Forex Day Trading Systems: A Comprehensive Review

If you're looking to enter the world of forex day trading, you know it can be a complex and fast-paced environment that requires sophisticated strategies. One potential solution is to rely on specialized trading systems that are explicitly designed for forex day trading.

In this article, we'll review some of the most popular forex day trading systems, analyzing their features, strengths, and weaknesses. We'll also provide recommendations for each system based on our experience and expertise.

What Are Forex Day Trading Systems?

Forex day trading systems are specialized trading strategies that attempt to identify profitable trades that are executed within a single trading day. These systems usually rely on technical analysis indicators such as moving averages, momentum indicators, or support and resistance levels to identify potential entry and exit points.

Many successful traders employ a combination of different systems, each tailored to specific trading situations. Examples of these may include the creation of 'analytical charts.' Analytical charts combine multiple technical indicators into a single chart to be used for trading purposes.

Choosing a specific trading system requires an understanding of one's trading style and risk tolerance level. While some traders may prefer a higher risk and higher reward style, others may prefer a more conservative approach that minimizes risk exposure.

The Most Popular Forex Day Trading Systems

Let's explore some of the most popular forex day trading systems in detail, breaking down their features, benefits, and drawbacks.

1. Moving Average

The moving average system is one of the oldest and most widely used forex day trading systems. This system works by calculating the average price of an asset over a specified time period. Traders often employ two moving averages, a faster one and a slower one. When the faster moving average crosses above the slower one, traders view that as a buy signal, while a cross below suggests a sell signal.

The downside to moving average systems is that they can be slow to react to sudden price movements, which can cause traders to miss out on potential gains. Additionally, it's essential to stay up-to-date on market trends to avoid getting "whipsawed" in and out of positions.

2. Bollinger Bands

Bollinger bands are another widely used forex day trading system. This system involves using three separate lines that are plotted based on the movements of asset prices. The central line is a simple moving average, while the upper and lower lines are typically two standard deviations away from the moving average.

Traders use Bollinger bands to identify whether an asset's price is currently overbought or oversold. When prices move outside the upper or lower line, traders may take that as a signal to buy or sell, respectively.

Bollinger bands can be especially useful for identifying potential changes in market trends or volatility. However, traders must be mindful of the potential for false positives, which can occur when prices fluctuate outside of the Bollinger bands but quickly return to normal levels.

3. Relative Strength Index (RSI)

The Relative Strength Index (RSI) is a momentum-based indicator system that traders often use to identify overbought or oversold markets. The RSI system works by measuring the magnitude of recent price changes to see if an asset is experiencing changes in momentum.

Traders will often look for an RSI value above 70 to identify overbought markets and an RSI value below 30 to identify oversold markets. Additionally, traders may watch for divergence between the RSI and the market price, which can provide early warning signs of a potential trend change.

The advantage of the RSI system is that it can provide accurate signals when used correctly. However, traders must be cautious not to over-rely on the system without considering other factors or indicators for strong confirmation.

4. Pivot Points

Pivot points can be used to determine the price levels that an asset is expected to encounter during the trading day. This system involves calculating a pivot point based on previous trading day data and then using support and resistance levels to provide additional price targets.

Traders can use pivot points to identify potential entry and exit points, with prices falling below the pivot level potentially signalling a short position and prices rising above the resistance level indicating a long position.

A disadvantage of pivot points is that they may not be as useful in rapidly changing markets, as they can be slow to respond to sudden price movements.

5. Support and Resistance Levels

Support and resistance levels are another popular forex day trading system that uses previous price movements to predict future asset prices. Support levels are price levels where an asset has previously bounced off, while resistance levels are the opposite, where an asset has previously been rejected.

Traders use support and resistance levels to identify potential entry and exit points, with an asset's price breaking through support indicating a short position and breaking through resistance indicating a long position.

One downside of support and resistance levels is that they may be subjective, with different traders interpreting the same chart differently. Additionally, support and resistance levels can sometimes be difficult to identify in rapidly changing markets.


Forex day trading can be a complicated and challenging environment to navigate, but the right trading systems can make an enormous difference. By choosing the right system for your trading style and risk tolerance level, you can hone in on profitable trades and minimize your risk exposure.

In this article, we've reviewed some of the most popular forex day trading systems, including moving averages, Bollinger bands, RSI, pivot points, and support and resistance levels. While no system is perfect, each has its unique advantages and disadvantages.

By fully understanding each system's features and benefits, traders can mix and match strategies to create a winning formula that maximizes profits and minimizes risk.