Warning!
Trading The Lower Timeframes Is Not Recommended...
Today's post is dedicated to the retail trader who may have a small underfunded
account and limited funds.There are many different strategies, systems and robots
that can help a trader to trade the forex market. However over
95% of retail traders lose their hard earned money to
the market and being underfunded is one of many obstacles a retail trader faces
in today's market conditions.
There are many traders that don't have $30,000 thousand dollars to open a true ecn account with a regulated Bank.
A ECN is a fancy word used instead of the word Bank. On average it takes
roughley $30k To trade comfortably. Remember there only two
types of brokers market maker and ecn. Market makers basically create a market by
taking the opposite order against you. In a ECN model when you
win they win as well creating a win win situation. Your goal should be, whether
you realize it or not, is to open a true ECN. Or in other
words trade with a bank not a market maker broker. This article is for those of
you who may have a mini account but still want to trade from the longer time
frames. So let's get started with how you should be trading a mini account of one
to five thousand dollars.
The first thing you want to do is find a setup on one of the higher time frames
like the daily. On the chart below we have a strong downtrend on the usd/cad
daily chart and sense the "trend is your friend until it bends"
we are looking for sell signal right? Right. A doji with confirmation
formed around the middle band. I waited for further confirmation. I got it with
the next bear candle. The bollinger bands had decent expansion which is a sign of
volatility. At this point you pop a vertical line on the candle of interest so
you can see it on the lower time frame.
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| Usd/Cad Day Price Chart |
You can check the 4hr the 1hr and the
15min and look for a support line or level to be broken. As you
can see i found one on the 15min chart below. Now all you have
to do is wait until the support line has been broken and then you can enter the
trade.
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| Usd/Cad 15 min Price Chart |
I entered the trade with my stop just above the support line which makes its much
in line with money management rules. You could handle the stop loss on the daily
because of margin limits. I placed my target roughly at a 1:1 ratio. The target
was hit.
 |
| Usd/Cad 15 min Price Chart |
So with this strategy you can trade the longer time frame with a small account
and smaller stop loss requirements. Always practice in a demo and get use to any
method you plan to trade live. Never risk more than 2% - 3% of your account on
any given trade so says the money management rules. I hope you gained something of
value from reading this this article. Happy trading!
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