Best Scalping Strategy For Day Trading Forex (with backtest)

Summary

In this video, the presenter shares a high win rate scalping strategy for Forex day trading, focusing on the 30 and 200 EMA applied to a 15-minute chart of the euro-dollar. The strategy outlines clear steps for both long and short setups, emphasizing trend direction and entry points based on pullbacks. Important tips include managing risk, avoiding trading during economic releases, and setting daily profit/loss goals. The presenter also discusses how to maximize profits by closing part of the position at the initial target and moving the stop loss to break even. Additional resources for identifying trends and swing trading are provided.

Takeaways

• 😀 This scalping strategy utilizes the 30 EMA and 200 EMA on the 15-minute chart of the euro dollar for effective trading.
• 📈 A long trade setup requires price to be above the 30 EMA and the 30 EMA to be above the 200 EMA, indicating an uptrend.
• 🔄 For a long entry, look for pullbacks towards or below the 30 EMA and draw a trend line above the pullback.
• ⚠️ If price closes below the 200 EMA during a pullback, cancel the trade setup.
• 📉 A short trade setup requires the price to be below the 30 EMA and the 30 EMA to be below the 200 EMA, confirming a downtrend.
• 📝 For a short entry, draw a trend line below the pullback and enter the trade when price closes below this line.
• ⏳ Avoid trading in ranging markets where the 30 and 200 EMAs are parallel or crossing, as it can lead to false signals.
• 🚀 To maximize profits, consider closing half of your position when the initial profit target is hit and adjust your stop loss to break even.
• ⚖️ Always manage risk by not risking more than 1% of your account on any single trade to protect against losses.
• 📊 Utilize the provided TradingView script for backtesting the strategy over a significant period to analyze its performance.

Q & A

What is the main focus of the video?

The video focuses on a high win-rate scalping strategy for forex day trading, specifically using the euro dollar (EUR/USD) and applying the 30 and 200 EMAs on a 15-minute chart.

What are the primary indicators used in this trading strategy?

The primary indicators used in the strategy are the 30-period Exponential Moving Average (EMA) and the 200-period EMA.

How do you identify a long trading setup?

To identify a long trading setup, the price must be above the 30 EMA, the 30 EMA must be above the 200 EMA, and both EMAs should be pointing upward and spread apart. A pullback towards or below the 30 EMA should be observed, followed by a trend line drawn above the pullback.

What are the entry and exit points for a long trade?

You enter a long trade when the price closes above the trend line drawn after the pullback. The stop loss is placed below the swing low of the pullback, and the take profit is set at two times the stop loss, creating a risk-reward ratio of 1:2.

What conditions indicate a short trading setup?

For a short trading setup, the price must be below the 30 EMA, and the 30 EMA must be below the 200 EMA, indicating a downtrend. A pullback towards or above the 30 EMA should occur, followed by drawing a trend line below the pullback.

What should you do if the price moves above or below the 200 EMA?

If the price moves above or below the 200 EMA, it cancels the current trade setup.

What are the risks of trading during economic releases?

Trading during economic releases can increase volatility and lead to significant price swings, which may adversely affect trades, especially in a scalping strategy.

What is the suggested maximum risk per trade?

The video recommends not risking more than 1% of your account on any single trade to manage risk effectively.

How can a trader improve their profitability using this strategy?

To improve profitability, a trader can close half of their position once the initial profit target is reached and move the stop loss to break even or into profit, allowing for potential larger gains without additional risk.

What key points should traders keep in mind for consistent profitability?

Traders should avoid trading during economic releases, manage their risk appropriately, set daily profit and loss goals, and follow a clear trading plan with defined take profit and stop loss targets.