SNR Fast Scalp Forex Trading Strategy

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SNR Fast Scalp Forex Trading Strategy

Scalping is notoriously known for being one of the most difficult ways to trade the market. Many traders who tried to dip their feet on scalping ended up losing money. On the other hand, many also made a fortune out of scalping.

Although scalping is a bit more difficult to trade, but it is probably not entirely due to the nature of the lower timeframes itself. Sure, there is a bit more noise on the 1-minute timeframe and setups are easily voided by big market movers, but those things are only part of the reason why traders lose money scalping.

One of the primary reasons why traders lose money scalping the markets is because of lack of analysis. Because of the sheer speed of scalping and the limited time traders have to make a decision, traders often skip analyzing the market and end up making rash decisions. The key is to have tools to help you analyze the market without taking too much time.

Support and Resistance on the 1-minute chart

Supports and resistances are powerful techniques and tools to analyze the market. These are areas or price points on the chart where price could either bounce off or breakout of. However, for some reason it is rarely utilized on the 1-minute chart. Probably you’re thinking that these supports and resistances don’t work on the lower timeframes because of the noise, but you’d be surprised how effective they are if incorporated on your trading strategy.

Trade Strategy Concept

For this trading strategy we will be using one of the most basic ways to draw supports and resistances – using swing lows and highs to draw horizontal supports and resistances.

Because swing lows and highs are previous turning points on the price chart, the market will be taking note of those areas. The advantage is that, unlike diagonal supports and resistances, horizontal supports and resistances are exact price figures, so traders could be setting pending orders on those areas.

Because we are trading on the 1-minute timeframe, the market will have tendencies to overshoot the supports and resistances, which could trigger breakouts. Our trade strategy we will be trading the breakouts as it happens and hope that momentum and pending orders would cause price to overshoot supports and resistances by a few pips on our favor.

Also, because analyzing the market and drawing supports and resistances on the 1-minute timeframe might be a little too fast, we will utilize an indicator that automatically draws horizontal supports and resistances.

Timeframe: 1-minute chart

Currency Pair: GBPUSD & EURUSD

Session: London and New York session

Buy Trade Setup

Entry

  • The most recent horizontal resistance should be drawn by the indicator on the chart
  • Set a pending Buy Stop Order at the horizontal resistance

Stop Loss

  • Set the stop loss at 5 pips above the entry price

Take Profit

  • Set the take profit at 5 pips below the entry price

snr fast scalp forex trading strategy 01

snr fast scalp forex trading strategy 02

Sell Trade Setup

Entry

  • The most recent horizontal support should be drawn by the indicator on the chart
  • Set a pending Sell Stop Order at the horizontal support

Stop Loss

  • Set the stop loss at 5 pips below the entry price

Take Profit

  • Set the take profit at 5 pips above the entry price

snr fast scalp forex trading strategy 03

snr fast scalp forex trading strategy 04

Conclusion

This strategy allows us to catch short momentum trades that take place due to breakouts. Because of that, we could assume that price would be going our direction for several more pips. It is possible to have strong momentum breakouts and gain 10, 15, even 20 more pips in a single trade, but this is not always the case. The most commonly recurring case would be that price could breakout with a strong momentum candle for about 5 – 10 pips. This is the range you could play with, but to be conservative, we will be aiming for just 5 pips.

There are also cases when after the breakout candle, price would stall for several pips before going our direction. The is commonly known among price action traders as a retest. To accommodate for these occurrences, we will be using the 5-pip stop loss. That way, we could have some wiggle room for price to move with.

This strategy is a fixed reward-risk ratio type of strategy, with a 1:1 ratio. This not the best reward-risk ratio, but this is doable as long as we have a positive win-lose ratio. To make up for the low reward-risk ratio, this strategy allows for high frequency of trades. This could allow for the low of averages and large numbers to play its part.

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