Creating a Forex trading strategy does not have to be a difficult process. Today we will review a simple scalping strategy using the Stochastics indicator. Traders who are looking to peruse Scalping opportunities in the Forex market will benefit from having a completed trading strategy at their disposal. The number of variables that can be added to a strategy are limitless, and it is often good to have a simple strategy on standby.
Today we are going to review a simple stochastic strategy that can be used for scalping trending Forex currency pairs. The first step to trading any successful trend based strategy is to locate the trend! Traders can add this indicator to any graph and identify whether price is above or below the average. If price is above the MVA traders can assume the trend is up and look to buy. If the trend continues, expectations are that price will remain above the period MVA and new highs will be created.
Once a trend is spotted using the period MVA, and a trading bias has been established, traders will begin looking for a technical trigger to enter into the market. Oscillators are common choices, and SSD slow stochastics can be added to your graph for this exact purpose. Note how only buy positions are to be taken on bullish crossovers as the uptrend continues.
At no point should traders consider selling as the uptrend continues. As with any active market strategy, scalping Forex trends carries risk. It is important to know upfront that trends eventually do end. Scalpers can use a swing low or even the period MVA as places to set stop orders.
In the event that price breaks and begins creating lower lows, traders will wish to exit any existing long positions and look for other opportunities. To contact Walker, email wengland DailyFX. Interested in learning more about Forex trading and strategy development? Register here to continue your Forex learning now! DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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