(+) Scalping Strategies

THE STOCHASTIC SCALPER TRADING STRATEGY

An easy-to-use scalping strategy that combines an SMA for trend identification and the Stochastic oscillator as a trigger. It can be applied to trading any financial asset.

 TRADING STRATEGY

■ Style: Scalping Strategy

■ Name: The Stochastic Scalper Trading Strategy

💱 FINANCIAL ASSETS

■ Forex Majors | ■ Metals and Energy | ■ Stocks | ■ Indices

 TIMEFRAME

M5 timeframe (5-Minutes)

■ 10-15 daily trades

 INDICATORS & SETUP

This strategy combines the Stochastic Indicator with a 200-period Simple Moving Average.

■ Stochastic Oscillator

At a Glance: The Stochastic Oscillator

The Stochastic Oscillator measures a currency pair's closing price relative to its price range over a specified period—typically 14 days. It generates two lines, %K and %D, which oscillate between 0 and 100. This indicator helps identify overbought conditions (above 80) and oversold conditions (below 20), signals momentum shifts through line crossovers, and highlights potential reversals by spotting divergences between price action and the oscillator.

Settings:

• Set to 10,3,3 instead of the standard 14,3,3.

■ Simple Moving Average (SMA)

Settings:

• Set to 200 periods.

 TRADING SIGNALS

This is how you can implement the Stochastic Scalper Strategy.

The 200 SMA is used as a straightforward tool to identify the prevailing trend. If the price chart is above the 200 SMA, the market is in an uptrend; if the price chart is below the 200 SMA, the market is in a downtrend.

■ (↑) Long Trades

• Each time the asset’s price is above the 200 SMA and the Stochastic is recovering from the 20 level, you receive a long trading signal (buy the market).

■ (↓) Short Trades

• Each time the asset’s price is below the 200 SMA and the Stochastic is falling from the 80 level, you receive a short trading signal (sell the market).

 TRADING ORDERS

■ Take Profit: 20-30 pips

■ Stop-Loss: 20-30 pips

■ Profit/Loss Ratio: 1

In the following chart, the 'Stochastic Scalper' strategy is applied to EURCAD, but it is preferable to use currencies that are traded with narrower spreads.

CHART: The Stochastic Scalper

■ The Stochastic Scalper Trading Strategy

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