Article by Joshua Martinez published on Executive Trader
For me, day trading is all about the European open. This session is known for aggressive, fast-paced market movements that occur between the hours of 2:00 a.m. and 12:00 p.m. ET, which is perfect for getting in and out of the market in a single day. (I prefer to look at this market open based upon the London, Great Britain open at 3:00 a.m. ET as opposed to the Frankfurt, Germany open at 2:00 a.m. ET, due to the increased market volatility that starts at the latter open.) It also doesn’t hurt that the majority of market movement takes place during this session either. But, knowing that the trading opportunity is there isn’t enough to earn a profit. The key here is to master day trading tactics that set you and your trades up for success.
Identifying Daily Trading Ranges
The first tactic is to identify the average daily trading range that you will utilize in identifying the day’s trading potential and optimal entry and exit points for your trades. This is where we break out the market data.
Within a 24-hour trading day, the market will form a high and a low of the day. I suggest looking at the past 20 trading days in order to find the low and the high of each day (easiest done by looking at the daily timeframe chart). When looking at these daily candlesticks, we need to decide how many pips made up each daily trading range for the past 20 days. At that point, you could then add them up. Next, we divide this pip total by the number of days we are looking at (20). This will give us our daily pip range average or the average distance between the high of the day and the low of the day.
Next, past experience can give us a good idea about how we could utilize this information. From my experience, I know that, on average, 10 of the next 20 trading days will be right around that average daily trading range prediction. Additionally – Click here to read the full article on Executive Trader.
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