Power Trend Scalp Forex Trading Strategy

Many traders often get lured to the forex market due to the fast income generating potential which some seasoned traders are enjoying. Although forex is not a “get rich quick” scheme, the forex market does present an unlimited income potential at a very fast pace to those who are able to master it. However, this will not be true for all. The forex market is a double-edged sword. It could be a quick way to earn unlimited income or it could be a quick way to lose money. It all depends on how you manage your money and whether you have mastered the craft of trading the forex markets.

One of the fastest ways to earn money in forex is through scalping. This is because scalping is a type of strategy that aims to profit quickly on short-term moves. This means traders could get in and out of the market multiple times in a day. Traders could opt to place the same risk on each trade as they would when day trading or swing trading or they could opt to lower the risk while settling for smaller profits multiple times. This is why scalpers are usually the ones who are able to multiply their accounts many folds.

Scalping is not for everybody. Many lose their shirts gambling on the lower timeframes, claiming they are scalping, when in reality they do not know what they are doing. But if you think you can handle the pressure of scalping, then this strategy might be for you. Power Trend Scalp Forex Trading Strategy is intended for scalpers aiming to earn quickly on short-term moves.

FX Trend Power Indicator

The FX Trend Power indicator is a trend following indicator which helps traders identify the direction of the trend, whether the market is bullish or bearish.

This indicator identifies trend direction by printing a horizontal line in its own window. This horizontal line would be colored depending on the direction of the trend. Bullish trending markets have horizontal lines that are colored blue, while bearish trending markets have horizontal lines that are colored gold.

The FX Trend Power indicator is usually used as a trend filter indicator. Traders often use it to filter out trades that do not agree with the trend based on the direction of the FX Trend Power indicator.

Highs Lows Signal Alert

The Highs Lows Signal Alert indicator is a custom indicator which provides traders entry signals which are based on momentum.

This indicator detects momentum based on an algorithm derived from the highs and lows of the candles within a period.

Traders could make use of this indicator in order to objectively identify entry points based on the short-term trend.

50-Period Simple Moving Average

Moving averages are a staple for many traders. In fact, most traders make use of a moving average in order to identify trend direction or even an entry point.

Different traders make use of different types of moving averages with varying parameters. However, there are certain moving averages that are commonly accepted by most traders as a standard. One of this is the 50-period Simple Moving Average (SMA).

Traders often use the 50 SMA as a trend direction filter. Some traders use the location of price in relation to the 50 SMA as a trend filter, while others use the slope of the 50 SMA in order to identify trend direction.

Trading Strategy

This strategy makes use of the entry signals provided by the Highs Lows Signal Alert indicator to take momentum-based trade entries as a scalp trade setup. These entry signals should agree with the trend direction indicated by the FX Trend Power indicator and the 50 SMA.

On the 50 SMA, trend direction will be based on whether price is above or below it and whether it is sloping up or down.

Trend direction on the FX Trend Power indicator will simply based on the color of the horizontal bars. Blue bars for bullish trade setups and gold bars for bearish trade setup.

However, this strategy will not be solely based on the confluence of the three indicators. Traders would want to scalp the market using this strategy should learn to anticipate price moves on the short term based on the movement of the Bid and Ask line. Unfortunately, this cannot be taught using a price chart. This is learned through experience and careful observation. Other traders would even go as far as observing the “Depth of Market” Bid and Ask movement to anticipate price movements on the short term.

One of the techniques used using the Bid and Ask line is by identifying if one line is moving and the other is not. This indicates that traders are hitting one price while disregarding the other. Price would usually move in the direction of the line that is quickly moving. This technique will be very useful in scalping.

Indicators:

• fxtrendpower (default setting)
• HighLowsSignalAlert
  • HowManyCandles
• 50-period Simple Moving Average

Preferred Time Frames: 5-minute (scalping) and 15-minute chart (quick day trade)

Currency Pairs: major and minor pairs

Trading Session: London and New York session; avoid low volatility sessions

Buy Trade Setup

Entry

• Price should be above the 50 SMA.
• The 50 SMA should be sloping up indicating a bullish trend.
• The FX Trend Power indicator should be printing a blue horizontal line indicating a bullish trend.
• The Bid Line should be moving quickly while the Ask Line is staying put indicating that traders are hitting the Bid Price or the Buy button.
• The Highs Lows Signal Alert indicator should print an arrow pointing up.
• Enter a buy order on the confluence of these conditions.

Stop Loss

• Set the stop loss a little below the entry candle.

Exit

• Close the trade on the first bearish candle.

Sell Trade Setup

Entry

• Price should be below the 50 SMA.
• The 50 SMA should be sloping down indicating a bearish trend.
• The FX Trend Power indicator should be printing a gold horizontal line indicating a bearish trend.
• The Ask Line should be moving quickly while the Bid Line is staying put indicating that traders are hitting the Ask Price or the Sell button.
• The Highs Lows Signal Alert indicator should print an arrow pointing down.
• Enter a sell order on the confluence of these conditions.

Stop Loss

• Set the stop loss a little above the entry candle.

Exit

• Close the trade on the first bullish candle.

Conclusion

This momentum-based scalping strategy is one that works well on a very volatile market condition. It also works well when used in confluence with candlestick patterns.

The key to this strategy is to master anticipating price movements based on the movement of the bid and ask line. This technique works best on the lower timeframes. In fact, it works really well on the 1-minute chart. However, brokers with wide spreads make it difficult to scalp the market. Stop losses could be prematurely hit due to the spread. For this reason, it is best to start on the 5-minute chart. Once you have mastered the 5-minute chart, then you may try trading on the 1-minute chart.

Trade wisely!!!

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