This article on day trading the EURUSD covers everything you need to start trading the most heavily traded forex pair in the world. The EURUSD provides ample opportunity most days to profit. It also offers high leverage to maximize trading capital (with proper risk management). This article will discuss:
- Why I like day trading the EURUSD
- What you need to day trade the EURUSD (getting set up to trade)
- Best times to day trade the EURUSD
- EURUSD day trading strategies
- Placing trades quickly with stop losses and targets attached
- EURUSD day trading indicators
- Trade size (how much to buy or sell)
- Risk management
Why Day Trade the EUR/USD
I love day trading the EURUSD and I have been trading it since 2008. I got my start in stocks, but over time transitioned to the EURUSD for my day trading. Here are the summary reasons why I like the EURUSD.
- Highly liquid. It is the most heavily traded currency pair in the world. The forex market is the biggest market on the planet, by far, and the EURUSD contributes to most of its daily volume.
- The EURUSD provides ample movement most days for an astute day trader to profit. Some days are quiet and don’t provide much opportunity, but more often than not the market presents enough opportunities.
- Most countries provide leverage of at least 30:1, usually 50:1, and often much more. That means if you are starting out with a smaller retail account, you can trade with a lot more money than you have. For example, if you start trading with $5,000 and have 50:1 leverage, you can take positions worth up to $250,000. It is much better to make 10% on $250,000 than $5,000 (the latter means you actually made 5x your account value in profit). But leverage can also mean losses accumulate quickly if you don’t know what you are doing. Risk management is discussed later.
- It’s possible to start with a small amount of capital. You can even start day trading the EURUSD with $100 (which means you can trade $5000 worth of position using leverage, as discussed above). It is one of the lowest barriers-to-entry markets there is.
- Since the EUR/USD provides enough opportunity each day, week, and month, there’s no need to day trade anything else. That means no homework or nightly research to find the next “hot stock” for example. Day trading the EURUSD is efficient.
- Of all the forex pairs, the EURUSD typically has the smallest spread. If you are going to trade forex, you may as well keep your fees and potential costs as low as possible (the spread is the difference in price between what people are buying and selling at).
- You can buy it if you think it is going up, or you can sell it if you think it is going down. There’s no “shorting” rule like in the stock market. Profit from price moves down as easily as moves up.
What You Need to Day Trade the EURUSD
There are only a few requirements for day trading the EURUSD:
- Some capital: $100+
- A high-speed internet connection. You don’t want a slow connection slowing you down. Aim for at least 2 Mbps in terms of speed. This is the basic minimum requirement for streaming or making a Zoom call. So you want at least that.
- A decent computer or laptop. There is no specific requirement for the computer, except that you should be able to operate your trading platform (and additional charts if you use them) without any lag, slowness, or freezing.
- DO NOT day trade on your smartphone. The small charts don’t provide the same context and insight that can be gained from analyzing trades on a bigger screen.
- DO NOT day trade on your smartphone. The small charts don’t provide the same context and insight that can be gained from analyzing trades on a bigger screen.
- A forex broker that provides you with a trading platform. Whichever broker you opt to go with, you generally download a trading platform from their site. It is often MetaTrader 4 or 5, but there are other trading platforms as well. When starting out, the platforms provided by the broker are fine. They are pretty standard and work well for day trading.
- Charts are provided for free by forex brokers within the trading platform they provide you. You can open a EURUSD chart, track price changes, do your analysis, and place trades all in the same place.
- Optional: I find TradingView charts (use link to save up to $30 on plans) much easier to look at and add notes to. Therefore, I have my EURUSD chart open on TradingView on one monitor, and my trading platform, where I place trades, open on another. This is not required.
That’s it. Those are the basic requirements for day trading the EURUSD: some capital, high-speed internet, a decent computer, and a broker that will provide you with a trading platform and charts.
Best Time of Day to Day Trade the EUR/USD
The EURUSD is composed of the Euro and US dollar. Forex pairs tend to have the most action when the countries contained in the pair are open for business.
The EURUSD is most active when Europe and the US are open for business. The main market for Europe is London and for the US is New York.
Anytime London or New York is open is a good time to day trade…with a few caveats.
Here are the times major cities are open for business around the world.
I like day trading while London OR New York is open.
As New York closes, that is the end of the global business day (after that, Sydney is opening for business the next day). Price movement tends to die down in the hours leading up to the New York close. Therefore, it is no longer ideal for day trading.
Because of this, day trade the EURUSD between 3 AM EST and about 2 PM EST.
The most active time of day is between 8 AM and 12 PM EST, as that is when London and New York are open for business. This is called the overlap period.
You can see how prices tend to move throughout the day in EURUSD Daily Volatility and Price Movement Tendencies.
