Scalping 5-minute chart
Why do many traders choose to use a 5-minute scalping chart?
The scalping strategy is one of the ways traders get profits with short-term trading.
The profit target they achieve ranges from 5-20 pips in each transaction.
But ideally, the scalping target is 10 pips referring to price movements on the scalping 5-minute chart.
A scalper might choose a 1-minute timeframe, or some choose 15 minutes, but most scalping traders prefer to use a scalping 5-minute chart.
This when compared to 1 minute, noise analysis occurs less frequently on the 5-minute chart.
Whereas 1 minute faces noise analysis more often.
Why not a 15-minute chart? This timeframe gives fewer trading signals and the wait will be longer to get one trading signal.
So choosing a 5-minute scalping chart is the most ideal in scalping strategy.
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Scalping 5-minute chart definition
The definition of a scalping 5-minute chart is a way of trading in the short term style by utilizing a 5-minute time frame.
The scalping strategy itself is an aggressive strategy because, in one trading day, a trader can make more than ten transactions.
Even an active scalper can reach a total of transactions one hundred times a day.
Indeed, this scalping strategy can make traders’ emotions become drained, especially beginner traders who have not much experience.
But for those who are experienced and experts, this strategy will be very profitable by utilizing every upward momentum and falling prices within a 5- minute time frame.
Even a trader who is good at using scalping strategy, he can become a winner in a trading contest.
So this scalping strategy is actually very interesting to learn because it allows giving large profits.
How to trade scalping a 5-minute chart?
How to trade this scalping 5-minute chart actually there are several kinds of trading strategies with a variety of indicators and different ways of analysis.
For example, by only using a candlestick pattern by finding an entry at the reversal price.
By looking at the color change of the candlestick, taking into account the support and resistance zones.
If in the support and resistance zone a candlestick reversal pattern appears.
It becomes an entry signal by placing a stop loss above or below the resistance support zone.
The way of scalping price action is very simple and allows finding lots of trading signals, especially in a busy market session.
There is also a way of scalping a 5-minute chart using two moving averages, with different settings.
I think you are familiar with how to trade with moving averages, but if you haven’t learned it yet, read here
Scalping 5-minute chart strategy with moving average
In this 5-minute scalping strategy chart using the moving average, we will use two moving averages, which will serve as a signal to confirm our trade.
I assume that you can attach a moving average indicator to your platform chart.
So that goes on setting the moving average indicator with the following details.
- Simple Moving Average 20 (SMA 20) in red.
- Exponential Moving Average 10 (EMA 10) in blue.
Rules for open position scalping strategy 5-minute chart
In essence, the rule for Open Position is when there is a change in trend, where the change in trend is marked by a cross between the two MAs.
So, you can only Open Positions when an MA occurs.
- You can open a Buy Position when the blue EMA crosses the red SMA upwards.
- For the placement of the SL, place it just below the two MA.
- You can open Sell positions when the blue EMA crosses the red SMA downwards.
- For the placement of the SL, place it directly above the two MA.
Then what about the target profit? You can set rational targets for scalping targets, can be 10-15 pips and wait for the signal to come again if a trading plan has been completed.
This strategy will work well when trending markets but can be emotionally draining when you use the sideways market.
Therefore you should also understand the concept of market trends that occur, so as to avoid the sideways that can lead you to emotions because of your impatience.
Scalping 5-minute chart with Bollinger band
Bollinger bands are one indicator that serves to measure volatility, but this time we will use for scalping strategy.
To use the Bollinger band indicator we use the standard settings.
- Period: 20, This parameter is used as the input period Moving Average (MA) in the middle line of the Bollinger bands indicator as a trend reading line.
- Deviation: 2, this parameter is the input distance between the lower band or the upper band with the MA line, This parameter serves to read volatility.
- Apply to: close, this parameter functions as an input data reader.
- Shift : 0
Bollinger band can be used in all timeframes, but this time we use scalping strategy so we choose a 5-minute timeframe.
