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The components of this 30 minute scalping strategy can be applied to almost any time frame. If you use it on another time frame please make adjustments for stop loss levels and profit targets.
This trading strategy takes place approximately 2 to 4 times in a 24 hour period between the major currency pairs.
When choosing to look for a different time frame you must do some testing to determine your comfort level for profit targets and stop loss. Each one of us prefers to use a different type of stop loss and it may change the outcome of this strategy. The details laid out in this article are for the 30 minute time frame only.
How to set up your charts:
I typically use the CCI set at 14 on the 30 minute chart.
In the price pain window I use a 20 day EMA. Generally I will go long when price is above the 20 day EMA and short when it is below. These are just some basic outline principles and can be adjusted according to market conditions such as consolidation.
I also use the fulcrum based on each day price activity. A general method of using the fulcrum is to go long when price is above the fulcrum and short when the low.
please remember these are just outline rules to apply some structure, don’t forget to do some testing.
The set up:
The entry occurs when I have a completed candle pattern such as a morning star, evening star or engulfing candle pattern. I must stress that I only analyze a trade when I have a closed completed candle on whatever time frame I am using.
For example,
If price is inside of consolidation, I will look for one of these candle patterns to occur at support or resistance on the 30 minute chart and I prefer price to be below or above the 20 day EMA according to the rules I mentioned above. Now in reality it isn’t always going to look like that when price is inside of consolidation. The 20 day EMA will often times move in a semi-straight-line through consolidation making it difficult to get a reading.
If this is the case I will only take one of these candle patterns when price has hit support or resistance that I can identify during the consolidation stage.
If there is a candle pattern that I mentioned above in the middle of this consolidation, I leave it alone as it may be a false move.
The other location I find an entry to use the scalping method is when price has actually broken outside of a consolidation range. What I am specifically looking for is a confirmed closed breakout candle. After wards I watch for the retracement to either support or resistance depending on which direction price has broken out. Once price has returned to a support or resistance, again I look for that candle pattern in the direction of the confirmed breakout.
Using this retracement pullback method will also allow for additional forms of confirmation such as finding the support or resistance level with psychological levels, Fibonacci retracement levels and the fulcrum. Additionally old highs and lows will often have an impact.
Profit targets:
I am basically looking for 20 to 25 pips as a profit target on the EUR/USD. This method can be used with only one lot as scaling out of the trade isn’t necessary. Comfortably I look for 25 to 35 pips on GBP/USD.
The stop loss levels are approximately one to one ratio and equal to profit targets however on occasion it is not always possible that price will behave accordingly and depending on market activity at the time, retests of the stop loss area are bound to happen. Specifically retests to support or resistance levels that often times will be very close to your stop loss.
For example if the last relative low on a long trade would require more than 20 to 35 pips you should pass on the trade if you are only willing to accept a 20 to 35 pip stop loss. Just wait for another opportunity, believe me another one will come and you can very often find a scalping trade like this with the stop loss I recommend in this article.
That’s basically it… now just practice this over and over.
The number one tip:
I recommend only analyze and wait for the candle to close creating the pattern you’re looking for.
Also don’t anticipate price will continue any farther than you planned. Simply take the profit target what you intended to from the beginning of your trade and follow your plan.
It is usually when we change our plan that we end up losing.
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