Forex Day Trading Strategy

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How long have you been doing forex trading? If you have been trading foreign exchange for some time you already know the importance having good forex trading strategies which you can stick on. You also need to continuously improve your forex trading system to make it perfect. Sometimes even minor adjustments in the way that you execute your trades can result in much bigger profits.

Today we are going to discuss about one such forex day trading strategy which will maximize your profits. This is a simple strategy, however when applied correctly you can expect to make good returns. Without too much introduction let’s get into the actual strategy..

One of the advices that most experienced traders will give you is to avoid the temptation to hang on to a winning trade beyond your profit target you have set. This is true because forex market is highly volatile and greed can often result in losses. However many a times we come across strong winning trades which can go way up when the market conditions are right. If you pull out too early you are leaving money on the table. This where “Trimming the Scalp” strategy can boost your profits without risk. It is a great method for day trading even though it would be just as valid for a longer term trading.

Here is how it works:
When your winning trade reaches your profit target, close one half of your position. Obviously I assume that you are trading two lots or more. Otherwise go for a forex broker who accepts partial lots. This provides you the flexibility that you need.

So, exit half of your position. At the same time, adjust your stop loss order to one half of the original size too. You can also shift the stop loss to your original trade entry position plus a couple of pips to take account of spread.

You have now closed on half of your profit target, so you already made some profit, plus you have a half size order open in the market that cannot lose because its stop loss is set at point zero. Now go ahead and set a new price target and put a limit order at that point. This could be the same number of pips as your normal price target or a little less. Do not make it more.

This simple day trading strategy will ensure that you make profit on a winning trade and maximize the returns when the trend is right without taking any risk.

However do not try to apply the “Trimming the Scalp” day trading strategy on a losing trade. That means, never hold on to even half of your position in a losing trade. As I said earlier “Trimming the Scalps” day trading strategy when applied to winning trades will maximize your wins. On the contrary if you apply it to your losing trades it will maximize your losses. Learn to accept minor losses and move on. Forex trading is not all about winning and losing, it is about making money.

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