The 5-Minute Forex scalping strategy For AUD/USD is based on the modified parameters of the popular TMA and Relative Strength Index indicators.
It’s designed in a manner that allows it to reacts promptly to the short-term changes in price with little or no lag.
We’ll employ the crossover signals of two distinct averages in a bid to buy when prices are low and sell when they’re high.
This scalping strategy works well on smaller timeframes i.e. 1-Minute, 5-Minute and 15-Minute.
The fine blend of indicators enables this system to generate signals that are consistent with skimming for small profits on a steady basis.
MetaTrader 4 Indicators: Donchian Bands.ex4 (Colors Width Modified; #2=2), TMA.ex4 (Inputs Variable Modified; Periods=36, Colors Modified; #0=Magenta, Colors Width Modified; #0=2), Relative Strength Index.ex4 (Parameters Modified; Period=19)
Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute
Recommended Trading Sessions: London, New York, Tokyo
Currency Pairs: AUD/USD + any other low spread pair
Buy Trade Example: AUD/USD (Australian Dollar / US Dollar), M5 Chart
Long Entry Rules
Initiate a buy entry if the following indicator or chart pattern gets put on display:
- If the magenta TMA indicator line crosses below the green mid-line of the Donchian Bands forex indicator as shown on Fig. 1.0, the overall market sentiment is said to be bullish, thus a trigger to buy the designated currency pair.
- If the dodger blue line of the Relative Strength Index Metatrader 4 forex indicator break and hover above the 50.00 horizontal level (see Fig. 1.0), price is said to be driven to the upside, thus a trigger to buy the forex pair of interest.
Stop Loss for Buy Entry: Place stop loss below short-term support.
Exit Strategy/Take Profit for Buy Entry
Exit or take profit if the following rules or conditions takes precedence:
- If while a bullish trend is running, the magenta TMA indicator line intersects the green mid-line of the Donchian Band indicator, bulls are said to be closing their market positions increasingly, therefore an exit or take profit stance is duly advised.
- If the dodger blue line of the Relative Strength Index custom indicator dips below the 50.00 horizontal level (see Fig. 1.0), more and more bulls are said to be closing their trades, thus an exit or take profit trigger is recommended.
Sell Entry Rules
Enter a sell order if the following holds true:
- If the magenta TMA indicator line crosses above the green mid-line of the Donchian Bands forex indicator as illustrated on Fig. 1.1, the general market sentiment is said to be bearish, thus a signal to sell the forex pair of interest.
- If the dodger blue line of the Relative Strength Index forex indicator breaksand runs below the 50.00 horizontal level as depicted on Fig. 1.1, price is said to be dragged lower, therefore a sell signal is said to be imminent.
Stop Loss for Sell Entry: Place stop loss above short-term resistance.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following takes center stage:
- If the magenta TMA indicator line intersects the green mid-line of the Donchian Band indicator while a bearish trend is ongoing (refer to Fig. 1.1), more and more bears are said to be leaving the market, thus a trigger to exit or take profit forthwith.
- If the dodger blue line of the Relative Strength Index custom indicator surges above the 50.00 horizontal level during the course of a bearish trend, it is pointing to diminishing bears power, hence a signal to exit or take profit immediately.
Sell Trade Example: AUD/USD (Australian Dollar / US Dollar), M5 Chart
About The Forex Technical Indicators Used
TMA or Triangular Moving Average defines the main weight that goes into the average part of the price series.
The TMA forex indicator is simply a double smoothed simple Moving Average.
The length of the simple Moving Averages is dependent on the oddness or evenness of the selected number of periods
Developed by Richard Donchian, the Donchian Bands custom indicator is as a tool to spot market price volatility.
The Donchian Bands gets narrow when there’s no noise in the market, but rapid movements in price will see the bands widens.
The Relative Strength Index is a momentum indicator that gauges the magnitude of recent price changes to determine overbought or oversold conditions in the price of a forex pair.
Start using this forex strategy in just 5 minutes. Click here to get started now.