Strategies

Midnight setup strategy for Forex Scalping

Thursday, November 17th, 2011 Strategies No Comments

If you are awake and available for trading the Forex Market at midnight this strategy can makes you win. Pay attention to the following details!

This strategy is based in the principle that it’s very difficult to find same size candles for 2 consecutive days on a daily chart. The main fact that it’s going to influence us from this conclusion is that prices are moving steady either up or down without producing “noise”, an element always present on smaller time frames.

Entry

The entrance hour should be at the 00:00 according to your local time or according to your trading platform. In this moment, the daily candle is newly formed and you will be able to find the highest and lowest price of the day for the previous daily bar.

If the price bar (including shadows) is less than 90 pips long we recommend not to open new trades the next day (this is a requirement for GBP/USD pair, but can be changed for other currency pairs).

If you suddenly discover that the previous day bar becomes an Inside bar you should be careful with entries the following day. While an Inside bar candle gives a good breakout opportunity the following day, it can also be a dual whipsaw breakout, the most unwanted scenario for Forex Scalping.

If anyways you decide to trade the next day you will be depending on the candle of the day before so, establish a Buy Stop order at the top (the highest price +5 pips) and a Sell stop order at the bottom (-5 pips). Over the time you will be able to adjust these additional pips s and stops depending on the currency pair you are trading with.

Exit

You should exit once that one of the orders is filled. At midnight with the new daily candle open, adjust your orders and stops according to the previous daily candle, following the same routine; keep on scalping the market until you raise +100 pips, then you can close current and enjoy the benefits of a well done job because your profits will arrive soon.

You should quickly close your current open positions (with either profit or loss) in two different cases: first of all if a daily candle becomes a Doji candle (or it’s about to become). The second occasion in which you should close your trades is if you met a Shooting Star candlestick in an uptrend or a Hammer candlestick in a downtrend.


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Best forex scalping strategies

Wednesday, February 2nd, 2011 Strategies No Comments

One of the best practices of scalping consists on the use of Fibonacci levels, a useful tool that will help us to determinate the trade direction while scalping. These levels are especially useful to analyze the market trends without caring about the size of sudden fluctuations or the lack of clarify in the possible destinations of the price.

The aim in using this strategy consists on identify the levels where the price could be rebound. For drawing the Fibonacci extension is important to identify the beginning and the end of the price movement that we want to extend.

As an example, in the five minute chart of the USD/CHF pair we can identify a sudden and sharp movement, we draw its extension after the first red bar; drawing the extension in the indicated area we will notice the 61.8, 100 and 161.8 extensions of the first movement.

Examining the chart above, we can see not only the fact that the price rebounded several times between the extension levels of the indicator, but also we can realize that these levels strongly act pulling the price towards themselves. The rest of the extension level supports the price preventing it to “fall through” twice.

The other two levels similarly created performance bars for the trend which, once broken, created further momentum for the trend. It’s not recommend to trade against the trend because of the risk of sudden reversals. Applying the Fibonacci levels we will identify the general direction of the trend and even if we register some losses, our gains will justify the trading activity.

In this example we scalp the market buying  at the red arrows shown on the chart; if we detect that the price is returning to the resistance that the level indicate us, we should stop trading until the market shows some clarity. The secret is scalping between the extension levels as long as the trend continue intact.

With the Fibonacci extension level through a reasonable degree of accuracy we can guess the main momentum of the price action and reach incredible profits.

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Scalping timings

Wednesday, December 1st, 2010 Strategies No Comments
According to the strategy that is going to be used we should choose different periods of time. The first choice that should be made is the kind of market where we would like to trade; some scalpers prefer directionless markets while others prefer strongly directional ones. This choice is very personal and also depends on the experience that the traders have, but the two kind of markets offer different trade environment where we can bear greater profit.
The trading styles respond to intuition and there are no rules about it, traders only should respect rules about money and risk management. They can combined different strategies in the same moment or pass from one to other. It is common that during the most volatile periods of trading, positions held longer than what is common with scalping can be more beneficial and prudent.
No let’s see the trading times in ET (New York time, where the biggest stock market is placed in)
  • 7:00-8:00 am
In this period European markets offer choppy conditions and traders are preparing itself for the opening of the New York market at 8 am. Mostly of the traders choose to reconsider their strategies and wait North American players to enter in the forex market. London and Frankfurt have their markets also opened but liquidity lessens as trading desks reduce gear.
This period is similar to the last two hours of working of the North American market but in a more volatile version.
  • 8:00-10:00 am
In this period the markets of New York, London, and Frankfurt are all open. A lot of new releases are issued and option expiries also take place. Due to this reasons, this period is the most liquid and volatile of the whole trading day. In this moment micro-trends begin to proliferate, markets events are been placed affecting to the forex market.
Traders now should apply their technical strategies for to exploit rapidly changing conditions
  • 3:00-7:00 pm
This period could be separate into two different phases. The first one is the period between 3pm and 7pm when the banks in USA still opened but are closing gradually until the end of the day. This period is suitable for those scalpers who want to take a little risk in volatile markets in order to get more sizable profits. The second period is between 5pm and 7pm the quietest part or the trading day, almost all the banks are closed and the trading activity is reduced. This is the perfect period for those traders who prefer clam markets and want to get great effectiveness in directionless oscillations.

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