Although the average daily range forex scalping strategy is primarily designed to trade the 1-minute charts, it also supports the 5-minute charts and above. The strategy consists of 2 indicators with clear rules to enter and exit trades. This strategy can be used for beginners and seasoned traders alike. Now, let’s go over the setup and trading rules.
Trading indicators: Forex Analyzer PRO, octopus_1.ex4
Recommended trading style: Scalping
Pairs: For best results, choose narrow spread forex pairs such as EUR/USD, USD/JPY, AUD/USD and GBP/USD.
Platform: Metatrader 4
Free System Download
Example: EUR/USD 1-Minute Trading Chart (click the picture for full size)
The figure above shows this strategy in action on the Euro/US Dollar 1 minute chart for scalping purposes. All buy and sell trades were closed for 15 pips each (10 successful trades at 15 pips/trade = 150 pips). No loss!
Trading Rules: Buy Trade
Enter a long position when both trading conditions are met as shown below:
- Octopus indicator must be green colored
- Forex Analyzer PRO paints a green arrow
==> Initiate a buy trade and place a protective stop-loss slightly below the most recent support.
Profit Target: Exit the buy trade at 0.17 X average daily range (in this particular case 90 pips). So 90 pips X 0.17 = approximately 15 pips. You’ll find the average daily range (pips) in the upper left corner of the chart.
Trading Rules: Sell Trade
Enter a short position when both conditions are met as shown below:
- Octopus indicator must be red colored
- Forex Analyzer PRO draws a red arrow
==> Initiate a sell trade and place a protective stop-loss slightly above the most recent resistance price to keep the risk low.
Profit Target: Exit the sell trade at 0.17 X average daily range (in this particular case 90 pips). So 90 pips X 0.17 = approximately 15 pips.