Indicator-Free Scalping: From Theory to Practice
Unfortunately, many traders still debate and argue among themselves about the effectiveness of this or that market analysis tool.
One part of traders are adherents technical analysis While some traders only recognize indicators, others dive headfirst into fundamental analysis. However, there is a third category of traders who practice trading without indicators.
The most interesting thing is that, despite all the controversy, each tool and approach to market analysis is simply individual, regardless of trading techniques.
The only thing that remains constant in traders' minds is that scalping without additional tools is impossible on the Forex market, and as a result, it's virtually impossible to find strategies without using indicators to navigate market noise.
A logical question arises: is scalping on Forex possible without indicators, and what tools can serve as its basis?
The best conditions for scalping.
Like most trading strategies, scalping on Forex requires certain trading conditions that
will significantly increase trading efficiency.
Better scalping conditions offer traders several advantages, completely free of charge. The key is knowing what to focus on when exploring this topic.
So, here's what makes scalping more effective:
• Floating spread – this issue is especially important if scalping , where every point of the spread is important.
With a floating spread, you can find moments when the commission is practically zero. This isn't just a theory, but a fact that has been proven in practice many times.
The "News Scalping" Strategy. Is this trading option possible?
News and the publication of economic statistics are comparable to a car engine, which, despite the presence of many other components and mechanisms, is the most important element that forces the market to move.
Unfortunately, many traders do not want to realize the fact that news and economic statistics are the very source of data.
They are the ones that are studied by investors and large investment companies, whose transactions actually set the market in motion.
The News Scalping Strategy is a trading tactic that is designed to capture the strong price momentum that occurs when news is released.
How realistic is Bitcoin scalping? The specifics of using the strategy
Scalping is one of the most attractive trends in trading, providing traders with a fairly high return, which can be several times higher than the average return of any trend or intraday trading strategy .
However, having a clear algorithm, or strategy, is far from sufficient for using this market analysis method.
The fact is that scalping's effectiveness depends largely on the broker's trading conditions, as well as the specifics of the chosen asset.
While one strategy may show excellent results on one currency pair, it's far from certain that the same strategy will show consistent losses on a completely different trading asset.
There's a direct correlation between asset selection and strategy effectiveness, and in this article, you'll learn how promising Bitcoin scalping is and whether it's advisable to trade this cryptocurrency using scalping strategies.
Scalping on the order book: a simple and effective strategy for making money
Scalping is one of the most common trading tactics in both the stock exchange and the forex market.
Many traders confuse scalping with day trading, believing that opening orders with small targets and stops is the foundation of this strategy.
In fact, this blurring of the scalping concept occurs because the Forex market lacks a proper order book, which has led to a simple confusion of concepts.
Stock exchanges do have a proper order book, which allows for assessing the actual market situation and placing trades with a target of a few ticks.
Scalping platforms for the glass
It's no secret to most traders that the MT4 and MT5 trading platforms feature a fictitious order book, which never displays the volume of trades or the cash flows behind buyers or sellers.
Scalping on pullbacks
Scalping, like any trading tactic, involves finding market entry points. Everyone has
their own approaches to finding these points, but generally, it all comes down to trading pullbacks.
No, of course, there are various scalping tactics in a channel or a narrow range, but as practice shows, trading in the direction of the main trend and searching for entry points in its direction turns out to be the most effective.
Unlike trading in a narrow range or flat market, all trading is conducted with short stop orders. Due to the eternal rule "The trend is your friend," you will very rarely encounter an entry against the market, and the profit size will often exceed the risk.
Scalping during a flat market
For most market participants, the onset of a flat market is almost always associated with losses. It so happens
that our upbringing as traders is focused on trend-following trading, with the emphasis always being on the trend being our friend.
In theory, following the trend is always a profitable tactic, but in recent years, the forex market has seen mostly sideways movement with emerging micro trends that both emerge quickly and quickly transition into sideways movement.
This market situation has thrown many traders off track, as the constant problem of stop orders being triggered by a strong, wide flat prevents trend-based strategies from fully realizing their potential.
While the vast majority suffer losses, there are those who, on the contrary, make money during the flat, using scalping to rake in profits even on the slightest fluctuations in the chart.
Scalping without indicators is one of the most profitable options
Every trading technique has its advantages and disadvantages. Scalping is a highly profitable
trading style achieved by capitalizing on market noise and intraday price fluctuations.
Every market noise and the slightest deviation in quotes allows a trader to enter positions and take a few points of profit.
However, few of you have probably considered that market noise is very difficult to predict, and the high volatility that occurs during news releases can seriously shake you and your nerves, not to mention the possible risks incurred.
