Help Center

  • Introduction to Forex Market
  • Trading Basics
  • Video Tutorials
  • Articles
  • Glossary of Forex Terms
  • Economic Calendar
  • Forex Heat Map

Best Short Term Forex Strategy

Best Short Term Forex Strategy img2

There are several fairly common options for short-term trading strategies.

They are all quite similar to each other, and yet, have a lot of differences.

The main similarities are the duration of the transactions and the amount of profit received as a result of a single operation.

Every trader chooses the most suitable option for themselves, but the best short-term approach, as personal experience shows, is trading in 15 minutes time intervals with a profit of at least 10 points from a single transaction.

Pipsing on short timeframes strains you with a lot of psychological burden, and as a result, you just do not have time to properly analyze the situation. Hence, you experience more failed trades than lucrative deals. Moreover, it is simply physically hard to trade on M1. Trading is hard work in of itself, and you will have to work all the time if you choose to earn your profits in one-minute time intervals.

The benefits of trading short-term are invaluable. Firstly, you can double or even triple your deposit in one session, and secondly, you don’t need to make complex predictions. It’s enough to simply assess the situation in the nearby future, without having to make predictions days or weeks out. At the same time, one should never forget about the high risks of trading when using this type of time frame for trading.

Best Short Term Forex Strategy img3

The Essence Behind the Strategy

Let us proceed to the main aspects of this strategy and how they contribute towards your success.

The currency pairs. Choose one of the more volatile currency pairs available – GBP/CHF, GBP/JPY, USD/CHF, EUR/USD. Make your decision based on which of the trading sessions you will work with, since the popularity of the tools may differ depending on the time of trading. It is clear that for short-term trading it makes no sense to take pairs in which both currencies rest at the time of the trading session. For example, don’t trade AUD/JPY during the European session.

Volume. If you decide to trade with this strategy, it means that you want to earn a lot in a short period of time. Therefore, we will be using a leverage of 1:200, though you can opt for even more. The main thing in determining the volume of the transactions is to observe the following ratio of deposit to volume. For example, a deposit of 100 dollars is equal to a volume of 0.1 lots, a depot of 1000 is equal to a volume of 1 lot, and so on. This type of approach will allow you to make good money and withstand a small rollback of the trend without having to drain your deposit.

Trading interval. The most optimal timeframe for this strategy is the M15. These are fifteen minutes that you will be able to earn money on with minimal effort. After much trial and error, the decision to adopt the 15 minute time interval has proven to be a great decision in the long run. If you need to clarify the situation on the market, H1 and H4 can be used, since by looking at them, you can get additional data on the movement of the trend.

Indicators. For trading you will need two indicators, the first one will be the Stochastic Oscillator, which is present in almost every trading terminal by default. The second indicator is meant to indicate the direction of the trend. For example, Ultra Wizard.

Entry signals. The signals of the Stochastic indicator will serve as entry points. When it starts to leave the overbought or oversold zone. More details will be found below.

Take Profit and Stop Loss. The two will be set at a rate of 1.5 to 1, meaning Take Profit should be one and a half times bigger than Stop Loss. In our case, the value should be determined based on the dynamics of the trend movement. With a strong trend, it is usually 30 and 20, with an average – 20 and 15. You can calculate this value by using a mini lot or a demo account, or by simply watching the price’s movement.

Best Short Term Forex Strategy img4

Once you are familiar and up-to-date on all of the points above, you should proceed to trading itself.

  1. 1. We must first determine the direction of the main trend. For this, we look at where the price of H1 and H4 are moving to, and also focus on the readings of the Ultra Wizard indicator. Trades for this short term strategy will be opened in the direction of the main trend.
  2. 2. Find the entry points. The easiest way is to look at M5 and M1. For example, if there is an uptrend on the market, and the price at this time on the minute and five-minute time intervals has finished moving down and started to move towards the main trend – open a deal. The second option is based on the Stochastic indicator. When installed, we set it up at 4 levels – 10,20,80,90. A transaction is to be opened when the red line leaves the overbought zone 20 or oversold 80, depending on the direction of the trend. The signal is confirmed by its intersection with the blue line.
  3. 3. We close trades only at Stop Loss or Take Profit. Do not make any sudden decisions, as deviating from the strategy will hinder your success rate.

Best Short Term Forex Strategy img1