by TFK1: There are many traders that enjoy constant action of scalping. I know because I used to be one of them. Let me therefore share one of my scalping systems with you. I have used it for quite some time and it has worked very well for me.
They system I have used is quite simply, which basically means that is functional in real time market – where clutter and hesitation is deadly.
Used forex indicators
Exponential moving averages (EMA) 50 and 21. Fast EMA position relative to slow EMA position will be used to determine market trend. All trades must be entered in this direction.
DeM (DeMarker) 3. Apply it on 5 min chart of EURUSD preferably.
Forex strategy rules
EMA 21 (green) trending below EMA 50 red. This will signalize downtrend, only short trades must be entered.
DeM rising above 0,7 line is a primary signal. Once that occurs, we wait for bearish candle to close below the low of previous candle. We enter immediately on bearish candle close.
We place stop loss above the high of our signal formation.
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EMA 21 (green) trending above EMA 50 red. This will signalize uptrend, only long trades must be taken.
DeM falling below 0,3 line is a primary signal. Once that occurs, we wait for bullish candle to close above the high of previous candle. We enter immediately on bullish candle close.
We place stop loss below the low of our signal formation.
Position liquidation: there is no simple answer for take profit question. There is no scenario where on solution fits all. You will do better in the long run, if you learn to liquidate the position based on you knowledge and experience. This all takes practice but its works at the end. That, being said, I have a few guidelines that can help you to liquidate in profit with this forex strategy.
Avoid entering the signal that would require exceptionally wide stop loss.
Liquidate in profit of at least twice the size of risked amount.
Liquidate base on wave geometry, in other words – where do you except the price to reverse. Expect the reversal and exit before it.
Once you reach some profit, adjust stop loss to break even position.