This scalping system is extremely flexible. We have tested only a fraction of possible variations. Due to its versatile nature, it can be applied both as a scalper and as a day trading forex system. During our test, we used it only as more conservative day trading strategy. Even though, it has brought some nice results with relatively low draw down.
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System uses MACD filter and stochastic signal. Those are standard forex indicators. However, when it comes to closing the trade, strategy uses parabolic SAR and trail stop combo, that has proven itself to be very effective in this particular combination.
Strategy is provided with free expert advisor and was tested on historical data since 2003 with profitable results. The EA includes more functions that have not been included in test.
Used tools and indicators
Moving average convergence divergence (MACD 250,500,9) The system uses histogram only to identify trend. It considers its position to the zero value line. All positions must be entered in confluence with trend (MACD). Signal line is omitted from calculation.
Stochastic (5,3,3) We haven't placed with stochastic period around much. Increase D and K value to limit sensitivity (higher period will lower the signal frequency and up its quality). This entirely depends on your goals. Anyway, always do the proper testing.
SAR parabolic trail stop (step 0,025, max 0,1). Trailing stop is placed on last closed SAR dot. Additional distance is preferably applied to widen the TS (30 pips in test).
Stop loss and take profit: EA includes this function. Use zero value for EA to use only trail stop in position closing.
Forex strategy rules
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MACD histogram trending below zero. Price closing below SAR dot. Downtrend confirmed.
Stochastic rising above 70 line. Signal line falls below the main line. Sell on candle close.
Trailing stop is placed at the last closed SAR dot above the price + 30 pips extra distance.
Predefined take profit is used.
MACD histogram trending above zero. Price closing above SAR dot. Uptrend confirmed.
Stochastic falling below 30line. Signal line rises above the main line. Buy on candle close.
Trailing stop is placed at the last closed SAR dot below the price -30 pips extra distance.
Predefined take profit is used.
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Disclaimer: Expert advisor was tested for profitability on historical data. All screen shots provided are displaying real results of the test. However past data will never guarantee future success. Every expert advisor needs to be tested properly on demo account. LIVE use only on your own risk. Read full disclaimer. TheForexKings Team does not give any financial advice. TheForexKings does not take any responsibility for any user’s investments and investment decisions. All rights reserved. Strictly for personal use.