While studying scalping strategies, we analyzed how they work and how useful they can be in trading. Today we will study another such strategy called "Simple Scalping" (or "Simple Scalping" - in literal translation).
We will analyze it according to what is already familiar to us:
The tools the strategy works with;
Conditions required to work on this vehicle;
Rules for entering the market based on signals from its indicators;
Profit fixation rules for transactions.
After that we will talk with you about how efficient the Simple Scalping system is. Let us discuss whether it is possible to work on it in the form in which it is provided by its author.
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The Simple Scalping strategy attracted our attention at one of the foreign trading forums. It is based on three indicators, two of which are in the standard package of terminal tools, and the third tool is the author's indicator, which can be downloaded at the end of the article. We have already discussed the topic of placing instruments on a chart more than once, so we will not repeat ourselves today. Let me just remind you that:
standard tools are in the root directory of your terminal initially.
copyright tools must be placed in the same root directory.
Simple Scalping Tools
This is how, for example, on a chart in MT4 the instruments required for trading with this trading system look like:
As you can see in fig. 1, here we use Bollinger Bands, a simple arrow indicator and 2 moving averages. Let's see what properties they are characterized by.
This is a proprietary instrument, an arrow indicator that filters signals.
Moving Average indicator
As you probably understood, this strategy uses 2 moving average curves, but with different parameters in the settings. On the price chart, they show the area for buying and selling:
If the price lies under these two curves, we consider only sales;
The price is above the moving averages - looking for an opportunity to enter with a buy;
The intersection of these two curves by the price indicates a possible change in the trend and is considered as one of the signals to close open positions.
The Bollinger Bands indicator in this strategy is an important tool. Focusing on its specific lines, we look for points of entry into the market, and also set Stop Loss and Take Profit orders. Below in the figure you can see the settings for this indicator:
We have just learned which indicators and with which settings should be used for scalping using "Simple Scalping". Next, we will understand how all these instruments work and what signals they give to open positions.
Trading conditions for TS "Simple Scalping"
It is necessary to scalp using this strategy, adhering to certain rules.
The scalping quality by Simple Scalping is directly proportional to the level of market volatility. The more volatility the market is, the more signals the indicators give, the more trades a trader will make. It will be good to trade on major major pairs, such as - GBP / USD, EUR / USD. You should take into account not only the currency instrument and market volatility, but also choose the right trading session:
So, with EUR / USD or GBP / USD it is better to scalp during the European and American sessions.
For scalping Asian currencies - Japanese yen (JPY), Australian (AUD) and New Zealand (NZD) dollars, it is better to trade during the Asian session.
This point is very important, because mismatching currencies and sessions will not do you any good.
A 5-minute timeframe is considered optimal for scalping. We know from experience that many of them would show better results, for example, in short-term or even medium-term trading. Since the strategy we are considering is declared as scalping, we will not deviate from the rules and also choose TF M5.
Stop Loss and Take Profit
When entering the market, we take Take Profit at the moment when:
When selling, the price reaches the lower line of the "Bollinger Bands";
When purchased, it reaches the top of the curve.
The author does not indicate where exactly to set Stop Loss. I believe that the trader must solve this puzzle for himself. For myself, I found a solution and set the Stops:
When selling - for the previous peak.
When shopping - for the previous depression.
Also, considering that we trade on TF M5, Stops can be placed:
If we sell, then Stop Loss can be placed above the maximum, but so that it lies below two moving averages.
If we buy, then Stop Loss can be set below the minimum and above the curves of the two moving averages.
If the price enters and crosses the moving ones, trades can be closed by Stop Loss.
Signals to open positions
Login with sale
The BB_Simple_Scalp indicator
Two Moving Average curves are above the price and show a downtrend.
We look for entry points after the price consolidates on the upper curve of the Bollinger Bands indicator.
You can see that several signals to enter with a sell are generated on the Bollinger line at once. Each of these signals can be used by a trader for trading.
Stop Loss is set behind the maximum, but not above the moving averages.
Take Profit will be on the lower line of the “Bollinger Bands”.
The picture above shows that the set Stop did not work - the price was steadily falling down, all four positions in this example will be closed by the Take.
For all signals to open positions or not - the trader decides. It is important to remember that each new open deal is an additional load on the deposit. Therefore, the decision should be made based on the size of your deposit and the volume of the lot with which you enter the market.
Login with purchase
Buy signals are similar to sell signals, but exactly the opposite:
The BB_Simple_Scalp indicator generated a blue arrow indicating that we can buy.
Two Moving Averages are located below the price, confirming the uptrend.
We look for entry points after the price consolidates on the upper Bollinger Bands line.
As you can see, the trading rules are simple, but the signals of this strategy require some attention. Summing up, let me remind you that: You should only trade this system on a market with good volatility.
EUR / USD, GBP / USD, in my opinion, are the most optimal currency pairs for this strategy.
The European and American sessions should be chosen for these currency instruments. I recommend skipping the Asian session altogether.