Scalping with parabolic sar And CCI Strategy For MT4
The Scalping with parabolic sar And CCI Strategy For MT4 is a momentum-based scalping trading system. Those who have years of experience knows the importance of market momentum. The strategy uses 50 SMA, 21 SMA, CCI and parabolic indicators. In case you are trying to trade in M30 or the H1 chart, you need to depend on the 50 SMA. But to trade in 1 minute, 5 minute, and M15 chart, you should be using the 21 SMA. Lower period SMA reacts to the price movement more promptly and provides the retail traders a fast signal. The CCI or the commodity channel index is used to find the reversal point in the market.
Those who have a fair knowledge about the stochastic indicator knows how easily they can find the overbought and oversold state of an asset. Just like this, the CCI indicator gives identifies the market reversal point with the help of a signal line. When the signal line is above the 100 marks, look for a selling opportunity.
On the contrary, if the signal line drops below -100, you should be looking to take the long trade. Advanced traders also pay attention to the slope of this signal and manage to make a decent profit without having much hassle. But knowing about the function of the indicators is not enough. To earn money with the help of The Scalping with Parabolic SAR And CCI Strategy, you have to choose your trading instrument wisely.
Selecting the trading instrument
Scalping is a daunting task. If you want to survive as a retail trader by scalping the market, it is important to pick the right trading instrument. Since the Scalping with Parabolic SAR And CCI Strategy focuses on market momentum, it is better to pick a trending asset. By picking the trending asset, retail traders can easily secure 20-30 pips by using the market momentum in favor. However, you have to very precise while selecting the trading instrument. Usually, experts trade GBPUSD, EURUSD, AUDUSD, and USDCAD pair with this trading strategy.
Never think that you will earn more by analyzing more trading instruments. When the traders are limited to four major currency pairs, they become more focused and manage to execute quality trades. As you get skilled, you will notice that choosing the best asset from these four major currency pairs also plays an important role.
Try to pick the asset which has the least spread but it must be in an obvious trend. Trying to use the Scalping with Parabolic SAR And CCI Strategy in the absence of a definite trend makes the overall trading process much harder. Now you know the basics about selecting the trading instrument. Let’s see how the experts use this system and make amazing trades.
Scalping with parabolic sar And CCI Strategy For MT4 - Long trade setup
Before you make any decision, the first thing which you should consider is the slope of the 21 periods SMA. It should be exhibiting strong upward momentum and the Japanese candlestick should be respecting the red SMA as a support line. Now draw a manual support level using the horizontal line tools and the highs or lows of the price market. Wait till the price falls to the drawn support level which exactly coincides with the 21 periods SMA. You should notice yellow parabolic SAR dots below the candlestick before the price touches the 21 periods SMA.
Once the price hits the 21 period SMA, wait for the closing of the candle. If the candle manages to close above the red moving average, take the data from the CCI indicator. The green signal line in the CCI indicator must be lower than the -100 level. Open the new long trade with 10 pips stop and 22 pips take profit. In case the volatility is very low, you should set 6 pips to stop and 15 pips take profit. Always use the 2% risk management rule while using the Scalping with Parabolic SAR And CCI Strategy to trade lower time frame.
Scalping with parabolic sar And CCI Strategy For MT4 - Short trade setup
By now you should have a basic idea of how the short trades will be taken. Look for the bearish trend in one of the four major currency pairs stated above. To determine the trend direction, analyze the angle of descending in the 21 periods SMA. If you see the red moving average is acting as a resistance, there is a decent chance to make a big profit by taking the short trade. As the asset price hit the resistance, you should see yellow dots created over the candlesticks. The CCI reading should be above 100 and the signal line must be heading south. Note that you need a minimum of three parabolic SAR dots above the candlestick to take the short trade.
After getting technical confirmation, it’s time to manage your risk. The SL price should not exceed 10 pips and the TP level will vary based on the nearest support level. But always ensure that the trade has a minimum 1:2 risk to reward ratio considering the spread. The lot should be minimum so that you don’t have to lose more than 2% of your account balance. Attempting to trade with a bigger lot, increases the stress level while using the Scalping with Parabolic SAR And CCI Strategy. Keep in mind that this scalping system is bound to fail when you exceed the 3% rule of money management.
We have already taught you the basic rules to manage the trades while using the Scalping with Parabolic SAR And CCI Strategy. But basic rules are not enough to take the trades like professional traders. To improve your skills, you must learn to execute quality trades based without any emotions and greed. And when you lose 2 trades in a row, you should take a break. Some of the retail traders often overtrade the market thinking it will make them rich within a short time.
But overtrading is one of the major causes for which retail traders blow up the trading account.
To get the maximum benefit from the Scalping with Parabolic SAR And CCI Strategy, the traders have to be disciplined. Create a simple trading journal and keep on using it so that you don’t have to feel pressured or stressed. After developing the habit of using the trading journal, you will notice that breaking the rules is very hard. Another key factor to analyze is the news. Though this technical strategy provides a powerful scalping strategy most of the time, you must be aware of the major news. You should avoid placing any trade on such events as the market becomes extremely volatile.
Scalping with parabolic sar And CCI Strategy For MT4 - Conclusion
Investment is a very sophisticated business. After knowing the INS and OUT of the Scalping with Parabolic SAR And CCI Strategy, you may feel that you know everything about this market. Few winning trades will boost your confidence to the extreme level. But you can’t afford to forget that losing trades are part of this trading profession. Learn the proper art of losing the trades without imposing heavy pressure on your capital. This should keep your mind fresh and let you follow the exact steps mentioned in the Scalping with Parabolic SAR And CCI Strategy.
Becoming a disciplined trader and securing consistent profit is a very hard challenge. But if you follow a strategic path and use a simple strategy like Scalping with Parabolic SAR And CCI Strategy, you can expect to change your life soon. Your profit potential will indeed be directly proportional to your investment but this doesn’t mean you will borrow money. As a currency trader, you should always trade with the money that you can afford to lose, and only then you can expect to earn consistently.
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