If you’re looking for a quick and effective way to enter and exit trades, this scalping strategy is for you. Scalping involves holding trades for a very short period, making it perfect for traders who like fast-paced action. In this article, I’ll walk you through a simple scalping strategy that uses two moving averages. So, if you’re ready to make some pips, let’s start!
What is Scalping?
First off, scalping is all about short-term trades. You’re not holding onto trades for hours or days. Instead, you’re in and out in a few minutes, sometimes even seconds. Most of the time, scalpers look to grab small price moves, like 10-20 pips. The key here is to take many trades throughout the day, profiting from these tiny moves. So, what makes this scalping strategy special? Let’s break it down.
The Power of moving averages
In this strategy, we’ll be using two simple moving averages (SMAs) — one set to 12 and the other set to 15. Moving averages are great because they help smooth out price data and show the overall direction of the market. Here’s how this scalping strategy works:
- Set Your Charts: Make sure you’re trading on smaller timeframes, like the 5-minute (M5) or even 1-minute (M1) charts.
- Add Two Moving Averages: The first moving average should have a period of 12 (we’ll set this one to green). The second moving average should have a period of 15 (set this one to red).
- Look for Crossovers: A crossover happens when the green line (MA 12) crosses above or below the red line (MA 15). When it crosses above, it’s a signal to buy.
When it crosses below, it’s a signal to sell.
Trading with the trend in scalping strategy
One golden rule in scalping is to trade with the overall trend. Never go against it! To identify the trend, you can add a 200-period exponential moving average (EMA). When the price is above this line, the market is in an uptrend. When it’s below, it’s in a downtrend. Always follow the trend to increase your chances of success.
Entries and exits: Timing is everything
As soon as the green line crosses above the red line, that’s your entry signal for a buy. Likewise, when it crosses below, it’s time to sell. Remember, this scalping strategy works best in trending markets. Keep your trades short and sweet, aim for a 1:2 or 1:3 risk reward ratio, and always keep an eye on the moving averages.
Setting stop loss and take profit for this scalping strategy
Scalping is all about minimizing risk, so make sure to set a stop loss just above or below the crossover point, depending on whether you’re buying or selling. For take profit, aim for 10-20 pips, or adjust according to market conditions.
Why this scalping strategy works?
This scalping strategy is simple, effective, and can be used on any currency pair.
The trick is in keeping it simple by using two moving averages for your entry and exit points. This helps you catch quick price moves without making things too complicated.
Final Tips
- Always trade with the trend.
- For scalping, use smaller timeframes(1 min, 5min) for quick trades.
- Be disciplined and don’t get greedy.
Conclusion
This scalping strategy is perfect for traders looking for fast, repeatable trades. It’s simple, easy to understand strategy, and doesn’t require a lot of indicators. If you’re serious about scalping, give it a try, and you’ll see how effective it can be.
Stay tuned for more advanced trading strategies and tips.
Happy trading!
