How to scalp the forex market profitably: Strategy 2

Hello, it's my pleasure having you here. This day we will be continuing our series on scalping strategy, and as I informed us in the first series of this video, that every of this scalping strategy we are going to be talking about works across all instrument classes. So we are not just restricted to the, to the currency asset class. You can also use this strategy to trade the commodity the index as well as, um, the stock. So whichever asset class you trade, you are well covered by this scalping strategy. So this one, uh, we are going to be using 2 indicators. Uh, first we'll be using the 200 exponential moving average. 200 exponential moving average will help us to know the trend in the market. So 200 exponential moving average helps us to understand the trend in the market while the RSI will help us to understand the strength of the instrument. So exponential moving average helps us to know the trend, the RSI helps us to know the strength or the weakness of the instrument. And the time frame we are going to be using is 1-minute time frame. So this is a scalping strategy, so this time around we are going to be working with the 1-minute time frame. And sometimes you can also use the 5-minute time frame on this strategy. Since it's scalping strategy, so we have to use a shorter time frame to get our trade setups in the market. So straight to business, I move first to the time frame we are going to be using for this strategy, which happens to be the 1-minute time frame. So I'm currently on 1-minute time frame on EURGBP. The next thing is to add the first of the indicator, and the first indicator we are going to be using is the exponential moving average. So I go to trend and I pick moving average and I change the period to 200. So it's 200 exponential moving average. I can decide to change the style, which happens to be the color, to maybe black, for example, and this way I have the moving average on my chart. The next thing is to add an oscillator called the Relative Strength Index. So I go to indicator list. It's from indicator list I get to add every indicators I want to use to analyze the market. I move to oscillators because the RSI happens to be one of the oscillators. Then I pick the Relative Strength Index. So this is Relative Strength Index. So I pick the Relative Strength Index and I go to levels. So on levels, I would see the default settings of the RSI, you might have it either as 30 and 70, and on some other devices you might see it as 20 and 80. But for this particular strategy, we only need a particular level, so I'm going to take out one of these levels. So I select, for instance, the 70, and I click delete to take out that particular 70. Then I will edit this level to reflect 50. I want to use the 50 mark for my RSI, and I can slightly increase the thickness of the line, uh, this way. Then I click OK. So every other thing remains constant. The parameters, the period is 14, we apply to close, the style is the color of your choice, and the maximum is 100. Yeah, and the minimum is also 0. So I leave every other one constant. The only thing I changed was to remove, um, one of the bands, either the oversold or the overbought, and edit the other one to 50, which is like the medium band of the range between 0 and 100. The middle happens to be 50. So with this done, I click OK, and my RSI is added to the chart. Which is beautiful. A scalping strategy means we enter the trade as many times as possible within short period of time. And this is how this strategy works. The first thing I would need to take note of is where price is trading with respect to the moving average. Is price trading above the moving average or is price trading below the moving average? That's very critical. That's the first thing I need to take note of. If price is trading above the moving average I will be looking out for buying opportunities, buying opportunities, opportunities to take a buy trade in as much as price is trading above the exponential, in this case 200 exponential moving average. And the second part of this strategy is the RSI. The RSI has the 50 mark now, so above 50 says I should still continue to look for buy trades. And below 50 says start looking for sell trades on that instrument or sell opportunities on that instrument. So since I have the setup, the next thing is for me to save this setup. So I can just go to my templates and I pick, uh, save template, and I can use the name RSI scalping strategy or RSI EMA scalping strategy. So this way I can always recall this on any instrument I want to trade. RSI EMA scalping strategy. This way then I save the template just as I have done. Yeah, so this is EURGBP on the 1-minute time frame, and currently at this point in time I'm seeing EURGBP trading above the 200 exponential moving average on the 1-minute time frame. But let me quickly take a look at my RSI. The RSI at this point in time is trading below the 50 mark. This means I have to wait until the RSI also gets to correspond with what the moving average is telling me. So the RSI must still trade above 50 before I go back for further confirmation on this particular trade. So with this on euro pound, let me quickly move to another instrument. Um, say