12/08/ · The 5-Minute Momo strategy is designed to help forex traders play reversals and stay in the position as prices trend in a new direction. The strategy relies on exponential moving averages and the 18/11/ · Now, this particular 5 minute EMA strategy is all about the short term, because it’s only designed for 5 minute time periods. This is what most traders would refer to as scalping, the practice of placing a large quantity of small trades in order to make a profit, instead of placing just a few larger trades In this course I teach you how to trade the 5 minute timeframe successfully. These methods took me countless thousands of hours to develop and are extremely high probability. Zone
The 5-Minute Trading Strategy
Some currency traders are extremely patient and love to wait for the perfect setup, while others need to see a move happen quickly, or they will abandon their positions. These impatient souls make perfect momentum traders because they wait for the market to have enough strength to push a currency in the desired direction and piggyback on the momentum in the hope of an extension move.
However, once the move shows signs of losing strength, an impatient momentum trader will also be the first to jump ship. Therefore, a true momentum strategy needs to have solid exit rules to protect profitswhile still being able to ride as much of the extension move as possible.
The 5-Minute Momo strategy does just that. The 5-Minute Momo looks for a momentum or "momo" burst on very short-term 5-minute charts. First, traders lay on two technical indicators that are available with many charting software packages and platforms: the period exponential moving average EMA and moving average convergence divergence MACD. EMA is chosen over the simple moving average because it places higher weight on recent movements, which is needed for fast momentum trades.
While a moving average is used to help determine the trend, MACD histogramwhich helps us gauge momentum, is used as a second indicator. This strategy waits for a reversal trade but only takes advantage of the setup when momentum supports the reversal enough to create a larger extension burst. The position is exited in two separate segments; the first half helps us lock in gains and ensures that we never turn a winner into a loser and the second half lets us attempt to catch what could become a very large move with no risk because the stop has already been moved to breakeven.
Here's how it works:. Although there were a few instances of the price attempting to move above the period EMA between p. and p. ET, a trade was not triggered at that time because the MACD histogram was below the zero line. We waited for the MACD histogram to cross the zero line, and when it did, the trade was triggered at 1. We enter at 1.
Our first target was 1. It was triggered approximately two and a half hours later. We exit half of the position and trail the remaining half by the period EMA minus 15 pips. The second half is eventually closed at 1. ET for a total profit on the trade of The MACD turned first, so we waited for the price to cross the EMA by 10 pips and when it did, we entered the trade at The math is a bit more complicated on this one.
The stop is at the EMA minus 20 pips or The first target is entry plus the amount risked, or It gets triggered five minutes later. The second half is eventually closed at ET for a using 5 min forex timeframe average profit on the trade of 35 pips.
Although the profit was not as attractive as the first trade, the chart shows a clean and smooth move that indicates that price action conformed well to our rules.
We see the price cross below the period EMA, but the MACD histogram is still positive, so we wait for it to cross below the zero line 25 minutes later. Our trade is then triggered at 0.
As a result, we enter at 0. Our stop is the EMA plus 20 pips. At the time, the EMA was using 5 min forex timeframe 0. Our first target is the entry price minus the amount risked or 0, using 5 min forex timeframe. The target is hit two hours later, and the stop on the second half is moved to breakeven.
We then proceed to trail the second half of the position by the period EMA plus 15 pips, using 5 min forex timeframe. The second half is then closed at 0. In the chart below, the price crosses below the period EMA and we wait for 10 minutes for the MACD histogram to move into negative territory, thereby triggering our entry order at 1. Based on the rules above, using 5 min forex timeframe, as soon as the trade is triggered, we put our stop at the EMA plus 20 pips or 1.
Using 5 min forex timeframe first target is the entry price minus the amount risked, or 1. It gets triggered shortly thereafter. We then proceed to trail the second half of the position by the period EMA plus 15 pips, using 5 min forex timeframe. The second half of the position is eventually closed at 1. Coincidentally enough, the trade was also closed at the exact moment when the MACD histogram flipped into positive territory.
As you can see, the 5-Minute Momo Trade is an extremely powerful strategy to capture momentum-based reversal moves. However, it does not always work, and it is important to explore an example of where it fails and to understand why this happens.
