In the previous article I talked about the night scalping strategy on volumes. Its essence was reduced to that during the night flat (horizontal price movements in a quiet market) to catch the moment values of the indicator and to enter the market for a short period. Scalping in Forex is quite a popular method of trading. But the strategy of scalping in the volume shows that there is the possibility of earning with a quick trade in Forex, but moments of successful entry into the market may be just 3-4 for all trading session.
Below you will see another scalping strategy in Forex which can be used more often.
Scalping in Forex: quick and profitable
The essence of scalping strategy in Forex analysis price trend on the long term and in the event of apparent ascension, short-term entry into the market. In advance let me give you some baseline:
- trading platform – MetaTrader4. I think it is a one-stop professional platform, it is convenient because it is possible to download the necessary strategy indicator. Professionals can write their own, if they are familiar with programming;
- trading period is 5 minutes (scalping in Forex may provide a minute period);
- currency pair: GBP/USD.
2 classic indicators are used in the strategy – stochastic (Stochastic Oscillator – brief review can be found in this article) and Awesome Oscillator of Bill Williams. The second oscillator is essentially the same as the MACD and is based on the median price and moving averages. Indicators parameters:
- Stochastic Oscillator – (Period %K = 14, the Period %D = 7, Slow = 7, Method MA = Simpe, levels 20, 80);
- Awesome Oscillator with basic parameters (there are almost no);
- Moving Average with periods 50 and 200.
The conditions for opening a buy trade:
- open hour chart and check the direction of the global trend. Now we see that the slow moving average (period 200) is slowly rising up, a large moving average moved upwards (red line) and also has an upward trend. Therefore, the overall direction of the trend is upward;
- back at a five minute chart. Look at the stochastic indicator (blue line) must cross the level 20 from bottom to top. On the same candle look at Awesome Oscillator – it must be the green column is not below the value “0”. Preferably, the columns are long relative to previous period;
At the next candle enter the market to buy. Stop loss is fixed at a distance of 20-25 points from the opening point. Exit from the market in the trailing (rolling order, which is often used in strategies scalping in Forex”) with parameters 10-15 points.
Opening position for sale the opposite of the previous tactic:
- on the hourly chart we see that the red moving average (period 50) below the blue moving average is pointing down;
- on 5 minutes chart the stochastic blue line crossed red line down at 80, the Awesome Oscillator has a red bars above the “0”;
- on the next candle enter the market.
I do not recommend to enter the market, if the value Awesome Oscillator columns is relatively small at or near the end of the session. You cannot log in to a deal to sell if the column is green (or red for a long position).
This strategy of scalping in Forex trading can be interesting for beginners, although scalping is not recommended for beginners. The reason – you need experience of market surveillance. However, you can disprove this thesis using this strategy.