A low-risk approach for better profits; one-minute forex scalping strategy
A low-risk approach for better profits; one-minute forex scalping strategy
Scalping is not an uncommon term in the world of forex trading. You might have come across scalping strategies at least once, even if you are a newbie in this field. The end goal of scalping is to make a small profit through the small price movements, which are common throughout the day. A forex scalper buys or sells an asset and then holds it for a short period to generate the profits. However, you will have to be willing to dedicate a few hours of a day if you plan to step into this strategy. A 1-minute scalping strategy is an approach that needs a bit of time and concentration put into to be successful despite the name having the words 1 minute on it.
Number of exponential moving averages (EMA)
This forex scalping strategy, like many other of its kind, relies on exponential moving averages. An average trader typically uses two or more moving averages to gain a general trend of price movement. This helps to better understand the main direction and to trigger more precise entries or exits in the market. Our strategy uses three moving averages to monitor short, medium, and long-term market trends. This allows us to estimate the trend’s intensity from multiple time frames.
one-minute forex scalping strategy
This is a 1-min chart of Euro-Yen with the three exponential moving averages: the 50, 100, and 150-period averages.
The 50 period EMA shows us the short-term trend while the 100 and 150 periods EMAs show the medium and long-term trends. Using longer-term EMAs somewhat eliminates the inevitable market noise. But you don’t have to use this exact setup. Any number of ema combinations can be used here. The types of Entry setups you are looking for, and the timeframes you are trading are the factors that determined that. So, feel free to use Every other moving averages.
If you look at the first part of the chart, you will notice that the price stays above the 50 periods EMA the entire time. The fact that all three EMAs are trending higher at around forty-five-degree angles during the first part of the chart is significant. Here all three moving averages are in agreement, in line, almost parallel, with strong trend consensus. This is the kind of behavior we’ll look for on our chart.
In the mid part of the chart, the price eventually brakes and falls below the 50 periods EMA. This signals a short-term weakness, but it soon resumes the uptrend at the 100 periods EMA. This confirms the medium- and long-term strength of this chart. The strength of the trend will always remain intact until the price breaks below the 150 periods EMA.
After we identified the main direction of the chat, we need to wait for a pullback to locate undervalued and overvalued entries into the established trends. Our goal here is to find opportunities when the price is considered overvalued or undervalued, as this presents excellent opportunities to “buy low in uptrends, and sell high in a downtrend.”
The goal of the pullback trade is to take advantage of situations when all three moving averages are indicating the same direction. The price is in an established trend, either bullish or bearish. Any pullback to the first or second EMA offers a buying or selling opportunity. This setup is effective because it makes you buy below the price and sell the above price while keeping you disciplined to the current trend.
How to enter a trade?
The vital part of entering a trade is to identify the current trend of the market. All three EMAs must be trending in agreement in a bullish or bearish manner. A slope ranging from 30 to 60 degrees is enough. But it is much better if all three EMA’s trending at a 45-degree angle. That kind of slope identifies a strong trend.
The next step involves waiting for the market to show a pullback towards either the 50 or 100 periods EMA. As said before, price should go down beyond the 50 periods EMA, but make sure it doesn’t go too low beyond the 100 EMA. It must go below 150 EMA. Once the price moves beyond either of the moving averages, we need price confirmation. The entry should happen when the price moves back in the direction of the current trend, just beyond the 50-period EMA.
How to manage the trade.
Many exit tactics can be used for the pullback trade. The room for error is tiny when you are scalping as you are trading with high leverage while looking for a small profit.
one min forex scalping strategy
The ugly truth about scalping is that it’s unpredictable, and any price swing can hit your stop loss. It is better to move your stops to break-even as soon as possible to diminish your risks. When this is done, you will get stopped out a lot at break-even, but it’s always better to have several trades in a row with zero profit, than the same number of losing trades. This is also why it is wise to look to play the break-even trade when you are 5 to 6 pips in profit. There is a good chance that the market will hit your stop loss and continue in your initial direction when you have 5 pips in profit. However, this will protect you in the long run and save you more than you could have lost.
