Simple Forex Scalping Strategy Using 200EMA And Stochastic Indicator

This is a Simple Forex Scalping Strategy Using 200EMA And Stochastic Indicator together to enter buy or sell trades.

Timeframes: 5mins

Currency Pairs: EURSUD, GBPUSD, USDJPY, USDCHF, AUDUSD

Forex Indicators: 200 ema and stochastic indicator with default settings

 

FINDING THE TREND WITH THE 200 EMA

The sole purpose of the 200 ema is to find the trend. If price is above the 200 ema then its an uptrend so you only need to look for buying opportunities.

If price is below the 200 ema then the market is in a downtrend so only look for selling opportunities.

 

THE PURPOSE OF THE STOCHASTIC INDICATOR

The stochastic indicator is an oscillator and it tells you if the market is oversold or overbought and it is your trigger to buy or sell.

You sell only when the trend is down and the stochastic lines have gone past above the 80 line and are starting to point down at the close of the candlestick.

You buy only when the trend is up and the stochastic lines have gone down past the 20 line and are starting to point up at the close of the candlestick.

 

TRADING RULES

Buy Setup:

  1. price must be travelling above 200 ema
  2. check to see if stochastic lines have gone below 20 line and now MUST BE POINTING UP.
  3. immediately activate a buy market order.
  4. Place your stop loss 15-20 pips away.
  5. Set your take profit target at 20 to 30 pips.

Simple Forex Scalping Strategy Using The 200 EMA And Stochastic Indicator

 

Sell Setup:

  1. price must be travelling below 200 ema
  2. check to see if stochastic lines have gone above the 80 line and now MUST BE POINTING DOWN.
  3. immediately activate a sell market order.
  4. Place your stop loss 15-20 pips away.
  5. Set your take profit target at 20 to 30 pips.
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Simple Forex Scalping Strategy

RANGING MARKETS=BIG PROBLEM

Ok, this is a trend trading scalping strategy therefore, if there is a ranging market, you’ll have too many false trading signals may get stopped out a lot too.

One way to avoid is is to watch the angle of the 200 ema, if the angle is flat or looks flat, then don’t trade. This will keep you out of making bad trades.

Next thing also is best to trade in london as well as New York session where there is increased volatility and trading volumes. Do not trade during Asian trading session.

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