Short Term Profit - Strategy for low intervals

No strategy gives us 100 the certainty of getting into a position and therefore the same wins in each position. Short term profit strategy (in brief STP) is definitely a tactic for the "impatient". The basis for entering the positions are low intervals, mainly minute ones. Based on them, we expose ourselves to greater risk than in classical strategies, while by using compound interest, profit remains in a good ratio compared to the risk of potential failure. STP therefore mainly matches daytraders. I encourage you to take a closer look at the methodology of making a position and running it.

Be sure to read: Momentum - the key to understanding price charts

Short Term Profit - structure and rules

Our base in the short term profit strategy is the use of two basic intervals. We focus on minute (M1) and five minute (M5). We view the general view of the market trend on M5. We use the 13 periodic rolling average. Two means can be used to observe the modification of this strategy. A popular variation is the use of medium in the 20 and 13 settings. The standard and modified MA version (average used in the strategy) is based on closing prices.

The second important element of the strategy is the use a stochastic oscillator (Stochastic). We use this oscillator on a minute interval to capture the right moment to enter the position. An important element is the so-called test. Stoch on our currency pair. It is worth observing at what moments the most credible values ​​take. From such very general conclusions that can be drawn from analyzing a stochastic oscillator is that in periods of price consolidation, it generates a lot of misleading signals. It works best in a particular trend, hence it is worth defining it well at the 5-minute interval.

Playing a position

We start by specifying the trend. The average 13 periodic is helpful in this, although in fact we can see it on the chart after a quick look. While the price is not moving in a specific direction, and the trend is difficult or ambiguous to determine, then we should not make any decisions.

Source: Platform xNUMX XTB

In addition, in the determination and subsequent confirmation of the trend, it is quite popular to use levels of support and resistance. Thanks to them, choosing convenient positions is easier. Thanks to this we get a certain image of the trend not only for a helpful average. At this point, we should not suggest a stochastic oscillator.

Source: Platform xNUMX XTB

In case when we can determine the direction in which the graph moves without much doubt, we can move on to the next stage. We're going down to the minute interval. At this stage, we should look for the optimal entry position. The oscillator will help you. It is based on the standard settings 7, 2, 3. Thanks to it, we can catch a few positions in the trend, thanks to which we average the entry price. In the chart below, we can capture three places. They are marked with arrows on the graph. At this stage, we will include a long position, i.e. a purchase. At the 5-minute interval, we identified an upward trend after the price of the average and the level set at the previous summit.

Source: Platform xNUMX XTB

In the classic assumption, good signals flow from a trend that lasts for a minimum of one hour. Now the main question arises. When should we keep the position? When should we close it? Generally, we should move the stop loss along with a profitable position. Usually, in this strategy we assume taking profit at the level of 5-7 pips. In the event that our transaction is profitable by 5 points, we move the SL in place of its conclusion. The position can therefore lead to its closure on the security order or directly from the "hand". Shifting SL helps to reduce the risk with simultaneous mental comfort in running a position.

Summation

When choosing a game at minute and five minute intervals, you have to take into account a fast change in the trend, and what is connected with a large amount of losses. This is not a strategy for people who have little time for speculation and a small start-up capital (although you can apply this strategy, but less effectively). It works well when we apply the method of compound interest in it, adding to the profitable position on the oscillator over / out levels. Trade is a bit automated in terms of securing the position. It is not worth trying to close each position from your hand with quick variation on minute intervals. Stop loss will be a good helper in running and controlling your position.