Scalping with Momentum, is a forex strategy based on Bollinger Bands, Stochastic oscillator and MACD for trading in Volatility Market.
Setup Strategy:
Trading Type Scalping
Trading Style: Momentum- Multi time frames
Time Frame 5 min, 15 min, 30 min, 60 min.
Signal detection 15 min, Confirmation signal 30 minutes or H1
Trade Execution: 5 minutes.
Indicators:
Bollinger Bands (22 periods, 2.0 deviations);
Stochastic oscillator (5,14,13)
MACD (12,26,9)
Trading rules Scalping with Momentum
Go M15 time frame
setup indicators:
MACD forms a peak
Stochastic oscillator is in Oversold or Overbought zone
The price touched upper/lower band.
Sell Signal
Blue
line in the Stochastic Oscillator needs to reach the 80 level.
MACD
histogram forms a peak.
The price has to touch the upper Bollinger
Band.
Candlestick rejections forms.
Buy Signal
Blue
line in the Stochastic Oscillator needs to reach the 20 level.
MACD
histogram forms a peak.
The price has to touch the lower Bollinger
Band.
Candlestick rejections forms.
When
all the rules for sell or buy are met on M15, draw a
straight line
to mark out the targeted reversal point.
After
drawing a line on M15, move to M5 for further
confirmation. Take
the following actions if you see any of the
following on M5:
Scenario
1
all
the conditions met on min 15 are also met min 5
action: mark
as high potential set up
scenario
2
all
the rules met on min 15 are not met on min 5
action: discard
trade immediately and wait for another
signal on m15
scenario
3
all
the conditions met on min 15 are about to be met on min 5
action:
wait patiently for complete signal formation on
m5 before
entering.
example:
The
conditions for sell have been met on M15 and confirmed on M5. when
you checked Min 30 and H1, you noticed that the BUYING POWER is high.
This means the price might not respect the signal and move along with
the trend instead.
To detect the trend direction on both M30 and
H1, you will check the crossover on the Stochastic Oscillator and
MACD histogram formation.
Buy:
Stochastic Blue line crosses the Red and moves upward, while the MACD
predicts an upward movement.
Sell:Stochastic
Blue line crosses the Red and moves downward, while the MACD predicts
a downward movement.If all these conditions are met, you can safely
enter your trade on M5.
Exit Position
There
are methods you can use to determine when the movement is done.The
Bollinger Band:
Price reaches the middle band or
Price reaches
the last band
The
Stochastic Oscillator
The blue Stoch line touches the opposite
level, e.g. For a sell entry, the line goes from 80 levels and
approaches 20. Vice versa for buy.Place
initial stop loss on the previous swing High/Low.
Examples of trades
In the picture AUDUSD above there are 4 potential setup for trade.
In the picture NASDAQ above there are 2 potential setup for trade.
In the picture Gold above there are 4 potential setup for trade and for experts I also show how to re-enter if the MACD still crosses in the opposite direction and the movement has continued in the initial direction and there has been no reversal.
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