This is a scalping strategy that was invented and submitted by Joy22. It is designed to work best on the 5 minute timeframe. The best currency pairs to use this trading system when trading are the GBP/USD and EUR/JPY currency pairs.
Just as the name goes, the trading system makes use of the market retracements. A retracement is a slight pullback in the trend of the market prices. When the exchange rates of a currency pair are changing continuously on one direction then the currency pair is said to have a trend in that direction. Sometimes the trend doesn’t take place continuously, there are times when the market prices will look like they are moving in the opposite direction of the trend but later continue in the same direction of the trend. This movements in the opposite direction of the trend are the retracements. The retracements may occur quite frequently or once in a while. This is the reason as to why the EUR/JPY and GBP/USD are the best currency pairs to use with this trading system. These two currency pairs usually do have many retracements in their trends.
The Forex scalp retracement trading system is designed to use several indicators namely the 55 exponential moving average and the MACD (4, 9.6).
Fig.1. The teplate of the forex scalp retracement trading system explained.
If you look at the chart above you will notice that the GBP/USD has s downward trend but as it moves down there are times that it has moved up abit and the contiued to move down. When using thid trading system this are the times to trade.
If Neo Blitz EMA indicator is responsible for showing the general trend in the market. Then the MACD shows when there are the retracements.
If you look at the MACD, you will realize for the better of it is below the zero line showing that there is a confirmed down trend. But there some times the indicator is above the Zero line. During this instances the market is having retracements. If it was the market had an upward trend then the MACD would be above the zero line most of the time with the retracements being indicated by the indicator getting below the line.
So, how do you trade using the Forex scalp retracement trading system?
When trading you have to be certain of when to place a buy or sell order.
- Forex Scalp Retracement Placing a buy order.
First the general market trend has to be downwards. If this is the case, then check to see that the prices close above the 55EMA in the hourly time frame chart. The closing candlestick has to be a bullish candlestick. The MACD on the other side has to show a positive divergence (move above the zero line).
Fig.2. forex scalp retracement trading system placing a buy order.
You have to switch back to the 5 min timeframe to place the buy order. Then target at most, 15 pips for your profit and 15 pips for a loss.
- Forex Scalp Retracement Placing a sell order.
First the general market trend has to be upwards. If this is the case, then check to see that the prices close below the 55EMA in the hourly time frame chart. The closing candlestick has to be a bearish candlestick. The MACD on the other side has to show a negative divergence (move below the zero line).
Then switch back to the 5 min timeframe to place a sell order. Then target at most, 15 pips for your profit and 15 pips for a loss.
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