As seen above, using 5 min forex timeframe, the price crosses below the period EMA, and we wait for 20 minutes for the MACD histogram to move into negative territory, putting our entry order at 1. We place our stop at the EMA plus 20 pips or 1. Our first target is the entry price minus the amount risked or 1. The price trades down to a low of 1.
It then proceeds to reverse course, eventually hitting our stop, causing a total trade loss of 30 pips. Using a broker that offers charting platforms with the ability to automate entries, exits, stop-loss ordersand trailing stops is helpful when using strategies based on technical indicators. When trading the 5-Minute Momo strategy, the most important thing to be wary of is trading ranges that are too tight or too wide. In quiet trading hours, where the price simply fluctuates around the EMA, MACD histogram may flip back and forth, causing many false signals.
Alternatively, if this strategy is implemented in a currency pair with a trading range that is too wide, the stop might be hit before the target is triggered.
The 5-Minute Momo strategy allows traders to profit from short bursts of momentum in forex pairs, while also providing solid exit rules required to protect profits. The goal is to identify a reversal as it is happening, open a position, and then rely on risk management tools—like trailing stops—to profit from the move and not jump ship too soon. Like with many systems based on technical indicatorsresults will vary depending on market conditions.
Technical Analysis Basic Education. Technical Analysis. Your Money. Personal Finance. Your Practice. Popular Courses. Table of Contents Expand. What's a Momo? Rules for a Long Trade. Rules for a Short Trade.
Long Trades. Short Trades. Momo Trade Failure. The Bottom Line. Key Takeaways The 5-Minute Momo strategy is designed to help forex traders play reversals and stay in the position as prices trend in a new direction.
The strategy relies on exponential moving averages and the MACD indicator. As the trend is unfolding, stop-loss orders and trailing stops are used to protect profits. As within any system based on technical indicators, the 5-Minute Momo isn't foolproof and results will vary depending on market conditions. Compare Accounts, using 5 min forex timeframe. Advertiser Disclosure ×. The offers that appear in this table are from partnerships from which Investopedia receives compensation, using 5 min forex timeframe.
This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Articles. Technical Analysis Basic Education Trading the MACD divergence.
Technical Analysis Anticipate Trends to Find Profits. Partner Links. Related Terms Moving Average Convergence Divergence MACD Moving Average Convergence Divergence MACD is defined as a trend-following momentum indicator that shows the relationship between two moving averages of a security's price.
Trailing Stop Definition and Uses A trailing stop is a stop order that tracks the price of an investment vehicle as it moves in one direction, but not in the opposite direction. Oscillator of a Moving Average OsMA OsMA is used in technical analysis to represent the difference between an oscillator and its moving average over a using 5 min forex timeframe period using 5 min forex timeframe time.
It can be used to confirm trends and provide trade signals. Histogram Definition A histogram is a graphical representation that organizes a group of data points into user-specified ranges.
Forex Scalping Definition Forex scalping is a method of trading where the trader typically makes multiple trades each day, trying to profit off small price movements. About Us Terms of Use Dictionary Editorial Policy Advertise News Privacy Policy Contact Us Careers California Privacy Notice. Investopedia is part of the Dotdash publishing family.
How to Trade the 5 Minute Chart Profitably with Price Action
, time: 31:08Zone Trader - How to Trade the 5 Minute Time Frame Successfully | Deci
So, if you have a 5-minute timeframe for the short-term, your intermediate and long-term timeframes will be minute and minute periods, respectively. This is only one example. The appropriate timeframe has to be chosen carefully. For a long-term trader, who looks at weeks or months, a 5-minute, minute and minute timeframe might not Estimated Reading Time: 6 mins 18/11/ · Now, this particular 5 minute EMA strategy is all about the short term, because it’s only designed for 5 minute time periods. This is what most traders would refer to as scalping, the practice of placing a large quantity of small trades in order to make a profit, instead of placing just a few larger trades Most Successful 5 Minute Scalping Forex Trading Strategy. The following is a 5-minute scalping forex trading strategy for the EURUSD, GBPUSD, USDJPY and EURJPY currency pairs. Scalping is a special type of trading strategy that helps the trader to make significant profits on minor price changes. In this strategy, the trader needs to make a minimum
No comments:
Post a Comment