My Forex Scalping System Revealed
December 24, 2009 by Kelvin
Filed under Forex Tutorial
Forex scalping has become more and more popular among new traders. This is because forex scalping tactics allows the trader to see fast profit sometime within less than 20 minutes of trading and this is what entices some traders.
Although scalping the forex market can see quick profit, it can also amount to quick loss if you do not execute it with proper analysis. Due to the scalping nature of your trade as a scalper, you can enter several trades within 1 hour and it can amount to a sizeable loss if you have consecutive loss trades.
Here are the forex scalping analysis you can do:
1) Mark out the important support and resistance levels, typical support and resistance levels are
- Fibonacci 0.618, 0.5. 0.328
- Pivot Point S3, S2, S1, PP, R1, R2, R3
- Previous high will be your current resistance and previous low will be your current support.
2) Use oscillating indicators like stochastic or RSI or even MACD can help you to time your entry more accurately.
- If you are looking to SELL, you should try your best to wait for the oscillating indicator to go overbought and start to curve down.
- If you are looking for BUY, you should try your best to wait for the oscillating indicator to go oversold and start to curve up.
Besides timing your entry, these oscillating indicators can also help you to time your exit.
- If you go SHORT, you should be looking to exit your trade when the oscillating indicator reaches the oversold zone.
- If you go LONG, you should be looking to exit your trade when the oscillating indicator reaches the overbought zone.
3) Confluence of Events – In trading, we should also wait for confluence of events to happen before we enter or exit a trade. Confluence of events refers to the situation where two or more conditions to enter a trade or exit a trade happen together. This can gives you more confident and assurance in the trade.
- The best long entry point is when the price hits the support level with the oscillating indicator reaching the oversold zone and start to curve up.
- The best short entry point is when the price hits the resistance level with the oscillating indicator reaching the overbought zone and start to curve down.
Above are the forex scalping system I have been using. Although some of you may be thinking that it is a simple strategy and may even wonder if it can make you money, you need to know that the most profitable strategy are those that are easy and simple to execute.
I do not encourage you to start trading this strategy immediately and I actually hope that you have the habit to try out new strategy on DEMO account and master the way to execute it before trading LIVE with it.
For more information on forex indicator, you can browse around this blog.
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Fibonacci 0.618, 0.5. 0.328 <> where is point A ( highest point ) and where is point B ( lowest point )
A,B is the point of yesterday ? or …
please help
thanks
Hi Boyxx
If you are trading off the 5 minutes chart, the highest and lowest point will be from that particular chart. Usually I will take the A and B of the most recent major swing highs and lows, the best way to know if you have drawn the right fibonacci levels is to look at the price movement at the 0.618, 0.500 and 0.382 levels. If you see the price being support or resisted by these levels, you have drawn the right fibonacci levels.
Kelvin, How do you plot a “Pivot Point?” I do not see that anywhere in the Metatrader 4 or any other platform..and what is S3, S2, S1, etc. Thanks for your help…Joe.
Hi Joe
If you are not sure about the pivot point system, you can read up on it here
http://www.forexindicator.org/forex-pivot-point-trading-tutorial.html
Whether you are able to plot the pivot points or not depend on the trading system you are using. If your MT4 platform do not have the feature, you can do a manual plotting. All you need is to collect the previous day open, high, low and close value of the currency pair you are interested in and then plot it into a pivot point calculator which you can find easily online and it will automatically calculate the value of S1, S2, S3, Pivot, R1, R2 and R3 for you.
Next you simply have to plot it on your trading platform and you are ready to use it.
I am just a small account short timeframe trader. I found your website the most true and honest forex site I have ever been on. I am gratefull that you are unselfishly sharing your vast knowledge and experience with us. I have already used some of your advice on the five and one minute timeframes, amazing stuff. I look all the time also at the higher timeframe(15 minute) to see if am with the trend.
Thank you my friend. Giliam
Hi Giliam
Thks for visiting my site. You are right to always understand the trend you are in before you enter any trade. Wish you all the best in your trading and hope to have you around here.
what’s the ideal time frame?
Hi Sebastian
If you are planing to be a scalper, you should be using the 15 minutes chart to have an understanding of the market trend and then move down to the 5 minute chart to do your analysis. Once you have identified a good trading opportunity, you should move down to the 1 minute chart to look for the best entry and exit position.
Hi, what is your stop loss with this scalping strategy? Thanks.
Hi Alex
Depending on the volatility of the currency pair you are trading, you should place your stop loss amount differently. If you are trading a low volatility pair, your stop loss can be 20 pips above a major resistance if you are in a short trade or 20 pips below a major support if you are in a long trade.
If the currency pair you are trading is very volatile, the stop loss has to be higher as you need to give the market some space to move.