To follow our friend in a market, namely trend, we can consider implementing trading strategies surviving. In a 2003 article published in the Financial Analysts Journal titled The Profitability of Day Traders”, professors at the University of Texas found that out of 334 brokerage accounts day trading the U.S. markets between February 1998 and October 1999, only 35% were profitable and only 14% generated profits in excess of than $10,000.
This trading or "betting with positive edge" method involves a risk management component that uses three elements: number of shares or futures held, the current market price, and current market volatility An initial risk rule determines position size at time of entry.
During a non-failure swing, however, the price immediate tends to make a lower low, demarcated by point D. Here, the sell-signal at S2 is more powerful than the first sell-signal which appeared at S1. This is because; all the building blocks of a downtrend have already been formed at point S2.
Most importantly, due to the accuracy of the indicators used and the conditions under which they are used, this strategy enables traders to enter only the best and strongest Forex trends out of which the best trading opportunities are filtered out and considered for taking a trade.
Don't fall into the ‘breakout' trap - Many amateur traders get stuck in a cycle of trying to trade breakouts all the time…this is not really an effective long-term strategy because the ‘big boys' all know that amateurs are constantly trying to buy and sell breakouts.
As you probably already know, there are tons of different indicators that you can put on your charts to ‘help' you identify a trending market and trade with it. Many traders spend countless hours and dollars on trend-following trading systems or on indicators that just end up confusing them and making the process of trend discovery a lot more difficult than it needs to be.
The indices: two minutes before the end of the current trading day place a pending order 10 pips above the peak reached during trading with a stop above or below the top of the bar, depending on whether you want to enter a long or short position in the market.
The formation of another higher swing low gives us another opportunity to compound our position as soon as the price trades above the high of the low bar (turning our swing chart up again) and then we place our stop loss orders safely a few cents below the higher swing low.