As an additional tool, you can use stochastic so that trading signals get better, stochastic with default settings 5,3,3.
Rules open position 5-minute scalping chart with Bollinger band
Bollinger bands consist of three lines, upper band, and lower band and middle band which are moving averages.
The rules for using Bollinger bands for scalping use the overbought and oversold rules of the upper band and lower band combined with the stochastic indicator.
Rules for open Sell positions.
Note whether the price has touched the upper band and the stochastic indicator intersects the overbought area or not, if both of them are confirmed then it is a buy signal.
Rules for open Buy positions
Note whether the price has touched the lower band and the stochastic indicator is crossing the oversold area or not, if both of them are confirmed then it is a Sell signal.
Unlike scalping using moving averages that are suitable for trending markets.
Bollinger bands are more suitable for ranging markets where prices have resistance and support lines from the upper band and lower band lines.
But you should avoid when high impact news will be released.
Then what about stop loss and profit targets?
You can place a stop loss above the upper band line when you sell and under the lower band when you buy.
For targets, it’s better to use a target scalping average of 10-15 pips.
Can scalping be automated?
Of course, scalping can also be automated by making the strategy an expert advisor.
If you really feel confident that the scalping strategy that you are implementing is profitable.
You can contact the EA programmer who will build a robot based on the strategy you are applying to.
But if you can make your own EA, it will be more cost-effective, you don’t need to pay for EA creation services.
Indeed, there are many EA out there that we can get for free, but not all ea can work profitably instead of many cause margin calls.
So, for example, you take one of the free ea on a forex forum, for example in Soehoe, the thing you need to do is backtest, that’s the first.
Then forward test with a demo account, if after passing both tests the results are good, you can continue with a real account.
But pay attention, sometimes the results between demo and real account are different.
This also depends on the broker you choose, sometimes there are cheaters for example often disconnecting with the server, of course, this reduces ea performance.
The advantage of automatic scalping
Because automatic trading is not necessary for trader intervention.
The advantage of using automatic trading scalping is that you do not have to always monitor the screen to see chart changes.
You can do other work and let the robot work trading based on the algorithm embedded in the EA.
This will make your trading more efficient because without the emotions in it.
The disadvantage of automatic scalping
If you are a frugal trader, using automatic scalping will add costs to running the robot.
For big traders, this is not a big calculation because renting a VPS only requires a few dollars per month.
Or if you don’t rent a VPS then run the robot with a computer for 24 hours,
This will increase your electricity costs, and risk the vulnerability of a computer that is easily damaged.
And also using automatic scalping, can not guarantee that it will always be profitable, it can even happen your account stops out when you look back.
The important thing in scalping
Scalping has short-term targets, for this purpose, there are several important things as follows.
Not all traders suits with scalping
Scalping cannot be done by just any trader.
A scalper needs to continue to sit in front of the computer and they must be able to “enjoy” the pressure caused by the movement of the chart that might disturb his emotions.
Brokers must allow scalping
Not all brokers allow clients to the scalping, so you must choose a broker that allows you to scalping trading.
Trading Platform Execution Speed
Scalping requires a speed of the execution, if the platform broker frequently requotes.
This will interfere with the scalper in opening or closing trading positions.
Fast internet connection
A factor besides the broker platform is your internet speed.
If it’s slow then even though the broker platform is good it will also be a problem when you open and close positions.
Spread and pair
Scalping targets are only around 10-15 pips, if spreads are high, you need more patience waiting to find floating profit.
You can refer the broker for information on spreads and low-spread pairs for this purpose.
Scalping can be a profitable trading strategy if the trader matches this style.
To become a scalping trader must have high patience and calm in trading, especially if he is trading manually.
This will be more profitable if you join in rebate trading, because of high trading intensity, rebate will increase your profit.
But you have to understand your capacity whether it suits this style or not because if you are temperamental, it will be difficult to control emotions when faced with sequential losses.