What is the Best Forex Scalping Indicator in 2021
In the trading world, scalping strategies are commonplace. Scalping, in general, is a style of trading that focuses on the use of tiny price movements in trading currency pairs, CDFs, and other highly volatile assets, which implies placing lots of trades in the minimum time and benefiting from small price fluctuations.
Given that positions are opened not for months or even for days or hours, the best indicators for scalping must meet particular requirements - they must be accurate and quickly react to any market changes. After all, even a second or a minute delay can cause losing an ideal moment to enter a profitable position.
It is practically impossible to use the fundamental factors. That is why it is necessary to consider not only the trend movement but also the reversals.
You can trust your intuition or trade based on visual analysis, but forex best scalping indicators give the best results as they help to make short-term trading more effective.
Today we will discuss forex best scalping indicators, which you should learn more about if you want to master scalping.
Scalping Indicators for Forex
Technical indicators - mathematical functions that allow making conclusions about the further development of the price movement of an asset - are actively used in trading. Nowadays, various indicators make trading more precise. As for scalping, many people believe that it is a non-indicator system. The first scalping trades were placed with the help of the depth of the market or as arbitrage, but today the situation is different.
But scalping is evolving and becoming more and more like intraday, which analyzes more factors and often uses technical indicators. So, the forex best scalping indicators are also applicable. But the logic of these indicators will be somewhat different. To understand what indicators should be used for scalping, it is necessary to remember that they are divided into trend indicators, which show the general direction of the dominating trend, and oscillators, which indicate the overbought/oversold price in a particular average range. There are also indicators based on volume data and other specific indicators.
Scalping presupposes many trades opened during one trading day. That is why indicators for this type of trading are often signal and arrow indicators, so they are much easier to use. A trader has an opportunity to receive a good profit if he manages to organize his work correctly.
And even if the amount of income in one trade is not large, subject to the opening of dozens of successful positions during the day, scalping can bring a decent profit at the end of the day.
The best forex indicators for scalping are usually used to simplify the technical analysis of the market and to increase the speed of decision-making. For example, in long-term trading, a trader has an opportunity to analyze market events thoroughly and for a long time, while scalping, it is necessary to do everything fast. And indicators are used to understand the market better, not to miss the opportune moments for placing orders.
This type of tool can be used in different ways - as an auxiliary tool or as the main one. Thus, traders often use indicators for drawing trend lines, channels, support/resistance zones, patterns, and models. When a chart does not resemble just a set of numbers and lines but becomes clear and logical, it is easier to find good entry/exit points.
If the indicator is used as the main tool for scalping on Forex, then it is possible to talk about fully automatic trading. The trader just monitors the situation and opens positions when the indicator signal appears. Such trading is dangerous because the instrument of automated trading is not always able to react to atypical situations.
Forex Scalping Indicators Most Accurate, Strong, And Tested
The best forex indicators for scalping can significantly help improve forex learning. By focusing on a specific aspect, forex best scalping indicators shade out unnecessary pieces of data and make the analysis process easier and faster. So, what are the best trading indicators for scalping?
Parabolic SAR scalping indicator. Parabolic SAR is useful for displaying the trend of price action. In an uptrend, the Parabolic SAR will display points below the price. In a downtrend, it will display points above price, signaling the beginning of a pullback.
When the Parabolic SAR displays only one or two points above price, it indicates that recent price action is just a pullback and leaves your trades open. However, when it plots three or more points above price, it signals a deeper pullback or even a reversal.
Although some traders use it to plan their entries, it should only be used as a trailing stop.
For the scalper, the Stochastic Indicator is one of the best options because it helps traders know the actual price movement. It is very different from the Bollinger Bands or the moving average. The indicator is used in conjunction with others to generate more profits.
A simple trick to use a stochastic indicator for scalping is to combine it with a moving average (200 SMA). It acts as a dividing line that serves as a boundary in a bull or bear market.
The best time frame for this strategy is the 5-minute timeframe. All you need to do is insert your Stochastic indicator with the following parameters - 5, 3, 3 combined with the 200 SMA.
You have to be picky when using this strategy because you will be tempted to enter any crossover. However, to enter a buy signal, the Stochastic must cross below the 20 level. And for a sell signal, it must be above the 80 level.
The last indicator that is included in the list of the best indicators for scalping is the Bollinger Bands. To use it effectively for scalping, you need to apply a period of 12 with a deviation of 2, using a 5-minute time frame. Whenever the price touches the bottom Bollinger Band indicator, you should buy. Alternatively, if the price reaches the upper boundary, you should sell. Remember to use Stop-Loss and Take-Profit if the trade goes against your analysis.
Every indicator has a flaw, and the Bollinger Band indicator is no exception. It works best if the market is oscillating or moving sideways. If you decide to try it in a trending market, the result will not be pleasant.
Ribbon Entry Forex Strategy
For this strategy, we will use three simple moving averages with the following periods: 3 SMA, 26 SMA, 100 SMA.
