Best Short Term Trading Strategy – Profitable Short Term Trading Tips

 

 

Short-term trading is one of the most popular trading approaches used by retail traders. This is because it gives you instant satisfaction. Our team at Trading Strategy Guides likes to keep our trading strategies simple. In this article, we will demonstrate how you can turn a simple trading principle into the best short-term trading approach. Below you can read our updated post for the best short term trading strategy.

Is Short Term Trading Not For You? Do you place yourself at the opposite end of the trading strategy spectrum, like a swing trader? If this is the case, we advise you to read the following strategy: MACD Trend – Simple to learn trading strategy.

Although this short-term trading strategy can be used by focusing only on the price action short trading tips, you can change it at any time. Add indicators to filter out some of the false signals. The best strategy for short-term trading is a pure price action strategy. If you want to use indicators, you need to know how to choose the most accurate indicators for short-term trading. Our team at Trading Strategy Guides put together a step-by-step guide with the most popular Forex indicators here, The Big Three Trading Strategy .

What indicator do we use for this short term trading strategy?

We are simply going to use a 20 period moving average. The moving average can be easily found on most Forex trading platforms.

So let’s move forward with the best short term trading. We will also discuss some short-term trading tips that will strengthen your knowledge of forex. We also have training on Trend Line Drawing with Fractals .

Steps for the best strategy for short term trading

Let’s start with our first short term trading tip. To understand price action, you need to understand the underlying cause that makes price action patterns work. This short-term trading strategy uses a specific pattern, derived from a well-known strategy used by Hedge Funds.

Let’s just put it simply: the best trading strategy in the short term is derived from the Turtle trading system. This system uses a 20-day breakdown of the price. If the price breaks to a new 20-day high, it will buy. Conversely, if stock prices were to break to a new 20-day low, one would sell a stock (see figure below). The main disadvantage of this strategy is that it loses 80% of the time.

That’s pretty bad, wouldn’t you say?

What we did next is reverse the trading system. We have turned it into the best short-term trading strategy with over 80% accuracy. With short term trading tips, you can use this principle and reverse any losing strategy. However, be sure to test the strategy again and see if you can come up with a profitable system or not. Also read the simple yet profitable strategy for more trading tips .

Let’s move forward and explain the short-term trading strategy in a simple step-by-step guide:

Step 1: Wait for the market to make a new 20-day low

The way you should count the lows is simple. Every time the market is lower on a daily basis, you can start counting. The rule is that you only count daily lows that are lower than the previous daily low.

A picture is worth a thousand words, so here you have an example:

In the example above, we have shown how to count the daily lows correctly. As we can see, the market was not able to make 20 day lows, so we had to stop the count. We started again when the market made its first new daily low.

Now let’s identify a valid 20-day low pattern and see how you can trade the best short-term trading strategy.

Consult the chart below:

Step 2: Wait for the market to break above the 20-day MA

For the success of our short-term trading strategy, this step is very important. We don’t want to pick tops and bottoms. We feel more comfortable entering the market once the price confirms that it is ready to reverse.

Let’s move forward and define our entry point. This brings us to step number 3 of the best short term trading strategy.

Step 3: enter a long position when we break above 20-day MA

Once you break above the 20-day moving average, buy it in the market. The combination of the 20-day low pattern and the 20-day moving average is the secret to our powerful short-term trading strategy. Incorporating the 20-day MA into your day trading system is one of the best short-term trading tips you can receive.

We have found our entry, but we still need to determine where to place our protective stop loss and take profit orders. This brings us to the next step of our short-term trading strategy.

Step 4: Place the protective stop loss below the swing low before the 20-day MA breakout

The best short term trading strategy uses a very rigid stop loss method. The obvious place to “hide” your protective stop loss should be right below the latest swing low before the 20-day MA breakout. If the market breaks above the 20-day EMA, and it turns around and breaks below the swing low, that means trouble. This is reason enough to close the trade at a small loss.

Why? Because it indicates that the prevailing trend is still maturing and will resume. This is why you don’t want to be in the business anymore. Listening to the price action is the best short term trading tips the market can give you.

In the following short-term trading tips, we learn where to profit:

Step 5: Take profit at the 50% Fibonacci retracement of the prevailing DownTrend

The logical place to take profits is at the 50% Fibonacci retracement. Normally, this is the first real target from which the market can reverse. We don’t want to risk our chances of losing more profit. So, we will liquidate the entire position here for a good profit.

Note ** The above was an example of a buy trade… Use the same rules – but in reverse – for a sell trade. In the figure below you can see an actual SELL trade example using the best short term trading strategy.

Closure

We hope these tips will help you become a better trader in the short term. Like every other strategy presented here at Trading Strategy Guides you must use strict money management rules. This short term trading strategy is a perfect example of how you can simply reverse a losing trading system and turn it into a profitable system. Here you can learn how to fade the momentum in Forex Trading.

If you want to learn more short-term trading tips on how to conquer the Forex market or any other market, we recommend you spend no more than 5 minutes and read How To Earn Profits From Trading – Earn Money Trading Today! This article has attracted a lot of attention from our trading community.

Thanks for reading!