Low Spread Scalping Strategies

February 22, 2017 16:34

Dear Traders,

I've already explained why it's important to exploit the advantage of low spreads. It's also good to know that there's a strategy to use while you scalp with low spreads which may provide you with many opportunities during the day.

A currency pair may move 25 pips long or short for a minute, then pull back 10 pips the next minute, oscillate at this level for another 5 minutes, and make another strong 25 pip move over the next ten minutes. This is usually a minor move in Forex, occurring over a matter of minutes, and this is what you, as the scalper, are after.

We'll cover two strategies for scalping pairs that have their spreads lowered. But first, let's discuss why it is so important to get educated on scalping.

Of course, scalping wouldn't be nearly as popular if it didn't provide benefits, mainly:

  1. The possibility to achieve a greater level of profit than you can by merely making positional trades.
  2. No waiting around for a strong trend to develop.
  3. Many trading opportunities.
  4. No pressure to analyse the overall market.

On the other hand, scalping also has some disadvantages, including:

  1. A lower margin for mistakes.
  2. Too many 'good' trades leading to overconfidence.
  3. Exhausting at times.
  4. The risk of overtrading.
  5. Greater level of loss.

Strategy Number One – Extreme Scalping

Indicators:

  1. Bollinger Bands (20, 3).
  2. Exponential Moving Average (3), close
  3. MACD Histogram (6,17,8)
  4. Relative Strength Index (14) with 50 level.

Timeframe: 1 min

Pairs traded: EUR/USD, GBP/USD, USD/JPY, USD/CAD

Long entry:

  • Wait for the 3 EMA to cross up through from the 18 Bollinger Bands middle line
  • Wait for the Relative Strength Index and MACD Histogram to line up above 0 on MACD and above 50 on RSI.

Short Entry:

  • Wait for the 3 EMA to cross down through the 18 Bollinger Bands middle line
  • Wait for the Relative Strength Index and MACD Histogram to line up below 0 on MACD and below 50 on RSI.

Stop Loss:

  • Place stop loss for long trade few pips below lower band
  • Place stop loss for sell few pips above upper band.

Take Profit:

  • Place profit target on opposite band
  • Average target is 5-15 pips.

scalping

Strategy Number Two – Gold Trading Strategy

For this strategy, I strongly recommend downloading MT4 Supreme Edition as it incorporates strong Admiral Pivot indicator that is used in this strategy.

Indicators:

  1. Exponential Moving Average (5), close
  2. Exponential Moving Average (10), close
  3. Stochastic Oscillator (8,3,3)
  4. Relative Strength Index (14) with 50 level.

Pairs traded: GOLD

Long entry:

  • Price should be at or very close to Admiral Pivot support (S1, S2, S3) or slightly above Pivot Point (PP)
  • Wait for the 5 EMA to cross above 10 EMA
  • Stochastic should have recently crossed 20 from below
  • RSI above 50.

Short Entry:

  • Price should be at or very close to Admiral Pivot resistance (R1,R2,R3) or slightly below Pivot Point (PP)
  • Wait for the 5 EMA to cross below 10 EMA
  • Stochastic should have recently crossed 80 from above
  • RSI below 50.

Stop Loss:

  • Place stop loss for long trade below previous support
  • Place stop loss for sell trade above previous resistance.

Take Profit:

  • Place profit target close to next pivot.

gold chart.jpg

Pro tips:

  • When taking long trades, it is always best to see that stochastics has just crossed above 20 from below.
  • When taking short trades, it is always best to see that stochastics has just crossed below 80 from above.
  • Using Profit Stop is advised after a trade has gone in profits.
  • Download award-winning MT4 Supreme edition
  • Use VPS

If you have any questions, please don't hesitate to ask us in the comment section below.

MT4 Supreme Edition + Volatility Protection

Cheers and safe trading,

Nenad Kerkez

Senior Analyst

Admiral Markets



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