Learn about day trading forex with price structures using various time frames.
To understand this article, please read the Price Structure Forex Strategy first. That article looks at swing trading price structures, while this article expands the same strategy to day trading.
Forex price structures aren’t just for big swing trades with huge reward:risk ratios. Price structures can also be used for day trading or shorter-term swing trades. Instead of holding a trade to try to capture the profit of the entire structure, take a short-term trade to capitalize on part of the structure.
In the video below, I discuss some variations of how price structures can be used for day trading.
Use Multiple Time Frames to Find Forex Price Structure Day Trades
Multiple time frames can be used to find forex day trades or short-term swing trades.
For example, we could take day trades (using 1 or 5-minute charts) based on hourly or 15-minute price structure levels. This would be if you want shorter-term trades without holding overnight or through a weekend. There are still attractive reward:risk opportunities, and potentially a few trades a day.
The EURUSD charts show an example of this using an hourly chart and a 15-minute chart for a day trade.
The EURUSD is in a rising regression channel. This can be seen on the hourly chart below.
This sets up a potential shorter-term trade on a lower time frame, especially if the price can show signs of bouncing off the bottom of the channel. This is shown on the 15-minute chart below. A 5-minute or 1-minute chart could also be used to really fine-tune the entry.
When day trading, I prefer using a 1-minute chart myself, although referring to the hourly and 15-minute can provide some context.
Note: using multiple time frames isn’t required. It is just an option. In my EURUSD Day Trading Course, I teach methods that ONLY use the 1-minute chart.
Just like with swing trading price structures, you can day trade on one timeframe, or you can start on a high time frame and then drop to a lower one to fine-tune entries.
If you have isolated a big price structure on the daily or hourly chart, which may take a few days for the price to move to the other side of the price structure, nothing says you have to make one big trade for a 20:1 reward to risk.
As the price treks across the big price structure, it is likely to form smaller price structures within the bigger structure. Take 3 or 4 day trades over a few days, attempting to capture 3:1 or 5:1 reward:risk on each trade, for example. This locks in profit as the price moves within the big structure.
Here is how the above trade turned out. It basically took a few hours for the price to move back to near the top of the channel…providing multiple exit points along the way.
Define how you will enter and exit. The trade above could have been held for one big day trade, or it could provide a few trades near the bounce area and then provided a long bias over the next few hours as the price rallied higher.
The same trade and setups could have been traded the following day as well, as the price bottomed near the bottom of the regression (on the 4th) right around the same time of day. Note after the big spike up on the 4th we have to start questioning whether the regression is still valid. Prior to that spike the price stayed pretty continued with the channel, but then we get quite a bit of action above. That said, the channel would have likely have provided some short-term day trades near the bottom of the channel on the 5th when the price dropped back there. As the price moved sideways, the rising regression was not longer valid because a new price structure had started.
Make it YOUR Strategy
This is article is meant to show that there are multiple ways to trade. Trade one time frame, or use multiple time frames.
If you are already swing trading forex price structures on the daily, 4-hour, or hourly charts, then day trading them is also an option.
New to forex and not sure where to start? Check out the Forex Introduction Course.
By Cory Mitchell, CMT
Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.