Free Scalp Forex Trading Strategy

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Free Scalp Forex Trading Strategy

You may have heard that the forex market, or any type of market that could be traded, has fractal characteristics. This means that the patterns that traders see in higher timeframes are the same patterns that they would see when they zoom in to the lower timeframes. This has some truth to it, but not entirely. There are factors that cause some characteristics and patterns that work on a higher timeframe to be irrelevant on a lower timeframe. Factors such as timing of trading sessions, choppy markets, news releases, wide gaps between bid and ask price, and more. These factors often disrupt the lower timeframes to a greater degree compared to the higher timeframes.

However, there are also overarching concepts that apply to both higher and lower timeframes. Factors such as trading patterns, trends, momentum, mean reversals, etc. These concepts apply to scalping as much as it does with swing trading. Traders who would want to dabble in scalping should have some of these factors in place.

The best way to assess if a trading strategy is applicable on a certain timeframe is to test it. There strategies that work perfectly fine on the 1-minute chart but is useless on the 5-minute chart. There are strategies that work well on timeframes above 1-hour but would cause significant losses when used on the lower timeframes.

Free Scalp Forex Trading Strategy works particularly well on the lower timeframes. It detects scalping trade signals based on trends and momentum using a confluence of highly reliable scalping indicators.

50 SMA and 200 EMA

As discussed earlier, trends are a critical factor in trading. This holds true whether scalping, day trading, swing trading or even position trading.

Moving averages are the one of the main indicators that traders use to identify trend direction and bias. Traders would often associate price being above a moving average or a moving average that is sloping up with a bullish trend. On the other hand, traders would also consider price below a moving average or a moving average that is sloping down as a down trend.

Another method that traders use is by looking at how two or more moving averages are stacked. Charts with shorter-period moving averages above longer-period moving averages are considered to be bullish, while charts with shorter period moving averages below a longer-period moving average are considered bearish.

There are certain moving averages that many traders use. One of these is the 50-period Simple Moving Average (SMA). This moving average is often used to identify the general mid-term trend direction. Another moving average which many traders use is the 200-period Exponential Moving Average (EMA). This moving average on the other hand is used to identify the long-term trend.

Free Scalping System

Free Scalping System is a custom indicator used to identify trend direction, specifically designed to identify trends on the lower timeframes.

This indicator indicates trend direction as an oscillating indicator. It displays histograms which could oscillate from positive to negative and vice versa. Positive bars are colored lime and indicates a bullish trend, while negative bars are colored red and indicates a bearish trend.

ASC Trend

The ASC Trend indicator is a custom indicator which indicates specific entry points based on trend and momentum reversals.

This indicator conveniently indicates entry points by displaying arrows on candles where it detects a momentum reversal. Arrows pointing up indicate a bullish entry signal while arrows pointing down indicate a bearish entry signal.

Trading Strategy

This strategy provides high probability trade signals based on the confluence of the long-term trend, the mid-term trend and momentum-based trend reversals specifically designed for the lower timeframes.

To trade this strategy, we will be looking for confluences between the 200 EMA, 50 SMA, the Free Scalping System indicator and the ASC Trend indicator.

The moving averages should be stacked correctly in the direction of the trend. Price should also close on the correct side of the moving average based on the trend direction. This indicates that both the long-term and mid-term trend direction are in confluence.

The Free Scalping System indicator should also agree with the trend direction of the moving averages. However, trades will be considered only when the free scalping system has just crossed the midline. This indicates that the long-term trend is still in place and that the temporary reversal on the Free Scalping System indicator was just due to a temporary retrace.

Finally, the ASC Trend signal should also agree with the trade direction of the indicators above. This indicates that the momentum has just shifted back to the direction of the main trend.

The crossing of price over the 50 SMA, the crossing of the histogram bars on the Free Scalping System from positive to negative or vice versa, and the occurrence of an entry signal on the ASC Trend should be closely aligned. This ensures a fresh resumption of the trend which still has much potential to produce huge gains relative to the risk of price reversals.

Indicators:

  • 50 SMA
  • 200 EMA
  • ex4
    • RISK: 12
  • freescalpingindicator
    • periods: 800000000

Timeframes: 1-minute and 5-minute chart only

Currency Pairs: EURUSD, GBPUSD, USDJPY, EURJPY and GBPJPY only

Trading Session: Tokyo open (first 2 hours only trading JPY pairs), London session (trading GBP and EUR pairs), and New York session (trading USD pairs)

Buy Trade Setup

Entry

  • The 50 SMA should be above the 200 EMA indicating a bullish long-term trend.
  • Price should cross and close above the 50 SMA.
  • The Free Scalping System histogram bars should shift from negative to positive and should change to lime indicating a bullish trend reversal.
  • The ASC Trend indicator should display an arrow pointing up indicating a bullish entry signal.
  • The bullish signals above should be closely aligned.
  • Enter a buy order on the confirmation of the conditions above.

Stop Loss

  • Set the stop loss on the fractal below the entry candle.

Exit

  • Close the trade as soon as the ASC Trend indicator prints an arrow pointing down.
  • Close the trade as soon as the Free Scalping System histogram shifts from positive to negative and changes to red.

Free Scalp Forex Trading Strategy

Free Scalp Forex Trading Strategy2

Sell Trade Setup

Entry

  • The 50 SMA should be below the 200 EMA indicating a bearish long-term trend.
  • Price should cross and close below the 50 SMA.
  • The Free Scalping System histogram bars should shift from positive to negative and should change to red indicating a bearish trend reversal.
  • The ASC Trend indicator should display an arrow pointing down indicating a bearish entry signal.
  • The bearish signals above should be closely aligned.
  • Enter a sell order on the confirmation of the conditions above.

Stop Loss

  • Set the stop loss on the fractal above the entry candle.

Exit

  • Close the trade as soon as the ASC Trend indicator prints an arrow pointing up.
  • Close the trade as soon as the Free Scalping System histogram shifts from negative to positive and changes to lime.

Free Scalp Forex Trading Strategy3

Free Scalp Forex Trading Strategy4

Conclusion

This strategy is a high probability trading strategy that allows traders to profit on trend resumptions on the lower timeframes. This strategy works best on the 1-minute and 5-minute chart as a scalping strategy. However, it could still work on the 15-minute chart as a day trading strategy still with good results.

To trade this strategy, it is best to align the lower timeframes with the higher timeframes to ensure a high probability trade setup. This may lessen the number of trading opportunities but may also improve win ratios.

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