Brief Summary
Alright, boss, here's the gist of the video: It's all about a super simple day trading strategy for beginners using just the 50 EMA indicator. The strategy involves waiting for price breakouts, pullbacks, and using the Chandelier Stop for stop-loss placement. The video also talks about when to invalidate a trade and shows real-life examples and backtesting results, claiming a 65% win rate. Plus, there's a shoutout to SimpleFX with a bonus offer for viewers.
- Uses only the 50 EMA indicator
- Aims for 65% win rate based on backtesting
- Includes stop-loss and take-profit rules
- Highlights invalidation conditions for trades
Intro to the Simple Day Trading Strategy
The video introduces a day trading strategy that's so simple, even a complete newbie can use it and potentially make profits. It's based on concepts used by professional traders but simplified for easy understanding. The strategy focuses on using just one indicator, the 50 EMA (Exponential Moving Average), and boasts a backtested win rate of around 65%, which is pretty decent for such a straightforward approach.
Understanding the 50 EMA
The strategy revolves around the 50 EMA, which is basically a line on the chart showing the average price of an asset over the last 50 days, giving more importance to recent prices. To use this strategy, all you need is a price chart and the 50 EMA. You can add the EMA indicator on TradingView, and set it to 50 in the settings.
The Breakout and Pullback Setup
The strategy starts when the price breaks above the 50 EMA after trading below it. Once the price closes above the EMA, you wait for a pullback, which needs to have at least two red candles in a row. After spotting this pullback, draw a horizontal line at the swing high point before the pullback. Then, wait for the price to break above this horizontal line, with the candle body closing above it, and that's your buy signal.
Setting Stop-Loss and Take-Profit
To manage risk, you need a stop-loss. The video suggests using the Chandelier Stop indicator on TradingView. Place your stop-loss at the Chandelier Stop level. For your take-profit target, aim for double the distance of your stop-loss.
Invalidating a Trade
Not every setup is a guaranteed win. Two things can invalidate a trade: First, if the pullback goes too deep and the price breaks below the EMA before breaking the horizontal line, the trade is off. Second, if the breakout candle is way too big (like three or four times the average candle size), it might not be sustainable, and the price could reverse.
SimpleFX Sponsor Message
This part is a quick shoutout to SimpleFX, a trading platform with a bunch of currency pairs, stocks, crypto, and indices. It has a built-in TradingView chart, and they're offering a $40 deposit bonus if you deposit at least $100.
Reverse Strategy: Trading Below the 50 EMA
The strategy also works in reverse. If the price is trading above the 50 EMA, wait for it to break below. Then, look for two green candles in a row for a pullback, draw the horizontal line at the swing low, and sell when the price breaks below that line. It's the same pattern, just in the opposite direction.
Real-Life Examples
The video shows examples using the USD/CAD and AUD pairs. It walks through identifying breakouts, pullbacks, drawing horizontal lines, and setting stop-loss and take-profit levels using the Chandelier Stop. There's also an example of a trade that got invalidated because the price went back below the 50 EMA before the breakout.
Backtesting Results
The video shares backtesting results from 2020 to 2024 on the AUD/JPY four-hour chart. Out of 32 trades, 21 were profitable, giving the strategy a 65% win rate. The point is, you don't need a complicated strategy to make money; just stick to the rules.
SimpleFX Promotion Again
Another mention of SimpleFX as a good platform for beginners to test this strategy. They're offering a $40 deposit bonus for deposits of $100 or more, so you can try the strategy without risking too much of your own money.
Conclusion
The video wraps up by saying this is the strategy the creator wishes they knew when they started trading. Once you're consistently profitable with this simple strategy, you can start exploring other strategies.
