This is a 5-minute forex scalping strategy using Parabolic SAR and a 200 exponential moving average indicator. This strategy might look difficult to some traders at first glance but it is quite simple if you can understand the signals of the indicators.
TLDR
- Use Parabolic SAR, 200 EMA, and 10-period MA on 5-minute charts during London/US sessions for optimal scalping opportunities.
- Enter long positions when price is above 200 EMA and PSAR dots appear below candlesticks with 10-period MA confirmation.
- Trade major currency pairs with low spreads to minimize costs and maximize profit potential in quick scalping trades.
- Limit risk to 1-2% per trade and use strict stop-loss orders to protect against unexpected market movements.
- Practice strategy on demo accounts while maintaining a trading journal before transitioning to live trading with real money.
Understanding the Core Strategy Components
The foundation of successful forex scalping lies in understanding three key technical indicators that work well together.
The Parabolic SAR, 200 EMA, and 10-period MA form the core indicators of this strategy, each serving a specific purpose in identifying market trends. The Parabolic SAR signals potential reversals, while the 200 EMA confirms the overall trend direction.
Operating on a 5-minute timeframe, this strategy works best during London and US sessions when market activity peaks.
Traders should focus on major currency pairs with low spreads to maximize effectiveness and minimize trading costs.
The rules of this trading strategy are clearly defined and easy to follow, making it one of the simplest and most effective scalping strategies available.
Setting Up Your Chart
To begin, you will need to set up your chart with the following indicators:
- Parabolic SAR (0.02 step)
- 200 exponential moving average applied to the close
- 10-period EMA applied to close
- De-munyuk indicator (optional)
Currency Pairs to trade with this Forex strategy: any with low spread, like EURUSD, GBPUSD, USDJPY
Trading Sessions: London, US
Timeframe: 5-minute Forex chart
Entry and Exit Rules for Long Positions
Several key rules form the trading plan for successful long position entries in this forex scalping strategy, creating a systematic approach to market opportunities.
The long position criteria require that price action remains above the 200 EMA while Parabolic SAR dots appear below the candlesticks. Entry confirmation comes when the price closes above the 10-period moving average. Traders should wait for all these conditions to align before entering a trade.
Once the position is open, a predetermined take-profit level (generally 15 pips) helps secure gains, while a stop-loss (generally 15 pips or less) protects against unexpected market reversals.
This chart shows four trade entry areas highlighted with arrows. We have 3 winners and one loser.
The losing trades sets up with a large candlestick with a larger range than others before it. You may want to include a rule that stands aside on those trades and wait for a pullback. Once price pulls back and then breaks the 10 period moving average, you’d enter a trade in the direction of the 200 EMA.
Short Position Trading Guidelines
Successful short position trading follows clear rules that help you identify perfect market conditions for downward price movements.
When implementing short position strategies, you should confirm that price action remains below the 200 EMA while PSAR dots appear above current prices. Market volatility often creates opportunities for short trades during trending markets.
Traders must wait for price closes below the 10-period MA before entering positions. For peak results, set clear take-profit levels and maintain strict risk management.
The optional De-Munyuk indicator showing red can provide additional confirmation for short entries.
Real-World Implementation Tips
When implementing a forex scalping strategy in real market conditions, you need to focus on practical execution rather than just theoretical knowledge.
Success comes from disciplined application and real-time analysis of market movements.
You should start with demo accounts to practice the strategy without risk.
Through practical examples, you can learn to identify valid entry points and manage trades effectively.
Important aspects include maintaining a trading journal, tracking spread costs, and ensuring stable internet connectivity.
Successful implementation also requires proper broker selection, focusing on those offering low spreads and reliable execution speeds for scalping strategies.
Your Questions Answered
How Long Does It Typically Take to Master This Scalping Strategy?
Mastering this strategy typically requires 3-6 months of consistent skill acquisition through daily practice frequency, with traders dedicating at least 2-3 hours per day to chart analysis.
Can This Strategy Be Effectively Used With Cryptocurrency Trading Pairs?
While adaptable to cryptocurrencies, increased volatility may affect PSAR and EMA signals. Trading psychology becomes more important due to crypto’s extreme price swings and extended trading hours. Ensure you have a trading plan that you follow instead of “winging it”.
What Is the Recommended Minimum Account Size for This Strategy?
A minimum account size of $1000 is recommended, though this can vary based on account utilization levels. Proper risk management suggests keeping position sizes at 1-2% per trade.
Does the Strategy Perform Well During High-Impact News Events?
Trading during high-impact news events is not recommended due to extreme news volatility. Proper risk management suggests avoiding these periods as price movements become erratic and unpredictable.
Are There Specific Broker Requirements for Optimal Execution of This Strategy?
Successful implementation requires brokers with fast execution speed, low spreads, and minimal broker fees. ECN or STP brokers are recommended. High-quality price feeds ensure ideal trade execution.
Conclusion
Forex scalping success relies on mastering proven strategies and maintaining strict discipline. By combining technical indicators, ideal trading sessions, and proper risk management, you can effectively capture small price movements in the market. Consistent practice in demo accounts and detailed journal-keeping help refine skills and boost confidence. With patience and dedication, you can develop profitable scalping techniques that work in real-world conditions.