market conditions change from tight ranging or choppy, they might be able to start swing trading on the H4 time frame or trend trading on the D1 or W1 time frames. When trading in the direction of the larger time frames, one trade entry point can make them pips today and also tomorrow, with no additional effort.

Here is our video overview of forex day trading on Youtube:

Conclusions about forex day trading: If you would like to day trade the forex market, you can do so with the indicator and alert systems provided by Forexearlywarning. But we will suggest that if you enter a trade in the direction of the major trends, that you make a good effort to stay in the trade as long as possible and let the trend do the work at getting you more pips.

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