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Simple Forex Scalping Strategy Using 288 EMA And Stochastic Indicator

Simple Forex Scalping Strategy Using 288 EMA And Stochastic Indicator

This Forex Scalping Strategy is a unique Scalping Strategy which you won’t find anywhere else on the internet. It could easily be used as a Profitable Day Trading Strategy.

This Forex strategy uses a combination of Market and Limit Orders to get the most out of the market. Everything will make sense one you have gone through the entire strategy.

Recommended Time frame: 5 Minute Only

Currency Pairs: GBPUSD, AUDUSD, EURUSD, USDCHF

Indicators Used: Stoch (16,3,3), EMA 288, LMA 288 (Linear Weighted Moving Average)

Levels Marked on Stoch: 5,10,15,20 & 80,85,90,95

Simple Forex Scalping Strategy Buy Entry Rules:

Simple Forex Scalping Strategy Using 288 EMA And Stochastic Indicator

Condition 1: LMA 288 is above EMA 288 ( This will give us the main trend, which would be Upwards now)

Condition 2: For The first trade in the Buy Cycle we will use the Level 20 on Stochastic for Trade entry decision( if there is no buy trade running already). When the Stochastic IS below Level 20 and the last candle close is below LMA 288 , we will enter a Buy Market Order. For every buy trade we open we will move the Stochastic entry line below by 5. So our next entry level for next Buy trade would be 15. For every new Buy Trade after the first buy trade Stochastic should have first retraced above Level 20. Now for the second trade the Stochastic should now BE BELOW level 15 and the last candle close is below LMA 288. But at this time we will not enter a Market Order but a Buy Limit Order placed at 5 pips away from the close of the last candle. At maximum we will only take 4 Buy trades at Stochastic levels 20,15,10,5 respectively by following the above conditions. First Buy Order will be the only Market order. Rest all will be Limit Orders.

Simple Forex Scalping Strategy Sell Entry Rules:

Simple Forex Scalping Strategy Using 288 EMA And Stochastic Indicator

Condition 1: LMA 288 is BELOW EMA 288 ( This will give us the main trend, which would be Downwards now)

Condition 2: For The first trade in the Sell Cycle we will use the Level 80 on Stochastic for Trade entry decision ( if there is no Sell trade running already). When the Stochastic IS ABOVE Level 80 and the last candle close is ABOVE LMA 288 , we will enter a Sell Market Order. For every Sell trade we open, we will move the Stochastic entry line above by 5. So our next entry level for next Sell trade would be 85. For every new Sell Trade after the first Sell trade ,Stochastic should have first retraced below Level 80. Now for the second trade the Stochastic should now BE ABOVE level 85 and the last candle close is ABOVE LMA 288. But at this time we will NOT enter a Market Order but a Buy Limit Order placed at 5 pips away from the close of the last candle. At the maximum we will only take 4 Sell trades at Stochastic levels 80,85,90,95 respectively by following the above conditions.

First Sell Order will be the only Market order. Rest all will be Limit Orders.

Now one part of the strategy has been achieved (getting your trades open as per the strategy). But ‘managing your open trades‘ is perhaps one of the most important and neglected aspects in Forex Trading. In my opinion it is more important for a strategy to put an equal emphasis if not more on managing trades rather than just working to find the best positions to enter.

No doubt you can enter at the best possible points but if you get out of your position too early or wait too long to exit it could all lead to a negative result in contrast to what could have been a positive outcome.

Simple Forex Scalping 288 EMA Strategy Strategy Buy Exit Rules

  • Set Take Profit For First Buy Trade in Buy Cycle: 10 pips
  • Set Take Profit For Second Buy Trade in Buy Cycle: 20 pips
  • Set Take Profit For Third Buy Trade in Buy Cycle: 30 pips
  • Set Take Profit For Fourth Buy Trade in Buy Cycle: 40 pips

Exit All Buy Trades When LMA 288 crosses below EMA 288. This should be termed as Hard Exit.

Now, lets work on managing the Stop Loss for all the Buy Trades

STRATEGY 1
Note the Price of the Candle Close when Stochastic crosses below Level 80. Let it be Say ‘X’. Also, note the Candle Low of this Candle and let it be say ‘L’.

Now note the Price of the Candle Close when Stoch crosses above Level 80. Let it be Say ‘Y’.

Now if Y > X and (Y-X) is at least TWO times the Spread of the pair), it would tell us that market has got upward momentum. We will now place the stop loss for the Buy Trades at Level H. And we will keep on moving the Stop loss by recalculating X, Y and L whenever Stochastic re-crosses above Level 80.

When all the opened Buy trades have their Stop Loss over their open prices respectively, guaranteeing us a positive outcome no matter, we will remove the Take Profit Levels of all the Buy Trades and continue to manage them with the Stop Loss strategy as mentioned above (STRATEGY 1).

STRATEGY 2

If the LMA 288 moves above the Stop Loss Level of any opened Buy trade then move the Stop Loss to LMA 288 and continue to trail SL with the LMA 288 as it moves in favor of the trade.

In short, you manage the Stop Loss for Buy Trades in two parts:
Part 1 : Manage it by Strategy 1
Part 2: Manage it by Strategy 2 ( if it satisfies the LMA 288 conditions as mentioned)

Simple Forex Scalping 288 EMA Strategy Strategy Sell Exit Rules

  • Set Take Profit For First Sell Trade in Sell Cycle: 10 pips
  • Set Take Profit For Second Sell Trade in Sell Cycle: 20 pips
  • Set Take Profit For Third Sell Trade in Sell Cycle: 30 pips
  • Set Take Profit For Fourth Sell Trade in Sell Cycle: 40 pips

Exit All Sell Trades When LMA 288 crosses ABOVE EMA 288. This should be termed as Hard Exit for all Sell Trades.

Now, lets focus on how to manage the Stop Loss for all the Sell Trades

STRATEGY 1
Note the Price of the Candle Close when Stochastic crosses above Level 20. Let it be Say ‘X1’. Also, note the High of this Candle and let it be say ‘H’.

Now note the Price of the Candle Close when Stochastic crosses below Level 20. Let it be Say ‘Y1’.

Now if Y1 < X1 and (X1-Y1) is at least TWO times the Spread of the pair), it would tell us that market has got downward momentum. We will now place the stop loss for the Sell Trades at Level H. And we will keep on moving the Stop loss by recalculating X1, Y1 and H whenever Stochastic re-crosses below Level 20.

When all the opened Sell trades have their Stop Loss below their open price guaranteeing us a positive outcome no matter, we will remove the Take Profit Levels of all the Sell Trades and continue to manage them with the Stop Loss strategy as mentioned above (STRATEGY 1).

STRATEGY 2

If the LMA 288 moves below the Stop Loss Level of any opened Sell trade then move the Stop Loss to LMA 288 and continue to trail SL of that Sell Trade with the LMA 288 as it moves in favor of the Sell trade.

In short, you manage the Stop Loss for Sell Trades in two parts:
Part 1 : Manage it by Strategy 1
Part 2: Manage it by Strategy 2

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