EURUSD Day Trading Strategies
Here are a number of price action strategies for day trading the EURUSD.
First off, I trade based on price action. Understanding how trends and reversals happen is a key component of price action trading. I discuss how to spot trends and reversals in real-time in this video and article. Read that when you get a chance.
With some price action skills in our toolbelt, let’s look at some strategies. These strategies are based on the 1-minute chart. These strategies may work on other time frames but that will be up to you to check. I don’t trade other time frames so I don’t know.
I don’t hold positions through major economic news announcements. I check the economic calendar daily and get out before high-impact news which affects the Euro or the US dollar. I don’t take new trades in the few minutes leading up to the news. I take can trades after the news comes out.
Snap Back Strategy
The snapback is a simple trend-following pattern. Assume the price is trending up. It has a pullback but then sharply rallies right back to the prior swing high. We wait for the price to move sideways near that high for at least two minutes.
If the price breaks higher out of that sideways move (consolidation) we buy, placing a stop loss below the consolidation. A target is placed at 2.5x our risk on the trade. For example, if the stop loss is 3 pips below our entry, we place a target 7.5 pips above our entry price.
In the middle of the chart are three Snap Backs in a row, this time in a downtrend. For additional details and examples, see the Snap-Back Strategy article.
Double Pump Strategy
This is another trend following strategy. Assume the price has just had a nice strong run to the upside. Then it has a small pullback, moves back to the high, and then pulls back to the prior pullback low. Basically two small drops.
IF, the price makes a move back to the upside, enter a long trade. A stop loss goes below the low of the second pullback. A target is placed at 2.5x the risk of our trade. If our stop loss was 2.5 pips away from the entry, then our target is placed 6.2 pips above our entry.
On the chart above, noticed the move higher, followed by a pullback (that green bar that spikes down) a move back to the recent high, and then another pullback. The price starts moving up again and a long trade is entered. Basically, it looks like a little rectangle and I am entering near the bottom of it.
For more details and examples, see the Double Pump Strategy article.
Session High Low Strategy
The following strategy can be used on its own, but I tend to use it more as an enhancement for my other strategy entries.
Mark the high and low of the London session which occurred before the US opened. When the price has been away from these areas for more than a couple hours, if the price moves back toward these highs and lows it will often move through them. I call these magnet areas.
Major highs and lows that the price has moved away from for an hour or two (or moved significantly away from), and then revisits, can provide similar opportunities.
As the price approaches the London high or low (after having been away from it for a while) watch for a consolation. A consolidation is a sideways move of at least a couple price bars. As the price breaks out of the consolidation toward the London high or low (whichever one it is close to), enter a trade in that direction.
A stop loss goes on the other side of the consolidation. The target is 2x the risk of the trade. If the stop loss is 4 pips from the entry, put a target at 8 pips from the entry.
Sometimes these trades can be explosive, so a trailing stop loss is also an option.
For more examples and details, see the EURUSD Session High Low Strategy article.
Want all my favorite EURUSD Day Trading Strategies in one place, along with guidance on how to stay in a peak mental state while trading? My EURUSD Day Trading Course shows you how to find and trade high-profit patterns in 1 to 2 hours per day.
EURUSD Quick Trade Execution
To input day trading orders (with stop loss and target attached) quickly in MT4, right-click your chart and select Market Depth.
Use the pop-up to quickly input the stop loss and Target in fractional pips.
2 pips = 20 for example.
A 5 pip target is 50 (fractional pips).
Position size is in standard lots.
1.0=100k standard lot
Click buy or sell to place orders. Your stop loss and target will automatically be deployed when you enter a position. In this case, if we buy right now, a stop loss will be placed 2 pips below the entry and a target 5 pips above on a 50 standard lot position.
Adjust quickly as needed while trading.
EURUSD Day Trading Indicators
I don’t actively use any indicators for day trading the EURUSD.
That said, there is one indicator that can be useful for determining how big price waves are. The size of the waves are calculated automatically, instead of having to measure them manually.
Why would you want to know the size of the price waves? Because how much the price is moving affects your profit targets. If you trying for a 10 pip target, but the price is only moving up 5 pips at a time, and then pulling back 3 or 4, you may need to hold through two or three price advances (and pullbacks) before the target gets hit. Or maybe you wait for a better opportunity, such as when the waves get bigger and your target is hit quickly because the price is swiftly moving 15 pips at a time.
The indicator can also help filter out the tiny price waves, and only highlights waves of a certain size. This can help with establishing trend direction.
The indicator is called Zig Zag. It is on TradingView as well as MT4 and MT5.
Here is a chart example using a 0.01% deviation and a depth of 6.
This indicator is not required, totally optional. I sometimes view it if I want a quick view of typical price movement. Use it if it helps, don’t if it doesn’t.
