Scalping strategy “Simple Scalping”

Scalping strategy "Simple Scalping"

While studying scalping strategies, we analyzed how they work and how useful they can be in trading. Today we will study another such strategy called “Simple Scalping” (or “Simple Scalping” – in literal translation).

We will analyze it according to what is already familiar to us:

  1. The tools the strategy works with;
  2. Conditions required to work on this vehicle;
  3. Rules for entering the market based on signals from its indicators;
  4. Profit fixation rules for transactions.

After that we will talk about how efficient the Simple Scalping system is. Let’s discuss whether it is possible to work on it in the form in which it is provided by its author.

The “Simple Scalping” strategy has attracted our attention at one of the foreign trading forums. It is based on three indicators, two of which are in the standard package of terminal tools, and the third tool is the author’s indicator, which can be downloaded at the end of the article. We have already discussed the topic of placing instruments on a chart more than once, so we will not repeat ourselves today. Let me just remind you that:

  • standard tools are in the root directory of your terminal initially.
  • copyright tools must be placed in the same root directory.

Simple Scalping Tools

This is how, for example, on a chart in MT4, the instruments needed to trade using this trading system look like.

As you can see in fig. 1, here we use Bollinger Bands, a simple arrow indicator and 2 moving averages. Let’s see what properties they are characterized by.

BB_Simple_Scalp indicator

This is a proprietary instrument, an arrow indicator that filters signals.

Moving Average indicator

As you probably understood, this strategy uses 2 moving average curves, but with different parameters in the settings. On the price chart, they show the area for buying and selling:

  • If the price lies under these two curves, we consider only sales;
  • The price is above the moving averages – looking for an opportunity to enter with a buy;
  • The crossing of these two curves by the price indicates a possible change in the trend and is considered as one of the signals to close open positions.

Bollinger Bands

The Bollinger Bands indicator in this strategy is an important tool. Focusing on its specific lines, we look for points of entry into the market, and also set Stop Loss and Take Profit orders. Below in the figure you can see the settings for this indicator.

Trading conditions for TS "Simple Scalping"

Trading conditions for TS “Simple Scalping”

It is necessary to scalp using this strategy, adhering to certain rules.

Trading time

The scalping quality by Simple Scalping is directly proportional to the level of market volatility. The more volatility the market is, the more signals the indicators give, the more trades a trader will make. It will be good to trade on the major major pairs, such as – GBP / USD, EUR / USD. You should take into account not only the currency instrument and market volatility, but also choose the right trading session:

  • So, with EUR / USD or GBP / USD it is better to scalp during the European and American sessions.
  • For scalping Asian currencies – Japanese yen (JPY), Australian (AUD) and New Zealand (NZD) dollars, it is better to trade during the Asian session.

This point is very important because mismatching currencies and sessions will not do you any good.

Timeframe selection

A 5-minute timeframe is considered optimal for scalping. We know from experience that many of them would show better results, for example, in short-term or even medium-term trading. Since the strategy we are considering is declared as scalping, we will not deviate from the rules and also choose TF M5.

Stop Loss and Take Profit

When entering the market, we take Take Profit at the moment when:

  • When selling, the price reaches the lower line of the “Bollinger Bands”;
  • When purchased, it reaches the top of the curve.

The author does not indicate where exactly to set Stop Loss. I believe that the trader must solve this puzzle for himself. For myself, I found a solution and set the Stops:

  • When selling – for the previous peak.
  • When shopping – for the previous depression.

Also, considering that we trade on TF M5, Stops can be placed:

  • If we sell, then Stop Loss can be placed above the maximum, but so that it lies below two moving averages.
  • If we buy, then Stop Loss can be set below the minimum and above the curves of the two moving averages.
  • If the price enters and crosses the moving ones, trades can be closed by Stop Loss.

Signals to open positions

Login with sale

  1. The BB_Simple_Scalp indicator signals with a red arrow that you can sell.
  2. Two Moving Average curves are above the price and show a downtrend.
  3. We look for entry points after the price consolidates on the upper curve of the Bollinger Bands indicator.

The picture above shows that the set Stop did not work – the price was steadily falling down, all four positions in this example will be closed by the Take.

For all signals to open positions or not – the trader decides. It is important to remember that each new open deal is an additional load on the deposit. Therefore, the decision should be made based on the size of your deposit and the volume of the lot with which you enter the market.