13 SMA represents a fast-moving average, and the 26 SMA represents a slow-moving average. The intersection between the two moving averages will be our signal for entry.
The 100 SMA will represent the main intermediate trend. All trades should be made in the direction of the trend. That is the crossing of the 26 SMA over the 100 SMA.
The following rules should apply to consider a buy trade:
- The price must be above the 100 SMA;
- 13 and 26 SMAs are above the 100 SMA;
- 13 SMA crossed 26 SMA.
Pay attention to how the 3 SMA moving averages overlap neatly and price builds a clear uptrend.
For short positions, we will look for the following signals:
- Price should be below the 100 SMA;
- 13 and 26 SMAs are below the 100 SMA;
- 13 SMA crossed below the 26 SMA.
You must remember that all indicators are lagging. Therefore, you have a high probability of catching such a movement, which, in fact, is already completed. As a result, you will enter the trade, something will take the spread, something will take commissions. The rest of the profit will not be able to cover the movement in a way that would make money on it.
Perhaps the strategy has a place in trending markets. Such as the American stock market now. Wherever you go in, the important thing is that you buy. The issuer will break the next high anyway.
The Relative Strength & Weakness Exit Strategy
The Moving Average is one of the most accurate indicators, which is designed particularly for trading specifically on the trend. In fact, MA with the right approach to the settings, namely the averaging period can cover both small short-term movements and global trends. Consequently, the Moving Average is the very key that can open the door to many doors and solve a huge number of problems. When it comes to finding the most accurate indicator for trend trading, there is a logical question: what kind of trend is needed? For example, some tools can give incredibly accurate signals only for short-term changes in trends, while others, on the contrary, only for long-term trends.
The fact that in a professional environment talking about the most accurate indicators causes nothing but smiles! The fact is that there are no most accurate indicators for the Forex market, there are only those tools that cope with the tasks clearly assigned to them.
There is no such thing as the most accurate, there are strategies that include some indicators, and together they can help to understand the trend direction and show the best time to enter the market. To develop your own approach and find the most accurate forex indicator, you need to study the most common, typical strategies in the forex market, understand the work and behavior of its main indicators. It is well suited to fans of scalping because it shows impressive results in low time frames, such as M15. Do not forget that the Digital MACD indicator, like any other, provides the most accurate signals during a good market movement, but not during a flat. Therefore, it is better to trade with this indicator during the London and American sessions when there is some volatility in the market.
Forex Scalping of Multiple Charts
Multiple charts indicator is an indicator that displays the values of several currency pairs at once on the screen. Why, you may ask, is that necessary?
First off, it allows you to simultaneously monitor several currency pairs which you trade, and it is very convenient, especially for scalpers. You do not have to "jump" from screen to screen to analyze the trend and find the necessary values. And the use of this indicator allows traders to identify movement patterns that are inherent to different currency pairs.
The Multicharts indicator can display up to 5 currency pairs in the windows. Trading currencies with this indicator becomes very convenient, especially when there is a need to learn the readings of other indicators, working with other currency pairs.
In addition, the indicator has its unique features, such as a built-in system optimizer based on genetic algorithms, which provides an enormous speed of testing and optimization of various trading systems (several orders of magnitude higher than traditional methods). Among other things, the Multicharts indicator has a three-dimensional visualization module for displaying the results of testing.
The Multicharts indicator is a convenient tool for comfortable scalping that allows the trader to control multiple working instruments, analyze the trend, as well as to monitor open positions.
Example of Forex Scalping
To fully get the idea of using the scalping indicator forex traders prefer, let us see how we can use some of the best forex indicators in actual trading.
Here is the initial set-up:
- Currency pairs - any;
- Time frame - М5;
- Indicators: MA(4), MA(8), Stochastic (5,3,3).
Since scalping is high-frequency trading, we set the Stochastic levels to 60/40 instead of the default 80/20.
Conditions for opening a long position:
- The fast MA(4) in red crosses the slow MA(8) in blue from bottom to top.
- The main stochastic line crosses the 40 level from below to above.
Conditions for opening a short position:
- The fast MA(4) in red crosses the slow MA(8) in blue from top to bottom.
- The major line of the Stochastic crosses the 60 level downwards.
The trade is opened on the same candle in which both conditions coincide. If the gap between the conditions is equal to one candle, you can open a position, but it will be considered as a delayed signal. It is impossible to open a trade if the gap between the fulfillment of the conditions is two candles or more, and if instead of a clear crossing of the moving lines, their convergence and subsequent divergence are observed.
Scalping attracts many traders with an opportunity to quickly increase their deposit and get the result of trades in the shortest possible time. It is not necessary to use some tools for scalping - a combination of several standard ones or one familiar tool that will help to understand the market better and work efficiently according to the chosen strategy is enough.
Using the best forex indicators for scalping, it is worth remembering that fundamental factors can influence prices even in their minimal fluctuations, so taking into consideration the support/resistance levels, monitoring the news, and marking the global trend will not be superfluous. Even the most universal and effective system can fail, and only a human being can keep track of all factors and make proper decisions even in a force majeure situation.