5 min Scalping Forex Trading Strategy For MT4

 

Table Of Contents:

  1. 5 min Scalping Forex Trading Strategy For MT4
  2. Essential elements used in this system
  3. Functions of the essential elements
    1. RSI indicator
    2. Support and resistance level
    3. Doji and pin bar formation
    4. Economic calendar
  4. The long trade setup sequence
    1. Stop loss
    2. Take profit
  5. The short trade setup sequence
    1. Stop loss
    2. Take profit
  6. 5 min Scalping Forex Trading Strategy For MT4 – Useful advice
  7. 5 min Scalping Forex Trading Strategy For MT4 – Conclusion

 

Please note: This strategy was publicly published in the trading community and is free to use. We do NOT make an attempt to decide if this strategy is profitable or not, because we know that the major factors regarding trading results are the skills/experience of the trader who executes the strategy. Therefore, we are mainly explaining the components and rules of the strategy. If applicable, we are highlighting advantages, disadvantages and possible improvements of the strategy.

 

The 5 min Scalping Forex Trading Strategy For MT4 is designed to trade reversal setups (counter-trend setups) on the time frame M5. According to the inventor of the strategy, there is no restriction regarding the trading instrument. However, it is better to choose an instrument with a small spread since you will be taking the trades in the lower time frames.

While using this strategy, you should always have an eye on the trend on the bigger time frames as well as support/resistance levels to get a broader outlook of the market. By doing so, you will feel more confident during the trade execution process. Now let’s check the essential elements used to construct the 5 min Scalping Forex Trading Strategy For MT4. 

 

 

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Essential elements used in this system

 

  1. RSI indicator
  2. Support and resistance level
  3. Doji and pin bar formation
  4. Economic calendar

 

Chart setup with the 5 min scalping Forex Trading Strategy for MT4

 

Functions of the essential elements

The 5 min Scalping Forex Trading Strategy For MT4 is dependent only on one indicator – RSI. So, to take the trades with extreme precision, we should have a strong idea about the essential elements used in this trading method. Let's discuss the functions of these essential elements in short.

 

RSI indicator

RSI stands for relative strength index. It is a very popular overbought and oversold identifier in the Forex market. After installing the RSI indicator, the market data is analyzed and represented in the form of a simple signal line. If the RSI reading is above the 70 lines, consider the market in the overbought state. On the contrary, if the RSI reading is below the 30 levels, the market is in the oversold zone.

Taking data reading from the RSI indicator

The RSI indicator has a leading property. This means signal lines might enter into the overbought state before the price test the support and resistance level. So, it is important to correlate the RSI signal with the support and resistance zone. Note that, you may use a lower period to get better reading in the RSI.

 

Support and resistance level

Being an active user of the 5 min Scalping Forex Trading Strategy For MT4, you should have strong analytical knowledge to draw the support and resistance level. Though you will be taking the trades in the 5minute chart, have a look at the key points in the H1 time frame.

After having a decent idea about the critical highs and lows, you may switch back to the 5-minute chart and draw the support and resistance zone. Support should be formed near the critical low and the resistance is usually formed near a critical high.

 

Doji and pin bar formation

Looking for the trade signals in the 5-minute time frame is quite challenging. That’s why we need to use the doji and pin bar formation while using the 5 min Scalping Forex Trading Strategy For MT4. A doji is formed when the closing and opening price of a candle is almost nil. On the contrary, a pin bar is created with a small body and long wick.

Prominent Doji patterns

After learning the functions of the doji and the pin bar, you should be looking for these patterns at the important support and resistance level. Note that, doji or the pin bar suggest a shift in market momentum, so, you should not trade during a major news release.

 

Economic calendar

The Forex market is extremely volatile. We often experience shifts in the trend without any prior notice. Usually, the major reversal in the currency pairs takes place during the release of the high-impact news. So, while using the 5 min Scalping Forex Trading Strategy For MT4, we will avoid taking any trades on eve of major news releases.

