I’m a sucker for a fast moving trend trading system. I get bored watching long time frames, and like to be in and out quickly. So here is an idea I picked up along the way that is a really fast moving trend scalping system.
Now, please be aware, to be successful with this system you really do have to be in and out fast!
No holding for greed…
No “what if I caught the bottom?” thoughts…
Set your stop loss, and take your pips when you’re happy.
Do not bend the rules.
Also, this is not a 100% mechanical trading system. You have to use your eyes, and your experience.
To be sure it will work, test it on a demo, and see how you do.
Now, with all that aside, here is the nitty gritty.
Can You Identify A Trend?
As the sub-heading says, if you can’t zoom out on a chart and define whether price is “generally” trending up or down, then stop right here. Go do some analysis. Here is a 1 minute chart, and it is trending up. If you can’t see why or how, stop here.
In addition to picking an instrument that is trending, it also should be fast moving, and have a low spread. At the moment, because of the way things are in the USA with Trump about to become president, USDJPY and EURUSD are strong candidates for trading this system on, because of the volatility and low spread. But it’s possible you could do this on a stock, or index future (eMini or similar, you need to test).
The 1 Minute Trend Scalping System
Now we have our instrument, and have identified a trend, we can add the indicators. Here is a chart with how the template and indicators will look. You can download them in a zip file for MT4 at the end of this article.
First, we want to see the 5 minute MTF Stochastic indicator up high. Above 50, and heading towards, or above 80. Coupled with an upward trend, this tells us the 5 minute chart is strong.
Next I want you to look at the shaded beige and grey blocks. This is an indicator which plots possible weak and strong support and resistance areas. If we understand the nature of support and resistance, we know that once it is defined, price will move away from it, when in a strong trend.
You will also see the bold red and green Parabolic SAR indicator.
Try see this.
When price is trending, and moves away from a colored support block, and MTF stochastic is high (above 50 preferably towards 80+), and the trend is generally up. If it either breaks past the last Parabolic SAR opposite color, or past the last high in a small sideways move, there can be pips on offer.
Here is the same chart but with the areas I have described above marked, and where you could enter.
But hey, what about the choppy area right after this..?
I thought you would be thinking that, so let me clear the chart and mark that up.
As you can see, if we try to take only breaks that move away from the support (or resistance in a down trend) and follow the general direction, closely watching stochastic, more often than not you can bag some pips, and keep the losses low.
Stop Loss / Take Profit
Obviously this is a super important part!
If you look at each break, and entry on the charts above, the obvious place for a stop loss is a pip or two under the last small low ( or high in a downtrend), or just under the support block it is currently moving away from. You need to get the best forex broker with really low spreads for systems such as this.
Here are where I suggest stops on the move up..
Now this is open to much debate, and where most people fall down because of greed.
Me, I like to bag enough to be happy.
If I get what I call a “home run”, where price shoots away over the next few minutes, 6, 7, 9, 10, 12 pips.. then I close. As I don’t want to break even.
If it runs away 4 or 5 pips, and stalls, maybe pull your stop up tighter, or to break even. Then take what you can.
Or, if you really get a good feel for it, trail underneath the last major up candle. You know, the one that breaks higher each time in a move?
JUST BE SURE TO TAKE SOME PROFIT, and KEEP THE LOSSES TIGHT!!
If you act like a robot, and do that ^ above, you should be ok.
If you get emotional, and worry/hope when in a trade, you should close it. Your mind isn’t behaving right for a fast moving 1 minute scalp trend trading system!
Oh, and another thing to remember.. a trend is your friend until it isn’t. What do I mean by that?
Well, a trend doesn’t last forever. At some point, when trend trading, one of your positions is going to get stopped out. Maybe if you hit 2 or 3 wins in a row, you should give up for the day? Food for thought. You don’t always have to trade!
Be lucky, and share to download the tools needed below!