Forex scalping refers to a method used by Forex traders to capitalize on small price movements. When utilizing this method, Forex traders open a position for a short period of time and try to make a profit on minor price changes.
Because Forex scalping can often be time-consuming, traders utilize various indicators to facilitate the process. In this article, you will learn about the three most effective indicators and strategies used in Forex scalping – the Ribbon Entry Forex Strategy, the Relative Strength & Weakness Exit Strategy and the Forex Scalping of Multiple Charts Strategy.
Ribbon Entry Forex Strategy
The main objective of this strategy is to identify strong trends by plotting the 5-8-13 Simple Moving Average (SMA) combination on the 2-minute chart. Keep an eye on approaching trend changes as they’re inevitable on a regular trading day.
Then, the 5-8-13 ribbon will align and point either higher or lower during strong trends that keep the price trapped in 5 or 8-bar SMAs. Breakthroughs into the 13 bar SMA indicate dropping momentum, favouring either a range or a reversal.
During the range swings, the ribbon will flatten out and the price may cross through the ribbon several times. After that, the Forex scalper should closely monitor a changeover as the ribbons might turn either higher or lower. Then, the ribbons will spread out, providing more space between the lines and this small pattern will generate a buy or a sell signal.
The Relative Strength & Weakness Exit Strategy
Forex scalpers often utilize the 5-3-3 Stochastic Oscillator, a 13-bar and a 3-SD Bollinger Band, in conjunction with ribbon signals on 2-minute charts, particularly when trading index funds or Dow stocks.
Instances in which the Stochastics becomes higher than the oversold level or lower than the overbought level produce some of the greatest ribbon trading opportunities. When the scalping indicator crosses and then moves against you after a profitable thrust, the trader should exit the trade immediately.
In order to perfectly time your exit move, observe the relationship between the band and the price. Take the profit during real band penetrations as they can forecast the trend, which can either reverse or lose momentum.
Forex Scalping of Multiple Charts
Forex scalping of multiple charts is one of the most effective scalping indicators. To do this, pull up a 15-minute chart with no indicators to monitor background conditions that can impact your daily performance. After that, attach one line for the opening print and two more at the high and low of the Forex trading range that establishes during the first 45-90 minutes of the session.
Also, keep an eye on price action at these levels as they will also generate large 2-minute buy or sell signals. You can expect the best returns when the scalps align with support and resistance levels on the daily chart, within 15-minutes or 60 minutes.
In conclusion, as a Forex scalper, it’s difficult to rely only on real-time market analysis when looking for buy and sell signals. That’s why FX scalpers utilize technical indicators which can be customized for limited time frames and identify trading signals.
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