Volatility Scalping method on the bar Strategy For MT4
Table Of Contents:
- Volatility Scalping method on the bar Strategy For MT4
- Volatility scalping method on bar system – Long positions
- Volatility scalping method on bar system – Short positions
- Is the Volatility scalping method on bar strategy good for trading?
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.
Have you ever wondered, how it would be to scalp the markets during volatile periods? In the forex markets, prices tend to get very volatile during high ticket items. These are basically fundamental news driven moves. Examples include the US nonfarm payrolls report, or an economic GDP report and even central bank interest rate decisions.
The Volatility Scalping method on the bar Strategy For MT4 is one such method that allows you to do so. This trading system is basically suited for those who want to scalp the markets during key news releases. As you might have imagined, the Volatility scalping method on bar basically feeds in from the Forexfactory economic calendar.
It displays the upcoming economic events on your chart and thus in a way, the Volatility scalping method on bar alerts you to any upcoming economic events that offer you an opportunity to trade the volatility in the markets.
Besides the main triggering event, which is the fundamental news, you also have the intraday pivots on your chart. This gives you further happenings into the markets on an intraday basis. Equipped with all this information, and the trend squeeze indicator which is part of this set up, you can now trade the volatility in the forex markets based on the news releases.
Volatility scalping method on bar system – Long positions
For long or buy signals, we have to follow a couple of rules. Note that the Volatility scalping method on bar is not a mechanical trading system. Therefore you need to be very aware of what you are doing and the markets that you are trading.
Firstly, identify a news item of interest. Examples could be jobs report, GDP or interest rate decisions. Then pick the corresponding currency pair. Once you have this ready, apply the template that comes with the Volatility scalping method on bar strategy and you are good to go.
If the news release beats expectations and is positive for the markets, then start looking for long positions. Ideally, we want the trend to be moving up. Therefore, look to the trend squeeze indicator which can be a good indication of the trend.
Once everything lines up, take a long position (preferable from the day’s low or near one of the pivot points). When the candlestick identified, go long on the market and set your stops just below the low of the previous candlestick.
Your take profit level should be at one of the upper pivot points. It is better to book profits at one of these levels and to manage your positions in real time. While it is tempting to choose every signal to trade, it is recommended that you only stick to the high impact news releases. This ensure maximum volatility and gives you a good chance to set your take profit levels at higher price levels.
In the above chart, you can see the ideal set up where price hits the day’s low and then moves higher, making it ideal to take a long position in the market. We should also mention that you should not trade every signal that you see.
Pick only the most promising long set ups that come your way. This means you have to be prepared before the news event takes place.
Volatility scalping method on bar system – Short positions
To look for short positions, the first thing of course is the news release itself. For the short position, of course we need to have the news coming out negative or less than forecasts. When the news result is negative for the markets, it results in a downtrend making it ideal for you to take a short position. Look for price to trade ideally near the upper pivot levels.
This will ensure that there is enough room for price to move lower. Then, secondly look at the trend squeeze indicator which should be sloping down. This will greatly increase the odds of your short position ending up in the money.
After you identify the candlestick, go short at market and set your stop loss at the high of the candlestick. In the above example, we have pointed out an ideal candlestick. It should be long with upper wicks. Set your stop loss a few points above this level.
For take profit, you can use the day’s pivot points. Or simply look to the left of your chart to identify any potential lows that were formed previously. Setting your take profit to one of these levels will be ideal as it increases the odds of your short position ending up in profit.
Also keep an eye on the stop loss levels and move your trade to break even as much as possible to ensure that you do not give back the profits you made.
Is the Volatility scalping method on bar strategy good for trading?
The Volatility Scalping method on the bar Strategy For MT4 is sadly, not suited for everyone. For one, this is an intraday trading strategy. This means that you need to be in front of your computer when the news is being released. Understandably not everyone has the luxury of time.
But if you are fortunate enough to live in a timezone that allows you to stay in front of your trading terminal during such key events can be great. Secondly another factor to consider is the spreads. We know that when volatility rises, the spreads can start to rise as well.
This can hugely impact your stop loss and take profit levels as the widening spreads can eat into your set up.
Lastly not every forex broker allows you to trade the news for the very reasons of volatility. Therefore, you should check with you forex broker if you are allowed to trade news based volatile events. But for all the obstacles, the Volatility scalping method on bar method can be used for swing trading as well for the short term. This is because trends can be impacted in the short term and the Volatility scalping method on bar allows you to take advantage of just that.
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