Momentum Scalping Forex Trading Strategy

Scalping is a sure way to spin profits with the right technical tools in place. Traders get to have a feel of the market at different times as a result of the successive times orders are being entered when scalping.

This forex scalping strategy is designed around the Momentum indicator, as such we are keen on knowing the strength of the dominant market trend.

Asides the Momentum indicator, other key technical tools that are employed in making this strategy includes the (T_S_R)-Big Trend, AMA and 7_MACD custom indicators, which are solid tools used in determining trends, price smoothening along with spotting convergence and divergence respectively.

Chart Setup

MetaTrader4 Indicators: (T_S_R)-Big Trend.ex4 (Default Setting), AMA.ex4 (Default Setting), Momentum (Parameter Setting Modified; Period=28), 7_MACD.ex4 (Default Setting)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute

Recommended Trading Sessions: London, New York, Tokyo

Currency Pairs: Any low spread pair (EUR/USD, GBP/USD, USD/JPY,…)

Download

Download the Momentum Scalping Forex Trading Strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Initiate a buy order if the following indicator or chart pattern gets put on display:

  1. If the (T_S_R)-Big Trend indicator line intersect the deep sky blue  dotted sienna AMA indicator line in a bottom up fashion as shown on Fig. 1.0, price is said to be driven higher i.e. a trigger to buy the designated forex pair.
  2. If the dodger blue line of the momentum indicator break above the 100, price is said to be bullish i.e. a trigger to go long on the stipulated currency pair.
  3. If the gray histograms of the 7_MACD custom indicator break above the 0.00 level as depicted on Fig. 1.0, bulls are said to be driving price higher, as such a buy will suffice.

Stop Loss for Buy Entry: Place stop loss 2 pips below immediate support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules or conditions takes precedence:

  1. If the line of the (T_S_R)-Big Trend custom indicator cuts through the deep sky blue sienna AMA indicator line to go above it (see Fig. 1.0), it is a trigger to exit or take profit at once.
  2. If the dodger blue line of the momentum indicator dip below the 100, an exit or take profit is recommended.
  3. If the gray histogram of the 7_MACD custom indicator readjust to go below the 0.00 level, it is a trigger to exit or take profit immediately.

Sell Entry Rules

Take up sell position(s) if the following holds true:

  1. If the (T_S_R)-Big Trend indicator line intersect the deep sky blue  dotted sienna AMA indicator line in a top downward manner (refer to Fig. 1.1), price is said to be pushed lower i.e. a trigger to sell the selected fx pair.
  2. If the dodger blue line of the momentum indicator stay below the 100, price is said to be bearish i.e. a trigger to go short on the currency pair of interest.
  3. If the gray histograms of the 7_MACD custom indicator break below the 0.00 level as illustrated on Fig. 1.1, bears are said to be driving price lower, as such a sell will do.

Stop Loss for Sell Entry: Place stop loss 2 pips above immediate resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following takes center stage:

  1. If the line of the (T_S_R)-Big Trend custom indicator cuts through the deep sky blue sienna AMA indicator line to go below it (see Fig. 1.1), it is a trigger to exit or take profit at immediately.
  2. If the dodger blue line of the momentum indicator realigns to jump above the 100 during a sell alert, traders are advised to exit or take profit on positions forthwith.
  3. If the gray histogram of the 7_MACD custom indicator gets aligned above the 0.00 level while a sell signal is running, price is said to be in a probable reversal, hence an exit or take profit will suffice.

Sell Trade Example

Fig. 1.1

Free Download

Download the Momentum Scalping Forex Trading Strategy

About The Trading Indicators

The (T_S_R)-Big Trend.ex4 or Terminate and Stay Resident Big Trend custom indicator is a moving average line with a default period 80.

The AMA.ex4 custom indicator is a trend following indicator that is built on the moving average.

Its dotted deep sky blue line represent a bullish trend, while the dotted gold line signals a bearish trend.

The Momentum indicator compares when the current price is relative to where price was in the past.

The 7_Macd.ex4 custom indicator is another variant of the popular MACD MT4 indicator.

It is used as a trend following and a momentum indicator.

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