3. Strategy “Scalping by Trend”

Unlike previous strategies, the essence of this trading method is to open a series of deals, catching the beginning of a trend. Theoretically, it would be possible to open one deal and keep it in the market until the trend reverses, but scalping is also earnings on kickbacks/corrections. In addition, this strategy allows you to earn on short trends.

Indicators used: classic stochastic and “Awesome Oscillator”. To analyze the trend line on the hourly interval, two moving ones are used.

  • The advantage of the strategy for beginners:
  • a good practical example of how you can make money by scalping using an additionally larger timeframe.

The currency pair is GBP / USD, the main trading time interval is M5, the auxiliary one is H1. Trade is conducted in the European session. You can download the strategy template.

Indicator Settings:

  • Stochastic:% K – 14,% D – 7, Slow – 7, Moving method – Simple, levels – 20 and 80 (basic).
  • Wonderful oscillator: we leave all the settings as basic.
  • SMA 1: period 50 (red line), Apply to – Close.
  • SMA 2: period 200 (blue line), Apply to – Close.

Conditions for opening a long position:

  • Analysis of the chart with the H1 timeframe. The direction of both slidings is up. The red sliding should be above the blue.
  • Analysis of the chart with the M5 timeframe: the stochastic was in the oversold zone (between levels 0-20) and on the signal, the candle comes out of it. Awesome Oscillator draws a green column below level zero.

The more vertically the stochastic leaves the oversold zone, the more accurate the signal. After all the conditions on the next candlestick are met, you can open a deal. The target profit is 10-15 points, the stop can be put the same or a little more.

Conditions for opening a short position:

  • Analysis of the chart with the H1 timeframe. The direction of both slidings is down. The red sliding should be below blue.
  • Analysis of the chart with the M5 timeframe: the stochastic was in the overbought zone (between levels 80-100) and exited from the signal candle. Awesome Oscillator draws a red column above level zero.

The conditions for opening a transaction are similar. If the trend is steady, you can open a series of deals.

4. Scalping trading by levels

Trading by levels provides two options for the development of events: a breakdown of the channel border with the appearance of a strong trend or a rebound from the border (support/resistance level) and a return to the middle of the channel, that is, to the equilibrium level. This is an ideal scenario. In practice, everything can be a little different:

  • A breakdown of the channel boundary may turn out to be an inertial price movement and a bet on a new trend will be erroneous – the price will turn into the channel after a slight movement
  • The movement inside the channel can also be chaotic. After a rebound from the border, the price does not manage to reach the middle (and even more so to the opposite border) and reverses.

For a channel intraday strategy, all these are risks. But just not for scalping, which allows you to earn money both on the breakdown of the channel and on intra-channel oscillations. The levels, in this case, serve as a target, allowing at least approximately to suggest potential pivot points within the channel.

The strategy is based on the creation of a “moving envelope”, in which the price will return. The probability of a breakdown of the extreme boundaries of the channel will help determine stochastics, the internal levels will be built according to the Fibonacci levels. Stochastic in this case will play an auxiliary role, moving and levels with coefficients 61.8; 161.8; 261.8; 361.8 are combined into one indicator – MaEnv, which you can download. Moving averages in the indicator are constructed by summing 3 LWMAs with periods of 30, 50 and 100, weighted by the closing price.

  • Beginner Strategy Advantage: A great combination of scalping and channel strategy.

Timeframe – M5 (5 minutes), pair – EUR / USD. MaEnv settings do not change. Stochastic settings:% K – 14,% D – 3, Slow – 3, Prices – Low / High, moving method – Simple. Levels are standard (20, 80).

Conditions for opening a long position:

  • The candle closes under the red line.
  • While the price is below the red line, the oscillator goes down into the oversold zone (below the 20th level).
  • Both price and stochastic should be below the red line for no longer than 10 candles.
  • Price rises above the red line.

After closing the candle above the red line, open a deal, ensuring it with a stop of about 10 points. We exit the market after reaching the orange line (Fibonacci level – 61.8).

Conditions for opening a short position:

  • The candle closes above the red line.
  • As long as the price is above the red line, the oscillator rises to the overbought zone (above the 80th level).
  • Both price and stochastics should be above the red line for no longer than 10 candles.
  • Price drops below the red line.

Market exit conditions are similar. The remaining lines are auxiliary, but if there is a price reversal and profit has already paid off the spread, close the deal and wait for the next price to go beyond the envelope. If the price for a long time is between the red and blue lines (from 8-10 candles and longer) or outside the red line, we do not enter the market.

Conclusion High-frequency trading is one of the strategy options suitable for both currency pairs and CFDs for other assets. Scalping is convenient in flat and when there is no directional trend. Someone considers it highly profitable, someone highly risky. In any case, before trading with scalping, any strategy needs to be honed on a demo account. I hope this practical case study has helped you answer the questions. If not, write them in the comments and together we will try to answer them. I also invite you to discuss in the comments the best optimal scalping strategies or share them with beginners! Good luck with your trading!

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