If you are looking for a profitable forex scalping strategy, but you are struggling to choose one among hundreds that are available,
I prepared for you 3 best forex scalping strategies that you must try.
These strategies are very different and unique:
one is based on a price action analysis, one is smart money concepts based and one is a technical indicator strategy.
So you will definitely find the one that suites your trading style.
One important note before we start.
There is one crucial element that unites all these strategies:
We will strictly look for trading entries from 4H key levels: key horizontal supports and resistances.
Only when the price tests such structures, we will start searching for a trading signal on 15 minutes time frames.
For that reason, make sure that you execute structure analysis on a 4h time frame.
Here is how a 4h time frame structure analysis should look like.
You should underline recent, historically significant horizontal support and resistance areas.
Strategy 1
Price action
Scalping with a price action on 15 minutes time frames, you should look for:
- a bullish price action pattern after a test of a 4H support
- a bearish price action pattern after a test of a 4H resistance
Here is the list of bullish patterns:
Double bottom, horizontal range, inverted head & shoulders pattern,
cup & handle pattern, ascending triangle.
Your bullish signal will be a breakout - a candle close above a neckline of the pattern.
After a test of a 4H horizontal support, EURUSD formed an ascending triangle formation on 15 minutes time frame.
Its neckline violation is a strong bullish confirmation.
A perfect entry point should be a retest of a broken neckline.
The safest stop loss will be below the low of the pattern.
Target - the closest 15 minutes key resistance.
Formation of a bullish price action pattern and its neckline breakout signifies the strength of the buyers and confirms the validity of a structure that was identified on a 4H time frame.
Here is the list of bearish patterns:
Double top, horizontal range, head & shoulders pattern, inverted cup & handle pattern, descending triangle.
Your bearish signal will be a breakout - a candle close below a neckline of the pattern.
Take a look at the example:
after a test of a key horizontal 4H resistance, the price formed a double top formation on a 15 minutes time frame.
The violation of a neckline of the pattern is a strong bearish confirmation.
Set a sell-limit order on a retest of a broken neckline,
place stop loss above the highs of the pattern,
target will be the closest 15 minutes key support.
Formation of a bearish price action pattern and its neckline breakout signifies the strength of the sellers and confirm the validity of a structure that was identified on a 4H time frame.
Strategy 2
Smart Money Concepts
Scalping with SMC, key horizontal 4H supports and resistances will be perceived as liquidity zones.
Your bullish confirmation after a test of a bullish liquidity zone will be an inducement (a false violation of a lower boundary of the zone) with a consequent formation of an imbalance bullish candle that completely engulfs the range of a previous bearish candle with its body.
Here are the examples of bearish inducements - a false structure violation.
Here is the example of a bullish imbalance after the inducement.
An imbalance bullish candle should have a relatively big body and should completely engulf the entire range of a previous bearish candle.
You should open a long position immediately after the close of a bullish imbalance candle.
Stop loss should lie below its low.
Take profit - the closest 15 minutes resistance.
With bearish inducement, smart money are attempting to force buyers close their position in losses and force sellers to open short positions, grabbing their liquidity.
Formation of a bullish imbalance indicates a real intention of big players.
Your bearish confirmation after a test of a bearish liquidity zone will be an inducement (a false violation of an upper boundary of the zone) with a consequent formation of an imbalance bearish candle that completely engulfs the range of a previous bullish candle with its body.
Above is the example of a bullish inducement followed by a bearish imbalance that completely engulfed the range of a previous bullish candle.
Short position should be opened immediately after a close of an imbalance bearish candle.
Take profit - the closest 15 minutes support.
Stop loss above the high of the candle.
With bullish inducement, smart money are attempting to force sellers close their position in losses and force buyers to open long positions, grabbing their liquidity.
Formation of a bearish imbalance indicates a real intention of big players.
Scalping Strategy 3
Technical Indicators
Technical indicators can provide a strong confirmation after a test of key 4H horizontal structure.
One of the most accurate technical indicators is the combination of 2 Moving Averages with different ranges.
Their crossover will provide an accurate bullish and bearish signal.
For our strategy, we will take Simple Moving Average with 5 range and Exponential Moving Average with 9 range.
The crossover of Exponential Moving Average by Simple Moving Average from downside will be a strong bullish signal and a long position should be opened immediately then.
Stop loss should lie below the entire 4H horizontal support, and the target will be THE CLOSEST 4H resistance.
In comparison to 2 previous strategies, the Moving Average confirmation gives much bigger profit potential.
The crossover of Exponential Moving Average by Simple Moving Average from the upside will be a strong bearish signal and a short position should be opened immediately then.
Stop loss should lie above the entire 4H horizontal resistance, and the target will be THE CLOSEST 4H support.
Being applied properly, the strategy will provide very high accuracy and reward to risk ratio.
Try these 3 scalping strategies, backtest them and choose the one that suites your trading style.