one minute easy forex ema strategy
Yet, if you have a more significant risk aversion, having a traditional trailing profit stop and a fixed profit target as well as exiting at the next support and resistance levels, or at a fibo extension if you trade with fib numbers, are other tactics you could use too.
forex one min scalp strategy
This is a chart where all the three EMA’s are trending lower at 45-degree angles is a good example of choosing a currency pair during a strong trend. As mentioned before, this behavior of EMAs show the strength of the trend, and trading in the direction of such an established trend increases your chances for a profitable outcome. We should wait for the price to break above the 50 EMA in order to have a much profitable “sell” in this chart. Once price dips above the first EMA, we look for price to close back below the 50-period average in order to trigger a long position, which occurred several times in this chart. You can use any period moving average you like to manage your trades here too. You could and should adapt the period of the EMAs to fit your style of trading.
How does this strategy work?
We do this scalping strategy by merely waiting for the price to come up or go down as of the direction since it went below the 50 EMA. But many other traders, especially the novice ones, immediately short the market when they see the price closing below the 50 EMA as they don’t care about the general trend. They are the reason we wait for the price to return above the 50 EMA. We want to have trapped traders below us, to fuel our long positions. The stops of the traders shorting below the 50 EMA are above the 50 EMA. So, when the price returns above the moving average, our scalping trade gets an extra boost from the stop of trapped traders. So, what we do here is taking advantage of those novice traders who are shorting the market below 50 EMA.
Things to keep in mind
• Being impulsive is one of the most undesirable traits for forex scalping. One should always improve their self-discipline and self-control before entering the world of scalping. The line between scalping and gambling is fragile. It is common to see excited traders on a winning streak abandoning their own rules in pursuit of fast money and lose everything.
• Scalping needs solid risk management. It is one of those trading methods that are often performed with a bad risk-reward ratio. The market provides many opportunities to enter high probability setups that can make high profits for a scalper. But this trading style could also wipe out profits of days and weeks with ease. So, it’s better not to risk more than 0.5% of your total balance. Remember, it’s not 5% but 0.5%.
• Keep your lot sizes lower. Small lots help you to keep losses down until your trading improves and is consistently proﬁtable. The smaller the forex lot size you have, the lower the risk you will face. You could always increase your lot with the experience you gather.
Scalping has been proven to be an extremely effective strategy where risks are low, but the profits are frequent. Yet, it is vital to understand that scalping is not easy work. Scalpers are rewarded according to their amount of efforts. To be successful in this strategy, it is important to be sure whether it matches your trading style and abilities.
The two indicators we are going to talk about here are found to be very well working when used side by side. This Forex trading system is an another simple discovery; and hundreds of such discoveries can be made when traders are there to learn and experiment. Any currency pair and time frame can be used.Indicators: Parabolic SAR default settings (0.02, 0.2), ADX 50 (with +DI, -DI lines) Entry rules: SELL When the +DI line is below the -DI line, and Parabolic SAR gives sell signal. When the +DI line is above the -DI line, all Parabolic sell signals must be ignored. Entry rules: BUY when the +DI line is above the -DI line, and Parabolic SAR gives buy signal. When the +DI line is below the -DI line, all Parabolic buy signals must be ignored. Exit rules: when +DI line and -DI lines have crossed again. Advantages: allows filtering entries and predicting good exits. Disadvantages: Both Parabolic SAR and ADX are follow-up indicators. Although they complement each other very effectively, the “weakest” in chain is ADX, because during trading it can give one signal, but later change to the opposite. Once given a signal from ADX, waiting for the current price bar to close to avoid such misleading is advised.
