Half Trend Scalp Forex Trading Strategy

September 25, 2020

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One of the easiest market conditions to trade on is a trending market. You would see a market go from the lower left portion of the chart to the upper right, then you would know it is a bullish market. Chances are trades that are going on that direction would have an edge. On the other hand, if you would see price starting from the upper left portion of your monitor going to the lower right, then that is a bearish market. Sell trades would probably have a higher probability of earning profits. Easy right? The question is when do you get in?

There are many ways to trade a trending market but taking trades on the retrace of a trend is one that is logical. You somehow get the best of both worlds. You are not trading against the trend but you are still able to get in on the trend at a discount.

The Half Trend Scalp Forex Trading Strategy is one which scans for an established trending market and allows traders to trade on the retrace.

The Half Trend Indicator

The Half Trend indicator is a trend following custom indicator. It is based on a modified simple moving average but at the same time it also factors in recent highs and lows.

This version of the Half Trend indicator plots a line on the price chart. Whenever the Half Trend indicator is bullish, it paints a dodger blue line with vertical lines below it. On the other hand, if the Half Trend indicator is detecting a bearish trend, it changes to color red with the vertical lines above it.

The Buy Sell Secret Indicator

As the name suggests, the creator of this indicator is quite secretive with regards to the mathematical idea behind this indicator. However, even without a clear concept behind this custom indicator, it still seems to be very effective in identifying trend.

The Buy Sell Secret indicator basically plots histograms on its own window. It also draws a line which hugs the top of the histogram bars. If the slope of the line is rising, the line is drawn blue. As soon as the line starts dropping, it also changes to color yellow. It also conveniently draws arrows both on its window and on the price chart whenever the line changes color, indicating the start of a new trend. Bullish trends start with a blue arrow pointing up, while bearish trends start with a red arrow pointing down.

The Pinbar Indicator

The Pinbar indicator is a custom indicator which conveniently identifies pin bar patterns on the price chart. While many traders could easily identify pin bar patterns, this indicator is quite useful for traders who are not quite sure how to identify a pin bar pattern or traders who would just want to be alerted whenever a pin bar pattern appears.

Trading Strategy Concept

This strategy basically uses the confluence of the Half Trend indicator and the Buy Sell Secret indicator to help assess the direction of the trend. Whenever both the Half Trend indicator and the Buy Sell Secret indicator are indicating bullish trends, we look to take buy trades only. On the other hand, if both indicators are indicating a bearish trend, then we only look to sell.

Once we identify the direction of the trend based on the two indicators, we then wait for price to retrace back near the Half Trend indicator. If on the retrace a pin bar pattern would take shape pointing towards the direction of the trend, we take that trade as a scalp trade.

This strategy is basically a scalping strategy. As such, we will only be using this on the 5 minute timeframe.

Indicators

HalfTrend-1.02
- Amplitude: 12
buysell5secret
- Signal Period: 60
- Dee Period: 76
- Filter Number: 3.0
Pinbar

Timeframe: 5-minute chart only

Currency Pair: any major or minor pair with good volume and volatility

Trading Session: London and New York session

Buy (Long) Trade Setup

Entry

The Half Trend indicator line should be royal blue indicating a bullish trend
The Buy Sell Secret indicator line should be blue indicating a bullish trend
The last arrow painted by the Buy Sell Secret indicator should be pointing up
Wait for price to retrace near the Half Trend indicator
Place a buy order as soon as the Pinbar indicator shows a bullish pin bar pattern

Stop Loss

Set the stop loss a few pips below the entry candle

Take Profit

Set the take profit target at 2x the risk on the stop loss

Sell (Short) Trade Setup

Entry

The Half Trend indicator line should be red indicating a bearish trend
The Buy Sell Secret indicator line should be yellow indicating a bearish trend
The last arrow painted by the Buy Sell Secret indicator should be pointing down
Wait for price to retrace near the Half Trend indicator
Place a sell order as soon as the Pinbar indicator shows a bearish pin bar pattern

Stop Loss

Set the stop loss a few pips above the entry candle

Take Profit

Set the take profit target at 2x the risk on the stop loss

Conclusion

This strategy is an effective way to scalp the market. It allows traders to enter a trending market at a reasonable price.

This strategy has a fixed reward-risk ratio of 2:1. This allows traders some leeway whenever they enter a losing trade. This is because one winning trade could cover for two losing trades. As long as you have a decent win ratio, this strategy would produce profits.

Although this strategy already aids traders in identifying trends, it is also important that the trader should also know how to visually assess if the market is indeed trending. The trader should also get to have a feel if the market is already overextended and might be at the end of a trend. Signals that appear far from the Half Trend indicator should also be taken with caution as price might have not retraced deep enough. The key here is to learn to get a feel of the markets and the trading sessions you are trading in.