How to scalp EUR/USD?
Scalping in Forex trading can be quite time-consuming, but it is still a very rewarding approach to trade currencies. Basically, this technique requires at least some experience of trading FX and the ability to analyze the market. Scalpers usually hunt for small profits using high leverage. On top of that, they enter the market and quit several times a day. EUR/USD pair is a popular choice for scalping strategies. In this article, we would like to present one of the simplest ways to scalp EUR/USD.
Strategy Requirements & Parameters
Generally, this strategy is the bearish one, meaning that the profits are made when selling EUR/USD. As scalping is conducted using small time frames, this strategy will be no different – it requires a 5-minute time-frame. In addition, you will need the RSI indicator that signifies when the market is either overbought or oversold. Secondly, it is necessary to use the Shooting Star candlestick pattern, as it spots the moment when the market turns bearish. To take the most out of the Shooting Star, we recommend utilizing it solely on the highs of the current trend. Otherwise, it will not prove to be that effective. The RSI period setup needed for this strategy to work accurately is 14 periods.
EUR/USD Scalping Strategy in Use
The best conditions to start off are when the RSI gets into the overbought area and when the Shooting Star is finally drawn after a significant move. Please note that this technical indicator and the candlestick pattern must be utilized only in combination and not separately. Once you observe that the Shooting Star has appeared and the RSI is in the right place, you can open a sell order on the opening of the following candlestick after formation. Thereafter, you have to set a stop-loss right above the upper shadow of the Shooting Star and also use a limit order at 50% of the foregoing move.
There is a second option to exploit this EUR/USD scalping strategy, but with some changes. We still need the same pattern drawn after a strong previous move, but now a 1-minute time frame should be used instead of the 5-minute. This is done because you will have to look for the Relative Strength Index to draw a divergence line. As you would rarely see these signals on the bigger time frame, 1 minute here will turn out to be the most effective. It also important to mention that divergences can provide more information than the overbought signals.
Nonetheless, the next steps remain the same. To scalp EUR/USD, you should open the sell order at the opening of the subsequent candle, put the stop-loss order above the upper shadow of the Shooting Star and then set the limit order at 50% of the ascending move.
This scalping strategy is quite easy-to-use and can generate good profits, especially during New York and London Forex sessions. The liquid market is favorable for all scalpers.