Using the 100 SMA to scalp the market

The Business Growth Network Forums Banking and Finance Using the 100 SMA to scalp the market

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    Vicky Lean

    Scalping is often considered as the riskiest business in the trading world. However, many professional traders in the United Kingdom are making a huge profit just by scalping the market. It’s a very clear sign that you can easily scalp the market in and make a decent living out of trading. Though there are many ways to scalp the market, the experienced traders prefer to use a simple and unique strategy. In today’s article, we will give you a unique idea which will help you make a profit just by using the 100 SMA.

    What is SMA?
    SMA stands for the simple moving average and the elite class traders use it to find the potential support and resistance level of this market. You might be wondering how the retail traders making a huge profit with just one simple indicator. There is nothing to worry about, we will make things clear. If you’re using the 100 days SMA, you can easily find the dynamic support and resistance level of any currency pairs. But we are not going to use the 100 SMA since we will be scalping the market. Just like the elite class trader, we will use the 4-hour time frame to filter out the very best trades in this market.

    4-hour time frame
    If you’re using the 100 SMA in the 4-hour time frame, we will get class support and resistance level. The experienced traders in the exchange traded funds industry often consider this as the dynamic support and resistance level of the currency pairs. If you closely observe the chart, you will see most of the time the price respect the 4 hours 100 SMA. So how do we execute the trade in the market? You need to use it as a critical support and resistance tool. If the price of a certain asset trade above the 100 SMA, set pending orders right at the 4 hours 100 SMA. Similarly, when the price trades below the 4 hour SMA, set the pending orders right at the dynamic resistance level. Most of the time you will be able to make a decent profit from this trade setup.

    Setting up the stop loss and take profit
    You now know the perfect way to execute the trade with SMA. But what about the stop loss? Those who set pending orders in the 4 hour 100 SMA usually use 15 pips stop loss and set a take profit of 30 pips. On the other hand, the conservative scalpers often wait for the price action confirmation signal to execute the trade. Instead of setting fixed stop loss they simply use the tail of the confirmation candlestick to set the stop loss.

    Scaling your lot size
    When it comes scalping, scalping your lot is extremely important. It’s true you can easily earn huge amount of money by executing trades with big lot. But this will eventually result in heavy loss. Even after following all the details very precisely there is no assurance you will be able to find the very best trades. No matter how hard you try, you will always have to lose some trades on a regular basis. So if you take a huge risk, the chances are you will blow up the trading account. So, start trading the market with a small lot and focus onmaking consistent profit.

    Avoid trading the news
    The professional scalpers never execute any trade during the event of high impact news. News trading is extremely risky since most of the time the market exhibits random movement. So, it’s better not to place any trade prior to the high impact news release since it will save a huge amount of time and money. As a fulltime trader, always remember that risk management is crucial in the trading business. You might have a very big trading account but this doesn’t mean you need take unnecessary risks to trade the market. Stay safe to become a successful trader.

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