The strategy involves dynamic trading with a large number of trades. Therefore, when talking to professionals in this field, almost everyone will tell you that 90 percent of a scalper's success depends on thoughtful capital management and the ability to quickly and ruthlessly cut losing orders.
Which brokers limit scalping?.
Scalping is a highly aggressive trading style that involves opening
a significant number of orders simultaneously with minimal expiration times. This means that trades last only minutes, sometimes tens of seconds.
Typically, scalping enthusiasts invest significant amounts of money into trading, and due to the significant turnover in their accounts, they generate colossal profits for the broker.
However, brokerage firms are increasingly blocking scalpers' trading deposits, despite the fact that traders using this method generate good dividends.
Naturally, this combination of circumstances raises a logical question: why don't brokers want to cooperate with scalpers?
How to avoid losing your deposit when scalping.
Scalping has become a favorite strategy for most traders due to its maximum profitability. If it weren't for its
inherent risk, almost all traders would likely choose this type of stock trading.
The main danger of scalping is losing your deposit—not a drawdown, but a complete loss of all funds when a trade is forced to close by a stop-out.
If it weren't for the frequent stories of total losses, it's unlikely that any trader would refuse to earn 1000% profit monthly. It's virtually impossible to completely eliminate the possibility of losing your deposit, but it can be minimized using fairly simple methods.
• Never use all your available funds in trading; only a portion of your account should be available—30 to 50 percent. Don't risk your entire account; always leave yourself a chance to correct your mistakes.
Leverage for scalping.
Some traders, when deciding to scalp, think that the key to this strategy is the minimum trade duration, but
in fact, the key factor is the amount of leverage.
Leverage for scalping should allow you to maximize profits in the shortest possible time.
There's always a pattern: the shorter your trade duration, the greater your leverage, and therefore the trade volume you can use.
For greater clarity, let's look at some specific examples.
Scalping with spinning tops.
The previous article described how to use trend confirmation candles in scalping, but one of the distinctive features
of scalping is that it allows you to trade both with and against the trend.
Entering the market at a reversal allows you to easily secure a few points of profit before the next price reversal.
One of the most attractive candlesticks indicating a reversal is the spinning top . These candlesticks have virtually no body, indicating a slowing trend and a high probability of a reversal in the short term.
How to choose a broker with the lowest spread.
When trading Forex, the spread plays a crucial role in most profitable strategies, especially scalping.
So how do you choose a brokerage with the smallest spread? Most brokers use floating spreads, specifying the smallest spread in their specifications.
The difference between the maximum and minimum spreads can sometimes be tens of pips. How can you avoid losing money, especially if you use an expert advisor and can't constantly monitor the commission when opening each trade?
There are several approaches to solving this problem, each of which is strictly individual, so you'll have to choose.
• A broker or account with a fixed spread - this way, you can be sure that any change in the commission will be no more than a point or two. At first glance, a fixed spread always seems larger than a floating spread, but on average, the difference is not that great, and you are insured against accidentally opening a trade with a widened spread, which can widen by 20-30 pips.
Scalping on the move.
As has been noted many times, the main problem with scalping is market entry. It's quite difficult for a trader to understand the basis for
a trade's opening decision.
Some rely on intuition, while others use scalping indicators . However, trading based on intuition almost always ends badly, and indicators often provide false signals.
You can learn to scalp if you understand the main principle of opening trades when scalping and learn to apply it.
The simplest entry option when scalping is to catch pullbacks and enter after the start of a trend. This method can only be used in a stable trend without sharp price movements.
Scalping using candlestick patterns.
The main challenge when trading scalping is finding entry points. Signals for longer
time frames don't always work, so you have to find your own solutions.
One common option is using candlestick analysis, although this method is more effective on M5 and M15 timeframes, which are therefore longer.
Trades are opened after candlesticks or candlestick patterns appear that indicate a continuation of the trend, as candlesticks that confirm the trend generate fewer false signals.
Mini scalping.
When we hear about scalping, we all imagine earnings in the tens or even hundreds of thousands of dollars. Most beginners are haunted by
the fame of Larry Williams, who made over a million dollars from $10,000 in a year.
But one of the peculiarities of scalping is that turning $1 into $10 is much easier than turning $10,000 into $100,000. There are several reasons for this.
Firstly, there's the psychological pressure of large sums. When working with a large deposit, a trader becomes more cautious, begins to hesitate more when opening trades, and, oddly enough, makes mistakes more often. Mistakes with this trading strategy result in drawdowns or even the loss of the deposit.
Secondly, a significant increase in the deposit in a short period of time immediately attracts the attention of a broker, and not every company will allow a scalper to earn money. After this, connection problems, accusations of unauthorized trading, and other unpleasant consequences begin to arise.
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