Fiber Forex Scalping Forex Trading Strategy

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Fiber Forex Scalping Forex Trading Strategy

Scalping is quite difficult for many traders. In fact, not all traders would ever learn to scalp, but it sure is a good skill to add to your arsenal.

Some traders argue that scalping is unprofitable. However, many traders make a lot of money scalping the market. Being able to get in and get out, making profits on minute moves here and there, adds up every day. It is just a matter of learning the skill and knowing where to apply it best.

Yes, one big factor is knowing where to apply it best. While many trading instruments could be scalped, some just tend to be easier than others. This is because of a couple of very important factor, cost of trading and volatility.

Cost of trading could refer to many things, but here we would apply it to spreads and commissions. Some currency pairs just seem to be very difficult to trade. Even though moves are clear, still making profit seems very hard. It may just be that the cost of trading is too high, it is difficult to go over it on each trade and make a profit.

Next, volatility. Some currency pairs might have a decent cost of trading. It may not be too high, but still making a profit seems impossible. This might be because that currency pair just has very low volatility. Imagine scalping a currency pair with an Average True Range (ATR), referring to the average size per candle, of less than 2 pips on a 5-minute chart. Even if the cost of trading, spreads and commissions included, is just at 2 pips, it would still be quite difficult to make money out of that market.

This just goes to show that not all currency pairs are good for scalping.

Fiber (EUR/USD) as the Perfect Scalping Pair

Fiber or more formally known as EUR/USD, is one of those pairs that is great for scalping. This is because this pair usually has the lowest cost to trade, depending on the broker. With my broker, it usually is below 0.5 pips. Sometimes even as low as 0.1 pips, without the commission. This low spread allows me to go over the cost hurdle quite easily.

There are other pairs that have higher volatility, but trading cost may also be a bit higher. However, you would be hard pressed to find another currency pair with a lower trading cost.

Trading Strategy Concept

This strategy aims to exploit the low cost of trading the Fiber to scalp the market.

To do this, we would be using a couple of custom indicators that work well together, the Big Trend and Instantaneous_Trend indicators.

The Big Trend is custom indicator based on a modified moving average. The main difference is that it changes color as the market sentiment changes, giving us a signal to trade or not.

Next, the Instantaneous_Trend indicator. This indicator is customized oscillating indicator. It is unbounded and has no midline. In fact, this indicator is plotted based on price. This indicator prints two lines that crisscross each other, which could be used as a signal to trade.

Indicators

  • Big Trend
  • Instantaneous_Trend

Timeframe: 5-minute chart only

Currency Pair: EUR/USD only

Trading Session: any, preferably the open of Frankfurt to the close of the New York session

Buy (Long) Trade Setup

Entry

  • Price should be above the Big Trend line
  • The Big Trend line should change to color light blue
  • The Instantaneous_Trend indicator’s fast line should cross above the slow line
  • Enter a buy market order at the confluence of the above rules

Stop Loss

  • Set the stop loss 1-3 pips below the Big Trend line

Exit

  • Close the trade if the Big Trend line changes to color tomato
  • Close the trade if the Instantaneous_Trend indicator’s fast line crosses below the slow line

Fiber Forex Scalping Strategy 01 Fiber Forex Scalping Strategy 02

Sell (Short) Trade Setup

Entry

  • Price should be below the Big Trend line
  • The Big Trend line should change to color tomato
  • The Instantaneous_Trend indicator’s fast line should cross below the slow line
  • Enter a sell market order at the confluence of the above rules

Stop Loss

  • Set the stop loss 1-3 pips above the Big Trend line

Exit

  • Close the trade if the Big Trend line changes to color light blue
  • Close the trade if the Instantaneous_Trend indicator’s fast line crosses above the slow line

Fiber Forex Scalping Strategy 03 Fiber Forex Scalping Strategy 04

Conclusion

This strategy is an excellent strategy for the EUR/USD pair.

It allows us to scalp the market at almost any session. Even when the market seems slow, as long as the market would trend in your direction, or even if the trend doesn’t last long, there usually enough pips to squeeze out of the market.

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