The RSI trading indicator is a price momentum measure that also uses overbought and oversold zones to show when markets may be overextended. It makes up many trading methods and we are going to use it with our 5×5 RSI Trading System. RSI = Relative Strength Index The RSI, although referred to as “index” is not really an index so the name is a little misleading. Just think of the RSI indicator as an oscillator that measures momentum over a set period (look back period) and will indicate when the momentum has pushed price to far in one direction (oversold/overbought). Oversold And Overbought Oversold is a term that is used when price is deemed to have fallen a certain distance away from the average price. This is a condition that is measured by the RSI dipping below level 30 on the indicator and is used in conjunction with a trading setup, usually a buy signal. Overbought is the opposite of oversold. When price has risen a distance from the average price, it can be deemed to be overbought and the RSI will be above the 70 level. Depending on the trading system, when the RSI is above the 70 level, the strength of price is considered to have been strong and a reversion is expected. This will set up a sell signal for most RSI trading systems. What Does “5X5” Stand For? Quite simply, it makes up the settings for the two trading indicators that will be used in the strategy: 5 period lookback setting for RSI – We will use levels 30,50,70. 5 period simple moving average (SMA) Other initial details about the trading strategy: Time Period – Any time frame can be used including short term for day trading or longer term charts for a swing trading approach with the 5X5 RSI trading system. Currency Pairs – You can use any Forex pair you like however keep spread costs in mind if considering trading the exotic currencies. How To Trade The 5X5 RSI Trading System – Forex Example Here are a few notes before you get to the rules of the Forex trading system: the 5 SMA Indicator is for determining trend direction if the price is is above the 5 sma, it is deemed an uptrend or downtrend if price is below the 5sma. the RSI is used as a confirmation Here is a sample buy signal RSI TRADING SYSTEM – BUY SIGNAL SETUP Buying Rules: Price closes above the 5 period SMA and is an obvious bullish candlestick RSI is above the 50 level. If this is the first cross over after a downtrend, that’s even better. Place a buy stop above the bull candle Place your stop loss about 5 pips below the low of the candlestick depending how your risk parameters. You can set profit targets, trail stop once price moves in your favor. Many ways to take profits. The sell signal is opposite that of the buy set up just discussed. RSI trading method short trades Sell Signal Rules: Price closes below the 5 period SMA and is an obvious bearish candlestick RSI is below the 50 level. If this is the first cross over after an uptrend, that’s even better. Place a sell stop below the bear candle Place your stop loss about 5 pips above the high of the candlestick depending how your risk parameters. You can set profit targets, trail stop once price moves in your favor. Many ways to take profits. Using RSI To Trade – Important Points About This System Remember that the RSI is a trading indicator, will lag price, and although objective, price action trading can help improve this system. Using price movement, especially how strong the candlestick closes, can bump up the edge you can have. You want to see strong closes or, as shown in the sell signal at #1, using price patterns such as inside bars and break from compression can help improve the system. If you chose to take more trades after the original trend change trade, you may want to see that the RSI indicator has dipped into oversold or overbought territory. This often times will set up a pullback in the price that can aid in triggering another trade depending on how deep price moves. Use stop orders for your entries as this will show that at least in the short term, momentum is in your favor. There may be times that the candlestick that gives the buy or sell signal is quite large. Either reduce position size or wait until there is a pause or retrace in price. There will be times that the RSI flips back and forth over the 50 line. This indicates choppy price action and you may want to highlight that price action with lines to show a pattern break. RSI AND CHOPPY PRICE ACTION Regardless of the time period you trade, you will run into issues such as price action that indicates chop. You do not want to implement this strategy during those times. Use standard price patterns to contain price movement and wait for the break of the price pattern to occur. Once the break occurs, return back to the rules for the RSI trading system
1.The last two weeks has had very fast price action in both directions. Moves that use to take weeks now takes days. 2.Last week was up on good volume comparative to normal daily volume. 3.Last week $SPY recovered from one of the quickest corrections in history as price closed back over all key moving averages. The 100 day sma, 50 day ema, and 10 day ema were all retaken after bouncing near the 200 day sma the previous week. 4.The chart is still under a bearish MACD cross under but is trying to reverse. 5.The average true range stays escalated at 4.6 with the big move back to the upside. 6.RSI is showing a swing to upside momentum at a reading of 51.62. 7.In the past two weeks $VIX crashed from 50 back to 19.46 one of the biggest plunges in volatility since 2008. 8.The last three days $SPY has made higher highs and higher lows . 9.All sector ETFs reversed off lows last week. Appearing to be setting up the market for a swing higher. 10.The 10 day ema / 50 day ema crossover is one signal I am looking at for additional long positions in $SPY and $SSO. My current positions after buying the reversals from lows are $BIB $ERX $AAPL $QLD & $UTSL.