USD/CHF. So I go to 1-minute time frame and I recall the strategy, RSI EMA scalping strategy. So I pick it and boom, it comes out on my chart. So this is it on the 1-minute time frame, um, USD/CHF. Okay, so USD/CHF is trading below the 50 mark, which is beautiful, and price is also currently trading below the 200 exponential moving average. This makes this Very beautiful. Now, what are my triggers for trades at this time? My triggers, in as much as price is trading below the exponential moving average and the RSI is also trading below the 50 mark, are the bearish engulfings. What do I mean by bearish engulfing? That is a bearish candle that is able to successfully cover the previous candle. Preferably a bullish candle, but it's also possible you have a bearish candle covering another bearish candle. That makes that particular one a bear-bear engulfing. So a bearish candle that engulfs another bearish candle. So quickly, let me look for an example of that so I get to show us what's a bearish engulfing or a bullish engulfing as a case of— in case of a bullish signal. What it looks like typically. So taking a look at these 2 candles, this is a red that precedes this green, and this green followed the red. This particular green candle, let's take a very close look at it. Um, yeah, so taking a very close look at this particular candle, it happens that the low of this particular red candle is found inside this green candle, and the eye of this particular red candle is also found within the body of this green candle. So in other words, the green candle is able to successfully cover the red candle. That's the meaning of the engulf— a green candle that covers a red candle that precedes it, or a bullish candle that successfully covers a bearish candle, or a bearish candle that successfully covers a bullish candle. So, so this particular green candle happens to be a bullish engulfing because it is able to cover a red candle that precedes it. That's a bullish engulfing. So in case price is trading above the 200 exponential moving average and RSI is trading above the 50 mark, this bullish engulfing will be a good trigger For us to take a buy. Let me even check where the RSI is. Yeah, at this time. So on this particular level, if you trace to where the RSI was at that time, RSI was already above the 50 mark, and price is also trading above the 200 exponential moving average. So this bullish engulfing that I just pointed to us now happens to be a trigger bar on this instrument. So immediately I saw this. I could have taken a buy immediately, and I have my stop loss below the low. And currently there's no other low at this time that is lower than the low of this bullish engulfing. So I put my stop loss below here, and I target minimum 2 times the size of my stop loss. Minimum 2 times the size of my stop loss. So since my stop loss is here, So the distance between the close of this candle and this low is very tiny, and if I have targeted 2 times around this level, maximum my trade would have closed in profit. So it's a scalping strategy. We enter as many times as possible in as much as we continue to get bullish engulfing candles. And in case the signal, um, does not really play out in the market, we are only getting to risk a very, very tiny fraction of our account. At every point in time. So this one guarantees to a reasonable level that we would not allow our trade to run for so long against us in case it is not right. We get to be stopped out as early as possible in case the signal happens not to be very correct as at the time we get it. So this is a bullish engulfing. So a bearish engulfing will just be the other side of what I have shown to us. Um, at this time. So let's go back to what is currently happening or what is currently playing out in the market. So I return back to the normal setup, uh, on USCHF. So USCHF is still trading below the 50 mark. Uh, was this a bearish engulfing? I am not so sure. Uh, yeah, I'm not so sure it's a bearish engulfing except I'm able to get the price of the high of this and see if the high happens to be inside of this red candle. Um, let's see, is it inside? Maybe, maybe, but let's confirm. I pick my data window. This is the data window, and I place my cursor on the candle I was trying to get open of this particular candle. The open is 0.94338. You get to see the open somewhere here. So let's just look at that segment of the chart. You see 0.94338 happens to be the open. So what is the open of this particular one? 94338 is exactly the same price. The 2 opened at the same price, 94338, 94338. So the open is the same thing, and every other part happens to be inside. So this is almost— it's a partial bearish engulfing because it opened at the same price, but the other part is well covered. Yeah, so this one is partial and it is not a full bearish engulfing. It is not a full bearish engulfing because it's not able to cover the open of this particular candle. If this one had traded a bit higher, it would have been a perfect bearish engulfing. And you could have checked what the setup is going to look like when the market plays out around there. So I moved another instrument to check what is currently happening. So I go back here and I had it. That's the RSI EMA scalping