A 5-minute Arrow Scalping Strategy
Scalping is what short-term trading is called in forex, when a trader opens a large number of short-term trades. In modern terms for trading fixed contracts, the situation has changed somewhat, but the basic principles remain the same.
Short-term strategies for turbo contracts for 1 minutes – 5 minutes differ from systems for longer-term trading within 15 minutes – 60 minutes or more. However, it is the interval of 5 minutes that is most popular among practicing traders, especially beginners.
Today we will look at a 5-minute arrow strategy recommended for beginners due to its simplicity and efficiency. It is suitable for Binomo broker or any other trading platform on which a 5-minute expiration period for fixed contracts is supported.
The basis of the trading system is two indicators for scalping on the forex exchange. But they can also be successfully applied when trading with fixed contracts.
- Moving Average Colored EMA/SMA – this is a custom modification of the MA which is in the top 10 most popular among TradingView (https://www.tradingview.com) users. Under normal conditions, the user can only see the exponential Moving Average. However, upon a rapid change in the level of volatility, the position of the line is determined by taking into account the position of the SMA. Therefore, this indicator can be called a hybrid of the simple and exponential Moving Average. Its appearance is distinguished by different colors depending on the active phase of the market.
- TUX EMA Scalper+SuperTrend – this is a hybrid combination of a scalping indicator based on the exponential Moving Average and trend analysis tool SuperTrend. The developer initially created it for trading Bitcoin cryptocurrency. However, as we all know, technical analysis strategies are universal and not tied to certain assets. Therefore, this solution soon became popular with ordinary currency traders. TUX EMA Scalper consists of 4 lines and 2 arrow pointers. But in our case, we will hide most of the unnecessary elements, leaving only the arrows.
The classic principle of this strategy is to determine the overbought and oversold points and the change in the trading balance. The use of oscillator hybrids with trend analyzers allows us to do this with a high degree of efficiency.
Preparing to trade
To trade, first open the Binomo web terminal (https://binomo.com/en) or any other platform where you trade. Then you need to select the most profitable trading asset and open it on the 1-minute candle chart. The same currency pair should be opened in the next tab over of your browser in the TradingView live chart.
In the technical analysis window using the integrated search, we add two tools – “TUX EMA Scalper+SuperTrend” and “Moving Average Colored EMA/SMA”. In the TUX EMA Scalper settings, go to the “Style” tab. Then hide all the elements by unchecking them except for UP Entry Arrow and Down Entry Arrow. More details are indicated in the illustration above.
Technical details of the system
Expirations. Scalping is short-term trading, so we use standard 5-minute trades.
Money management. It is not recommended to exceed the permissible risk; therefore, it is necessary to limit the amount of a trade to 4-5% of your current trading balance.
Trading asset and time. Forex currency pairs or cryptocurrencies, as well as any other high-yield assets that are in the web terminal catalog and TradingView live chart.
Signals to trade according to the system
Evaluating the signals of arrow strategies is always easy, even for novice traders. The pointer shows where the market will go in the next few minutes. The exponential Moving Average plays a minor role in this case. However, it is the EMA that in some cases makes it possible to recognize a false signal. Therefore, you should not downplay its role. It allows you to increase the total percentage of profitable trades on the strategy by about 10%. In statistical terms, that is a very large factor.
- Contract “UP”. On the chart, the upward green arrow TUX EMA Scalper is formed, at the same time the market rises relative to the position of the Moving Average curve.
- Contract “DOWN”. The appearance of a downward red arrow, combined with the breakdown of the Moving Average.
The signals are clearly visible in the picture above. It is unlikely that anyone will have problems trading on this strategy. This is one of the easiest systems for any beginner. Other arrow strategies presented on our website are also noted for their ease of use. However, in relation to trading, simplicity does not mean inefficiency. On the contrary, the most effective indicators usually have a very simple minimalistic appearance.