I have been busy the last few days combining all my research and looking over the trades and drawdowns also where I got lucky with the news going in my direction.
I have combined what i have learned and the best moving averages into an indicator called ‘Trend is your Friend’ ( it free attached)
Using TheBear multi trend indicator with a set file 20 lwma 60 lwma and 300 lwma (Set file attached)
My Conclusion is as follows:
First let me clarify, Scalping is based on minute-based movement combined with high frequency of trades resulting in small pips per trade adding up to profit.
Question Number 1:
Trend is very important, but how do we know the near-term next few minutes of the trend?
The higher timeframes are the key here right up to 4 hour chart, even when scalping the 1m chart you need to know the trend for all the timeframes. I have developed an Indicator called ‘Trend is your Friend’ it is free to download. It is based on the research done here with moving averages and combining them into a simple to understand indicator.
Question Number 2:
Take profit or let the trade run, when do I get out?
Get out even at 1 or 2 pips if you see the price is hitting S/R. Your not impressing anyone with your 100 pip trade. Do not tell yourself I’m looking for 10 pips on this trade, just get out when you feel price is retracing, Why not let it run for a bit you ask, remember you’re on the 1M Chart another opportunity will come very quickly so bank the pips. Get in Get out.
Question Number 3:
Closing bad trades, where is the final stop.
Draw trend lines based on the 5m Chart. When candle opens on the wrong side of it get out. This will allow your trade the chance to return into profit or less loss. Indicators are very bad at telling you when to get out of a trade, only trust the S/R trend lines, when they break you get out.
Question Number 4
Which pair do I trade?
The pair that is trending, using the ‘Trend if your Friend’ indicator it is easy to see look for large sections on the indicator to be painted one colour either magenta or blue this shows the pair is trending.
How I think I have found the solution
Using the ‘Trend if your Friend’ indicator I get a view of all the major Moving averages direction. I place this on all charts like GBPUSD, GBPAUD, EURUSD etc and then I see which one is trending that’s the one I want to trade today.
Using TheBear Multi Trend with the Set file for 1m scalping I have three lines on the chart nice and clean, when the lines are in order and the correct colour, it’s a trade.
I know I need to go into more detail which I will do, just need some time to write it up with examples so next week I will give you some examples like today’s trading.
Trend is your Friend indicator
Trend is your Friend.ex4 (28.9 KB)