The 5-1 strategy was developed by the Danish day trader Hans-Henrik Nielsen from Markettimer, known for his simple yet effective strategies. The 5-1 strategy is a distinct day trading strategy. It can be used in its simplest form, but it can also be advantageously refined with additional indicators.
The strategy is applied in the German DAX index and is based on two charts, namely a 5-minute chart and a 1-minute chart. On both charts, a 10-period Exponential Moving Average (EMA) is applied.
In this situation, you wait for the moment when the price on the DAX in the 5-minute chart drops below the EMA line. At that point, you shift your focus to your 1-minute chart and are ready to execute a short trade when a 1-minute candle closes below the 10-period EMA.
The stop is now placed just above the previous high on the 1-minute chart, and the target should be at least equal to the size of the stop. If the stop is 18 ticks, one should aim for at least 18 ticks in the target, and so on. If the market moves quickly in the direction of profit, it can be advantageous to move the target downward.
The strategy can, of course, also be used to go long. Here, you look for rising highs and rising lows, while the price must now naturally break the 10-period EMA from below and up.
Hans-Henrik Nielsen also trades the strategy on longer timeframes (1-hour charts), where he combines the strategy with oversold/overbought indicators. However, on longer timeframes, the strategy requires significant experience or smaller stakes, as the impact of a single loss becomes proportionally larger on a longer timeframe.
daytrading strategies
Next Post
Tags
ABCD Patterns Andrews Pitchfork avatrade avatrade review avatrade trading broker candlestick patterns Candlesticks trading candlestick strategies candlestick trading cfd cfd trading cot reports cot trading Cup & Handle Patterns cup handle trading currency daytrade daytrading Double bottoms trading Engulfing forex forex signals forex strategies forex trading guide indicator MACD market markets markets review markets trading mean reversal trading mean reversion trading money price breaks stocks stock trading strategies technical analysis trade trading trading trends trend following trend trading
Remember that you should always trade with caution. Use ONLY money you can afford to lose. Any use of information on this page – for example, specific trading signals, investments, or trades as a result of the content on the page or in our educational sequences is at your own risk. CFDs are complex instruments and there is a high risk associated with them of losing money due to leverage. 60-80% of retail investors have losses on their account when trading CFDs with this provider. You need to consider whether you understand how CFDs work and whether you can afford to take a big risk of losing your money. NordTraders.com disclaims any liability for the results that may be caused by a reader or user using the information presented here in various ways. Leveraged trading products described on this website are not suitable for everyone. It is possible that losses can exceed your account balance. You should not trade with money you cannot afford to lose, and seek advice if you do not understand the risks. Historical returns never guarantee future returns. © 2024