5 minute scalping is a trading system
based on exponential moving averages but the key of this strategy is
the retracement. In this article we explained how to do scalping with
the technique of retracement in a trendy market. This system requires
discilpline, but if you learn this one well it will consistently earn
your profits. The beauty of this system is that is so simple and so
profitable.
Currency pairs: EUR/USD, GBP/USD,
USD/JPY.
Time Frame: 5 minute.
The indicators you want use for this
system inclue:
Exponential moving average (EMA 10
period, close).
Exponential moving average (EMA 21
period, close).
Exponential moving average (EMA 50
period, close).
The 50 EMA is our indicator to
determine short term trend, and the 10 and 21 period ema's provide us
with strong support and resistence levels which we will use for entry
signal.
Sessions for trading are London and New
York.
Our whole point here is to the ride out
the shor terms trend while the trend is making higher highs (and
lower lows) and to constantly squeeze 10 -15 pips out trade while
only risking five. If you follow our entry rules this system does
work well. The basic idea shown on a chart.
Trading Rules for 5 minute scalping
with retracement
In the picture there are 7 entry points. Of those seven only 4 are valid but we'll get to that.
In this case all the entry sifnal are valid The 3# trade would have stopped out, but we woul have had four profittable trades by scalping 10 pips at time from this trend.
With this method we take the first entry signal once we've determined that we are in a uptrend/downtrend. Looking at the chart above the bar hits the midway points between the EMA 10 and EMA 2. We enter the trade. We still use our 7-12 pips of stop plus spread but this time we don't set a take profit. We wait until the trade moves 10 pips in our favor and the set our stop to the the breakeven point.
Look for an trend on five minute
chart.This means that the currency will be making higher highs (in
an up trend) and lower lows (in an down trend).
Look at the EMA 50 for determine the
trend direction. The more is slanting up or down, the stronger the
trend is.
Wait that the price of the currency
enter the halfway point between EMA 21 and EMA 10. this is your entry
signal buy or sell.
For Stops use 7-12 pips plus the
spread.
Set a take profit at te 10-15 pips plus
spread.
Continue the scalping until the trend
stops 50 EMA turn sideways).
See the picture
In the picture there are 7 entry points. Of those seven only 4 are valid but we'll get to that.
In this case all the entry sifnal are valid The 3# trade would have stopped out, but we woul have had four profittable trades by scalping 10 pips at time from this trend.
This system is simple and if used the
way we have laid it out it can be extremly profitable.
Using this method we won't making
multiple trades instead we just take the first signal, set our stop
to breakeven once we are 10 pips ahead, and then let it run. Using
the same example.
With this method we take the first entry signal once we've determined that we are in a uptrend/downtrend. Looking at the chart above the bar hits the midway points between the EMA 10 and EMA 2. We enter the trade. We still use our 7-12 pips of stop plus spread but this time we don't set a take profit. We wait until the trade moves 10 pips in our favor and the set our stop to the the breakeven point.
To exit to the trade there are two
strategies:
1 wait until the EMA 50 begins to
flatten with this we have earned 50 pips.
2 wait until the EMA 50 turns up with
this trade we woul have held if for most of the day and earned 100
pips. Conservative traders shoul use the first exit strategy. Risk
traders can try the secon methods is it an easy way to make a big
trade off the 5 minute charts.
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