You must watch this video made by Kelvin Lee in which his explains his Best Forex Scalping Strategy. Forex Scalping is becoming more and more popular amongst new traders as it allows an opportunity for making a quick profit in as little as 20 minutes. Plus you have the opportunity to make multiple trades in a day. In the Best Forex Scalping Strategy video, Kelvin Lee explains what indicators he uses and how he uses the confluence of these indicators in deciding when to enter and when to exit the market. Watch this Best Forex Scalping Strategy video!
The indicators used are the:
1. Fibonacci Indicator
2. Daily Pivot Point Levels
3. Slow Stochastic with the settings of 5,3,3.
The first step that you need to do is mark the important support and resistance levels. Two very good indicators that can help in identifying the support and resistance is the Fibonacci 0.618, 0.5 and 0.382 levels plus the daily pivot levels of R3, R2, R2, PP, S1, S2, S3. At these levels, price action has a strong potential of bouncing. So the first thing that you should do is identify the support and resistance levels using the Fibonacci Levels and Daily Pivot Levels.
Once you have identified the support and resistance levels, you should use the slow stochastic(5,3,3) to decide when to enter the market and when to exit the market. Readings above 80 indicate an overbought market and readings below 20 indicate an oversold market.
When Stochastic reading is above 80 wait for it to move down before you enter into a sell order. Exit the trade when the Stochastic reading reaches the 20 reading. In the same manner, when the Stochastic reading is below 20 wait for it to move up before you enter buy. Exit when the Stochastic reading reaches the overbought reading of 80.
Another indicator that you can add to the above mix is the candlestick reversal patterns. If you find a candlestick reversal pattern forming close to the support and resistance level and the Stochastic Oscillator is also showing overbought or oversold, you have a high probability of making a winning trade.
The most important thing for you is to first find confluence between the support and resistance levels and the Stochastic overbought and oversold readings. The price should be at the support and the Stochastic reading should be below 20 before you enter into a long trade. In the same manner, price action should be at the resistance level and the Stochastic reading should be above the 80 level before you enter into a short trade. So both the S&R levels and the Stochastic Oscillator Levels should confirm each other. As said above, you can also look for a candlestick reversal pattern forming close to these levels for further confirmation. Kelvin Lee has developed an excellent Trendline Strategy that you should take a look at. This Trendline Strategy is easy to use and master. You might also want to take a look at Kelvin Lee’s Forex Indicator Blog.