How To Trade The 5 Minute Chart Naked?

5 minute chart is fast moving suitable for scalping. The advantages of trading 5 minute chart is you can lower your risk to just 10-15 pips. The most important thing is the risk to reward ratio. Just make sure that you trade with a risk to reward ratio of 1:1 with this strategy. This will ensure that you have a high winrate. If you increase your risk to reward ratio to 1:2, you will be reducing your winrate drastically.

Trading naked means that you are not going to use any indicator at all and trade solely based on price action. On shorter timeframe like 5 minute, the chances of a false signal is high. The price is moving fast and you have to be alert most of the time. But if you have a strategy that only needs a right entry and the take profit is fixed to 1:1, your chances of success on lower timeframe increases. Read this post on my candlestick trading straategy that makes 100-200 pips with low risk of 10-20 pips per trade.

Now I don’t trade on 5 minute timeframe. 5 minute timeframe is pretty fast and trend keeps on changing. You never get the big picture when you are trading on 5 minute timeframe. My preferred timeframe is the daily and the H4. On H4 you have ample of time to plan the trade. I only open a trade at the close of an H4 candle. I wait for the candle to close on H4 timeframe. Then I make a decision. First I look at the daily timeframe. This gives me the idea for the direction of the main trend.

When the H4 candle closes, I also look at the lower timeframes like H1, M30 and M30 but seldom do I look at M5 timeframe. I basically use M5 timeframe for trading binary options. Above video can help you a lot in trading binary options with 30 minute expiry. When you trade on M5, you can predict the trend and open a binary options trade with expiry 30 minutes. You can read this post in which I explain in detail how you can develop an algorithmic binary options trading strategy.

You can use M5 timeframe to make 40-100 pips per trade. The only advantage of trading on M5 timeframe is that you can reduce the risk a lot. But you can lose a lot in trying to reduce the risk. For this you should first look at the higher timeframes like H4 or H1. When the H4 or H4 candle closes, you should again take a look at M5 chart and then make you trading decision.

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