This is a simple scalping system for M15 timeframe. Primarily we will be using the divergence as an entry signal and then use EMA10 (red) crossing EMA34 (yellow) as an exit signal. This simple scalping system for M15 timeframe is perfect for trading breakouts. Just open the Forex Factory Economic Calender and note the time of the major economic news release. You will be surprised to find that at around the time of the Economic News Release, this system will give you a trading signal. More on this in detail in a later post. Take a look at the following screenshot.
This is the same system that we use for swing trading. We hope that you have read our posts on how we use this system for swing trading. The rules are the same for scalping as well as swing trading. The only difference is that we swing trade on H4 timeframe while we scalp on M15 timeframe.
Now in the above screenshot, the three indicators RSI, Stochastic and the MACD are showing bullish divergence. So draw a minor trendline and wait for the price action to break it. The minor trendline gets broken immediately. So we enter into a long trade at 1.31750 and the stop loss is 1.31650. The risk here is 10 pips. Once we enter into a trade, we will exit when the three indicators simultaneously show a bearish divergence or the EMAs 10 (red) crosses from above EMA 34 (yellow). There is no bearish divergence so we continue in the trade. Always remember as a rule of thumb for the bearish divergence to appear, MACD should be in the positive territory. When it is in the positive territory we wait for the bearish divergence to appear on it. When it does appear, we then check the Stochastic and the RSI for bearish divergence. If all the above three indicators show divergence at the same time we close the trade otherwise we continue in the trade. Take a look at the following screenshot.
As you see, the three indicators RSI, Stochastic and the MACD all three are simultaneously showing a bearish divergence so we close the trade at 1.3285. We made 110 pips in less than 24 hours. As you have seen above, we have used the exact same rules for scalping that we use for swing trading. The only difference is the timeframe. We use M15 for scalping and H4 for swing trading. The only advantage of scalping is the small stop loss. We had been able to enter into a trade with a small stop loss of 10 pips. Usually our stop loss will be 10-20 pips. With practice you will be able achieve a winrate of more than 80% with this system meaning in a series of 10 trades, you will be able to make 800 pips and lose only 20-40 pips. A scalping trade using this system can last from a few hours to around 24 hours. Daily you can get multiple scalping signals using this simple scalping system for M15 timeframe.