Forex Indicator Options For Scalping Top
Want to be a scalper? Here are some forex indicators for scalping that are widely used, and can be rated as the best tool to build your system.
Scalping technique traders are always trying to get a profit from the small price movements in the market that always happen all day long. Trading methods and forex indicators for scalping are also typical. Fundamental analyzes vary and this news rarely affects the scalper. Therefore, experienced scalpers usually already have their own powerful and reliable system, consisting of technical indicators with default and customized settings.
Well, here are some forex indicators for scalping are widely used, and can be judged as some of the best “tools” to set up your trading system.
1. Moving Average
As one of the simplest indicators available on all trading platforms, Moving Average is a favorite of many scalpers. Placement and use is also very easy for beginners. Traders simply define the timeframe for trading, put a combination of several Moving Averages lines, test their reliability, then operate.
Master Trader Alan Farley in a column in Investopedia suggests a combination of SMA 5-8-13 on the 2-minute chart to identify a strong enough trend for both buy and sell, as well as to review when the trend will roughly reverse.
Put Moving Averages on the chart, you will see the high school lines up and down. When the trend is still strong, it will stick to SMA 5 or SMA 8, while if approaching SMA 13 then it means that momentum is fading and reversal will happen (time is close position). Next, wait for the lines to reunite before opening the position again. Use one of the classic formulas Moving Averages: If a lower MA passes a high MA upward, open buy; whereas if lower MA passes high MA downward, then open sell.
Many other Moving Averages combinations. There is a “marry” SMA-60 with a default Parabolic SAR setting, or trio EMA-12, EMA-26, and SMA-55. And so forth. The disadvantage of using the MA is the possibility of fake signal is high enough, so it’s good to always be ready to square off the exit if the price goes in the wrong direction, or equip it with another indicator as a confirmator.
2. Bollinger Bands
Bollinger Bands in low timeframes are also popular as a forex indicator for scalping. Simply apply Bollinger Bands with period 12 and Deviation 2 (default) at 5 minute timeframe, then run. If the price touches the lower band, then buy; then if the price reaches the upper band, then sell. Install the stop loss slit and thin TP, between SL: TP = 10: 5 pip.
However, there is no system without weaknesses, including Bollinger Bands indicator. This one forex indicator will only be effective in the market ranging / sideways, and can bring disaster if used when the price is trending. The problem is, Bollinger Bands often fail to detect the penetration of one band, but it can easily make the position we get SL because SL level is low.
Stochastic usage as an indicator of forex for scalping is somewhat different from Moving Averages or Bollinger Bands. Most traders use Stochastic not alone (single indicator), but rather as a complement in one system. So you can often see the recommendation of a system where Stochastic is combined with Moving Averages, or Bollinger Bands, and more.
One tip of scalping while following the trend of DailyFX is to combine Stochastic with SMA-200. SMA-200 is often regarded as a demarcation line that limits the bullish market (price is above the line) and bearish market (price is below the line). So, put SMA-200 on 5-minute timeframe, then apply also Slow Stochastic (5,3,3). For example the market is bullish, then target buy signal from Stochastic crossover to open position. Conversely, if the market is bearish, then the sell signal incar. Of course, you need to be picky which currency pair seems to be moving quite actively and tempting to be scalped in this way.
There are many others that can be used as a forex indicator for scalping, such as the CCI indicator. There is even a Scalper who dare to trade naked, aka trading without indicators, just by observing the price action and candlestick patterns. The equations are all one: applied to a low timeframe, between 1M, 5M, and a maximum of 15M.
Whatever indicators are used in the system, an important point to be observed is that traders need to test first before using real trading. There are so many scalping systems out there, one of the reasons is that not every system works for everyone. Capital, money management, and trading habits of each person can also affect the success or failure of scalping.