SIMPLE and PROFITABLE Forex Scalping Strategy!

Summary

This video explains a simple, high-probability 5-minute scalping strategy for trading the financial markets. The strategy is based on using moving averages to confirm trend direction on higher timeframes, followed by precise entries on the 5-minute chart after a pullback. The presenter outlines clear rules for entering and exiting trades, including risk management with stop-losses and take-profit targets. Viewers are also invited to test the strategy with no financial commitment through live trading sessions, providing hands-on learning opportunities.

Takeaways

• 😀 Scalping is a trading strategy where you enter and exit the market quickly, aiming to make small profits multiple times a day.
• 😀 A five-minute scalping strategy is based on trend-following, focusing on the shorter timeframes while confirming the trend direction with higher timeframes like the one-hour chart.
• 😀 The strategy uses two exponential moving averages (EMAs) to determine the market trend: the 8 EMA and the 21 EMA.
• 😀 You can only trade in the direction of the predominant trend, confirmed by the position of price relative to the EMAs (above for buys, below for sells).
• 😀 The core of the strategy involves looking for pullbacks to the 8 EMA on the five-minute chart, which acts as the trigger for entry.
• 😀 Entry is confirmed when the price touches the 8 EMA and does not close above the 21 EMA. A valid entry occurs after a pullback to the 8 EMA.
• 😀 After the trigger bar, look back five candles to identify the lowest (for sells) or highest (for buys) point. This determines the entry point, which is three pips beyond the identified level.
• 😀 Always set a stop-loss three pips above the trigger bar for a sell trade (or below for a buy).
• 😀 First take profit target (TP1) is set at 1x risk, exiting 50% of the position. The remaining 50% is moved to break-even.
• 😀 The second take profit target (TP2) is set at 2x risk, and the trade is exited once that target is hit.
• 😀 As an alternative, you can use a trailing stop after hitting TP1. This allows you to capture more profit if the trend continues strongly, by trailing behind the lowest (for buys) or highest (for sells) of the last three candles.

Q & A

What is the focus of the five-minute scalping strategy presented in the video?

The five-minute scalping strategy focuses on quick in-and-out trades using short timeframes to capture small profits. The goal is to enter and exit the market quickly, typically targeting 10-20 pips per trade.

What are the two main methods of exiting trades in the presented strategy?

The two methods for exiting trades are: 1) Exiting at predefined take profit levels, where 50% of the position is closed at the first profit target, and the remaining 50% is moved to break-even and targeted for a second profit level. 2) Using a trailing stop, where the stop is moved behind the lowest or highest point of the last three candles, depending on whether the trade is long or short.

How do you confirm the trend direction for the five-minute scalping strategy?

The trend direction is confirmed using a higher timeframe (anchor chart). For example, if trading on the five-minute chart, the anchor chart is the one-hour (60-minute) chart. You look at the 8 and 21 exponential moving averages (EMAs); if the 8 EMA is above the 21 EMA, the market is in an uptrend, and vice versa for a downtrend.

What is the purpose of using moving averages in this strategy?

Moving averages are used to identify the trend direction and potential entry points. The 8 and 21 EMAs on the higher timeframe (anchor chart) confirm the overall trend, while the 8, 13, and 21 EMAs on the five-minute chart help identify pullbacks during the trend.

What is a trigger bar in the five-minute scalping strategy?

A trigger bar is the candle that touches the 8 EMA on the five-minute chart after a pullback. It signals a potential entry point, and the trade is considered valid as long as the price does not close above the 21 EMA.

How do you calculate the entry price after identifying a trigger bar?

After identifying the trigger bar, you count back five candles to find the lowest low (for sell trades) or the highest high (for buy trades). The entry price is then placed 3 pips beyond this low or high, depending on whether you're entering a short or long trade.

What is the stop-loss placement in this scalping strategy?

The stop-loss is placed 3 pips above the trigger bar for sell trades and 3 pips below the trigger bar for buy trades. This ensures the stop is tight, minimizing the risk of large losses.

What is the first take-profit target in the strategy, and how is it determined?

The first take-profit target is set at a level equal to the initial risk. This means the target is positioned 1 times the risk distance from the entry price. When the price hits this target, 50% of the trade is closed.

What should you do with the remaining position after reaching the first take-profit target?

After reaching the first take-profit target, 50% of the position is closed. The remaining 50% is moved to break-even (entry price), and you can then set a second take-profit target at 2 times the initial risk.

What is the purpose of backtesting this scalping strategy?

Backtesting is important to understand how the strategy performs in various market conditions. It helps build confidence, prepares the trader for possible losing streaks, and ensures the strategy works as expected before using real money in live trades.