Additionally, while I don’t consider it an indicator, the Session Highlighter is a great tool for marking where sessions begin and end. If you search session highlighter in TradingView (under Indicators) you will find a number of options to try out. Make sure the times line up based on your chart time zone.
I haven’t used a session highlighter in MT5 or MT5 in a long time, but a ran a quick internet search for “session highlighter MT4” and saw some viable ones that can be downloaded and installed on your platform.
Here’s an example of the session highlighter (how I have it set up) on TradingView.
Trade Sizing When Day Trading the EURUSD
When day trading, I use the 1% risk method. It means I don’t want to lose more than 1% of my account on any single trade.
Setting that up requires using a stop loss that gets me out if the trade doesn’t do what I expect, AND the size of my trade is such that if I do get stopped out, I only lose 1%.
To figure out position size, we need to know a few things:
- Account risk in $: this is 1% (or any % chosen) of the account balance, or the dollar amount we are willing to lose on the trade. For example, on a $10,000 account, 1% is $100. Our account risk is $100…the maximum we can lose on a single trade.
- Trade Risk: the number of pips between our entry point and our stop loss. Most of my day trades have a Trade Risk between 2 and 4 pips.
- Pip Value: the value of each pip of movement. When day trading the EURUSD with a US dollar account (you deposited US dollars when opening the account) each pip is worth $0.10 for a micro lot. If your account is in a different currency, pip value will change, so you’ll need to calculate it or look it up each day.
Once we have that, we can calculate position size. Assume we have a $10,000 account and trade with a 3 pip stop loss. We are only allowed to lose 1% on the trade if we are wrong.
Account Risk $ / (Trade Risk x Pip Value) = Position size in lots
$100 / (3 x $0.10) = 333 micro lots. That’s 33.3 mini lots or 3.33 standard lots.
In most trading platforms, input 3.33 to get 3.33 standard lots as most trading platforms use standard lots as the whole number.
1.0 is a standard lot.
0.1 is a mini lot.
0.01 is a micro lot.
If you have any concerns with position size, check out the Forex Position Sizing article for more examples.
Risk Management for Day Trading the EURUSD
For day trading, we want a multi-pronged approach for managing risk.
- Control the risk on each trade with a stop loss, as discussed in the strategies section. When we lose, we should lose less than 1% of our account.
- Controlling risk on each trade is a result of our stop loss as well as our position size. Position size is discussed in the section above. We don’t want to “overbet” on any single trade.
- Daily (and weekly and monthly) loss limits prevent us from taking further losses if we hit our prescribed loss limit. For example, not losing more than 3% in a day. If we lose 3% in a day, that is it. We are done trading for today. We can trade tomorrow, but no more today.
A similar concept could be applied to weekly or monthly limits. If we are down 6% or more, for example, on the week, we stop trading until the next week. If we are down 15% or more for the month, for example, we pause trading for the rest of the month and resume the following month. We can use the hours and days off to refine our method, note our mistakes, and try to improve on them.
All these tactics—stop losses, position-sizing, and loss limits—help us control our risk. They pause the bleeding when things aren’t going our way. They force us to slow down and limit how much we lose, which gives us time to improve. Many traders hit a bad streak and blow their accounts so quickly they don’t have a chance to learn anything.
Other Helpful Tidbits When Day Trading the EURUSD
Establish a pre-trading routine. The pre-trade routine helps you get into the right mind frame for trading. It only takes a few minutes before you start day trading, but in my opinion, it’s an essential component of successful day trading.
The success rate for any form of short-term trading is low. This is mainly because most people don’t put in the effort to improve their skill at trading a few strategies. Instead, they assume things don’t work and are forever bouncing around between new ideas. Make a trading plan with the strategies you are going to follow, and then keep working at and refining those strategies until you trade them well.
To do this, look at how much your mistakes are costing you (a mistake is any deviation from the plan). Once you know how much your mistakes are costing you, you can start making improvements on it, and turning those mistakes into profit.
The mental game is a HUGE part of trading. Actually, psychology is really 100% of trading, because to succeed we need a strategy that we understand and have confidence in (that’s psychological). Then, we need to be able to trade it without our emotions interfering too much (also psychology). You can have amazing strategies, but if you are too anxious to pull the trigger at the right moment, or too excited to wait for the right opportunity, the strategy will be wasted.
Understand why most traders lose money, so you can avoid the same pitfalls.
And finally, if you read right to the end you get a golden nugget: 4 Practices to Dramatically Improve Day Trading Results. This article delves into keeping the mind focused while trading.
My EURUSD Day Trading Course guides you through trading a few powerful patterns that tend to occur multiple times per day, providing loads of opportunities to capitalize.
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.