strategy. Yeah, so on euro pound at this time, I'm seeing price trading below the 200 exponential moving average. Is it the same thing? Yeah, so below the 200 exponential moving average. And the RSI is currently below 50. So looking out for bearish engulfing candles on the 1-minute time frame now will trigger us to take a sell. Yeah, that would be a trigger for us to take a sell on GBP/USD as at this time. But there's no bearish engulfing now on this particular instrument. So if you continue to watch, once a bearish engulfing candle appears, then you take a sell. And you adjust your stop loss above the, uh, the high since it's a sell trade we'll be looking at since price is trading below the 200 exponential moving average and RSI is also trading below the 50 mark. Uh, so move to another one, USD/JPY. I had the RSI EMA scalping strategy. Yeah, so on USD/JPY 1 minute, price is currently consolidating. Yeah, so price is currently consolidating. You see price moving sideways. So sideways movement is not a very good time for one to take trades. Yeah, so it's better the market is trending. So the market at this time is not trending. The moving average is flattening out. The RSI too is also flattening out. This is not a very good time to use this strategy to trade. We only trade the trend. It's trending towards a particular direction. Waving above 50 very well, or waving below 50 very well, and price not just around the moving average, not exactly around. Okay, so let's see what is playing out now. Uh, this current candle on USD/JPY, is it going to likely close as a bullish engulfing? Let me check the low of this particular candle. The low happens to be 126.588. And what is the low of this one? It's exactly the same price. Oh, that's not, um, very good bullish engulfing. It's a partial bullish engulfing as at this time. So if any other bullish engulfing appear that tends to move away from around this moving average, then that's telling us that we should be looking at buy trades on the instrument. Okay, D30. This is an index. I think this one too is currently consolidating, but let's check 1-minute time frame and see what is happening there. Okay, this is it on 1-minute time frame. Price is trading below the 200 exponential moving average, and the RSI is also trading below the 50 mark, uh, looking for bearish signals in the market. Bearish signals, and our bearish triggers are bearish engulfing. Uh, this was not another one. Okay, so as at this time, let's confirm, was the RSI also below 50? If yes, one could have here. So as at the time we got this particular candle, if you check, this particular red candle happens to be a bearish engulfing. So this is a very good example of a bearish engulfing. And the RSI at that time was also below 50. One could have taken a sell as at this time and add the stop loss above this high. Target about 2 times the size of your stop loss as your TP, and around this level our trade should have been closed in profit according to that setup that we got around this level. So that's how you use the bearish engulfing with the 200 exponential moving average and the RSI. So let me take a look once again at this. Uh, you know, this was the previous instrument we checked earlier. Yeah, so currently the RSI is above 50. We just need to wait on this particular candle to close bullish. If that happens, that would be our trigger bar for us to take a buy now on EURGBP. So let's just wait and see how this current candle is able to close on the 1-minute time frame. Um, the previous candle we waited on couldn't close as a bullish engulfing, but let's see if this can possibly be a bull-bull engulfing, and that would still be our trigger. Open of this candle— this candle opened at 82913, and what is the open of this? Exactly the same price, exactly the same price. That couldn't give us a perfect bullish engulfing, but it's a partial one. On US30, US30 is one of the index, uh, that's the Dow Jones Industrial Average. So on US30 on the 1-minute time frame, I've added, um, the indicators to the charts, and here I have seen a couple of bearish engulfing. The first bearish engulfing on this particular time frame, and as at this time that I could see clearly was this particular one. So I got this bear-bear engulfing. You could see a bearish candle, and the next candle happens to also be a bearish candle and covers the previous bearish engulfing, the previous bearish candle. So this one was a bear-bear engulfing candle. So at the close of this particular candle, I could have taken a sell trade with my stop loss above the high. The recent high on this instrument is just around here. So my TP is going to be minimum 2 times the size of this stop loss. So this is a stop loss, so my TP should be somewhere around this region as at that time. And I could have seen that the way price came down, it would have gotten to my TP as at that point in time. So that's basically what we would be doing, um, using this strategy to get to take our trades, um, in the market. Some other scalping strategies will still be made available to us in due course. Let us sit back, relax, enjoy, practice this one, check out what the result is looking like in the market, and get to become more profitable in the financial market. Thank you.