What is Monday trading Strategy
Generally speaking, the Monday strategy is designed for traders who prefer comfort since it only requires them to watch the trading platform for tradable occasions on Monday every week. The principle of this strategy is pretty simple: trying to find and take advantage of the correcting momentum by the beginning of the week. Despite the simplicity, this is a very astute technique since traders often have a tendency to end up their transactions on Friday of the previous week and start a new week trying to catch retracements. However, there are also critical risks following this strategy, especially when the market trend remains smooth and sharp as the trend is likely to continue in its way rather than halt and correct.
As mentioned above, the strategy is mostly based on price action, so it doesn’t necessitate traders to use any additional indicators.
In the ten months to October 2017, the Monday trading technique has by far generated about 2000 profit pips. There are of course four signals on Mondays of the month. If you are tired of boring and need more trading activity, you can use it as an additional system alongside another more active strategy.
Focus and discussion on one seasonal or potentially viral happening/niche that sellers should tackle. These weekly tips will span everything from little known opportunities to exploit on Merch, to clever ways to make a dent in highly competitive seasonal or viral trends.
Let have a look at some examples to see how to collect trading signals using this strategy.
How to use the strategy in Forex trading
According to the testing result, the Monday system works best on the daily chart and on the Euro – Greenback pair.
To confirm a bullish trading opportunity valid, the last day candle of the prior week (Friday candle) must be closed with a bearish body. Right after the beginning of the market on Monday, you should open a buy position in defiance of whether the market opens with a gap or not.
Conversely, to affirm a bearish trading occasion valid, the last day candle of the prior week (Friday candle) must be closed with a bullish body. Right after the beginning of the market on Monday, you should open a sell order regardless of whether the market opens with a gap or not.
Below are some important terms when using this technique:
- Only one position should be entered at a time;
- Don’t trade until the candle of confirmation is fully closed;
- Don’t trade if the previous week development shows a strong and smooth trend;
- The stop loss is established just below the last day candle low, but not less than 30 pips and no more than 50 pips. After moving about 30 pips in the expected direction, the stop loss should be trailed to breakeven;
- The exit is executed manually on Monday close;
- Given that a gap is presented, the stop loss should be set of 50 pips;
- The maximum risk for each transaction shouldn’t be more than 3% of your total balance.
If you like this strategy, you might also be interested in this Elder Force Index
Pros and cons
- Simple and easy-to-use;
- Generates highly accurate signals;
- Requires no additional indicators.
- Requires a high level of patience;
- Involves risks of a counter-trend trading method.
The Monday strategy is a technical strategy highly suitable for market participants who love to trade with fixed trading rules and timing. Despite its effectivity and convenience, we suggest that you should use it cautiously because it involves risks of a counter-trend trading method. And most importantly, always remember to use it along with risk and psychology managing methods to maximize profit and minimize risk.