 

The long trade setup sequence

Analyzing the data in the 5-minute chart is a very tough task. Inexperienced traders should never try to use the 5 min Scalping Forex Trading Strategy For MT4 in the real market unless they master the sequential techniques for trading. Now let’s see the prime conditions which we need to assess to execute the long order.

 

Conditions to execute the long trade

 

  1. Have a look at the 1-hour chart and get a general idea about the swing high and low. This should give you a decent idea about the daily price range thus setting up the TP will be easier.
  2. Draw the major support and resistance level in the chart. You may use the horizontal or the trend line tools to determine these levels.
  3. Stay on the sideline until the price of an asset test the major support level. As the price test the support, you have to analyze the candlestick patterns.
  4. The RSI reading should be below the 30 levels, indicating the bulls getting ready to push the price higher.
  5. Look for the doji or the bullish pin bar formation at the important support level. Usually, it is better to look for the bullish pin bar.
  6. After spotting the price action signal, you should check the economic calendar. There should be no major news release when you are intending to take the trade.
  7. If all these conditions are filled, you may execute the long trade but be advised the risk factor should be lower than 2% of the capital.

 

Execution long trade

 

Stop loss

To determine the stop loss, you should be using the pin bar or the doji pattern formation. Set your SL, few pips below the doji or the pin bar. But do not place the SL to close the entry price as the market often hunts such stop loss.

 

Take profit

Since the 5 min Scalping Forex Trading Strategy For MT4 is designed to scalp the market, you should be aiming for the nearest resistance level. But the risk to reward ratio should never be lower than 1:2. If possible aim for a 1:3 risk to reward ratio as it will improve your recovery factor.

 

The short trade setup sequence

The process of opening the short trade is fairly similar to the long trade. But in this portion, we will learn to use the 5 min Scalping Forex Trading Strategy For MT4 in a different way. Instead of looking at the 1-hour chart, you will directly move to the 5-minute chart and find the reliable trade signals based on certain criteria. Let’s see the prime conditions to take the short trade.

 

Conditions to execute the short trade

 

  1. Pick a major currency that has a spread of fewer than 3 pips. Since you will directly analyze the 5-minute chart, stick to the major currency pairs only.
  2. Draw the major support and resistance level so that you can identify the rejection of the price.
  3. As the price head towards the resistance level, cautiously monitor the candlestick pattern and look for the price action confirmation signals.
  4. After finding the bearish pin bar or the doji pattern, have a look at the RSI reading.
  5. The signal line in the RSI indicator should be trading above the 70 level, which confirms the market is in the overbought zone.
  6. Finally, check the economic calendar and make sure there is no major news release in the upcoming 30 minutes.
  7. After checking all these factors, open the short trade right after the price action confirmation signal.

 

Execution of short trade

 

Stop loss

The stop loss should be placed above the high of the doji or the bearish pin bar. You may also set the SL price above the manually drawn resistance level. If the rejection takes place near a critical high, set your SL right above the most recent high.

 

Take profit

Since the trades are taken to make a quick profit, you should be setting the TP to the nearest support level. The TP should be tailored based on the 1:2 risk to reward ratio. While setting up the TP consider the spread so that you don’t have to deal with the trade setup which has a RR ratio of less than 1:2.

 

5 min Scalping Forex Trading Strategy For MT4 – Useful advice

Scalping has always been the most daunting task for retail traders. Being an active user of this strategy, you should keep a close eye on the high-impact news. Moreover, you should master the essential steps of this strategy via a paper trading account. Unless you test the functions of the 5 min Scalping Forex Trading Strategy For MT4, you will never feel confident to execute the trades in a fast-paced environment.

 

5 min Scalping Forex Trading Strategy For MT4 – Conclusion

Every trading strategy has its own merits and demerits. As the 5 min Scalping Forex Trading Strategy For MT4 is exclusively designed for scalpers, you should be concerned about the problem of overtrading. Create fixed sets of rules so that you don’t become addicted to this system. And never forget, this scalping system is not immune to losses. So, accept to face few losing trades and consider it as a part of this business.

 

Download the complete system description and the files here:

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