What’s up Traders, in this article, we’re going to be talking about BEST Scalping Trading Strategy For Beginners (How To Scalp Forex & Stock Market).
In this article I will show you, how I sculpt the markets using a simple energy setup strategy, that helps me to spot high probability areas on a chart.
Scalping Trading Strategy
- Static area of Support/Resistance
- 200 EMA (Dynamic area of Support/Resistance)
- Stochastic Oscillator (Pinpoint Market entries-Divergences)
- A divergence signals a potential change in price direction
- Does it work on Crypto Markets?
- Scalping is not easy
So scalping is basically a technique, which involves opening and closing the trades in a very short period of time in order, to obtain quick profits this trading method is based on opening trades, and closing them with small profits on lower timeframes.
My scalping setup is based on finding confluence, the confluence is an area, with multiple support and resistance levels both static and dynamic a confluence of support or resistance, is more relevant to traders as it includes 2 or more important focus points on the chart.
Although it might seem complicated finding conference on the chart, is not difficult you just have to train your eyes to spot chart areas, where multiple levels meet finding confluence on your charts.
Conference offers high probability trading opportunities
It’s very important for scalping, because these areas offer high probability trade opportunities, before you continue with the scalping setup.
Let me tell you something important finding confluence it’s a quite subjective, and is dependent on the trader skill experience and tools used on the chart.
My personal role is to find areas with at least two support and resistance levels, one of them must be a static level in the other one a dynamic level.
So we need three confluence conditions, to be met for our scalping strategy.
Static area of Support/Resistance
First we need an obvious area of support or resistance support, and resistance is practically, the foundation of technical analysis and these levels serve as a starting point for developing.
An idea of what may happen next, in what concerns the price movement, so we first look at recent market swings and try to spot areas of static support or resistance as a rule of thumb.
If the line includes three or more swing points, it means that the support or resistance level is more relevant, but drawing horizontal lines around recent market swings can be very subjective.
And in most cases, we can usually only approximate those areas, that’s why we need to add something else for our scalping confluence set up.
200 EMA (Dynamic area of Support/Resistance)
The second conference condition involves the 200 EMA as a dynamic area of support and resistance.
I prefer to add the 200 EMA, because as a Dynamic area of support and resistance level is constantly changing depending on recent price action, in the case of esthetic support or resistance level.
You already know at the beginning of the trading day where those levels, are you know in advance where the possible areas of interest are located on the chart with dynamic support and resistance.
You don’t know an exact number as these levels, are changing depending on market fluctuations, this is a good thing for our scalping setup, because we can use both static and dynamic levels in our advantage.
So we add the 200 EMA and start searching for areas of confluence between the dynamic support and resistance and the static support and resistance.
Stochastic Oscillator (Pinpoint Market entries-Divergences)
Our third component in our scalping setup, is the stochastic used to pinpoint market entries, the stochastic oscillator will help us to spot divergences on the chart, if you are not familiar with divergences.
The divergence occurs, when the price for a lower low while the stochastic forms a higher low indicating a possible, buy or when prices form a higher high, and the oscillator forms a lower high indicating a possible.
Sell divergence occurs, when the price action is different from the action of the stochastic oscillator.
A divergence signals a potential change in price direction
When a divergence occurs a potential change in price direction could be on a course.
So now we have the full set up, we are looking for confluence of dynamic and Static support, and resistance levels respectively recent market swings and 200 EMA, and we pull the trigger, if we spot a divergence on the stochastic oscillator.
Let’s see the scalping strategy in action in this chart, we see this level of static support and resistance and here is the confluence area, with the 200 EMA the dynamic support and resistance indicator.
So we have this potential area, but we cannot enter the market blindly we need to confirm it with the stochastic, we have a regular divergence and we also have a hidden divergence which is a more powerful set up all our conditions were met.
So after the crossover of the stochastic lines, we can enter long on the market, because we trade based on confluence the stop-loss order would be placed below the confluence area the profit target depends on your trading style and risk aversion.
You could aim for a 2:1 ratio, or put your stop to break-even once in profit and write a risk free trade.
Here’s the same setup we have a confluence area, between the recent market swings and the 200 EMA in the divergence on a stochastic oscillator.
If you incorporate also some price action techniques the scalping setup, will become even more powerful.
Look at the flag pattern developed which is another confirmation, that a long position was the only alternative ensure positions were out of a question.
Here we have a short scalping trade, we have a clear resistance area right around, here the 200 EMA serves as a dynamic area of support and resistance and around here.
We have our confluence area, we have a hidden divergence on a stochastic and once the stochastic lines crossed, we had the conformation, we needed and the high probability trade was on the short side.
Does it work on Crypto Markets?
I know that there are some of you who are also trading on crypto markets, I personally don’t trade Cryptocurrencies, because I prefer to understand the fundamentals behind the market before I decide to put my money on it.
So, I’ve not tested this copy strategy on crypto markets, but you can back test it on demo account to see, if it has potential on this Bitcoin chart I found the confluence pattern and the stochastic entry here, but I am not familiar.
With the spreads on crypto markets, so I cannot tell for sure, if you can profit from it in the long run. Why I am talking about the spreads?
Because of the nature of the scalping, you need to trade only the instruments, with the lowest spreads as a scalper by default, you will use lower stop losses aiming for small profits.
The higher the spread the lower your stop-loss will become. I personally never sculpt an instrument that has a spread higher than two points because the risk/ reward ratio is not worth it.
Scalping is not easy
Like I said before scalping may seem easy but is not. if you want to make money from scalping, it’s imperative to have a disciplined approach to trading.
Keep your price charts clean, without plotting a lot of indicators, and focus also on reading and understanding the price in order to increase your chances to sculpt the right way.
Okay, so that’s it I’ve come to the end of this presentation, I hope you’ve enjoyed it and if you really do please write a comment and click the share buttons smash it right, and click to subscribe bell to Allow notifications be updated.
Whenever, I publish content like, this and finally any questions or feedback let me know below and I’ll do my best to help, so with this guide, I hope you got value out of this presentation, I wish you good luck and good trading and I’ll talk to you soon you.
2 thoughts on “Best Scalping Trading Strategy For Beginners (How To Scalp Forex & Stock Market)”
Hi Just read about the scalping ,Very good presentation.