164# 5 min Scalping System

Submit Janus Trader 28/11/2011

Time Frame 5 min.

Pairs: majors

Indicators:

Exponential Moving Average – 10 Period

Exponential Moving Average – 21 Period

Exponential Moving Average – 50 Period

The 50 EMA is our indicator to determine the short term trend, and the 10 and 21

period EMA’s provide us with strong support and resistance levels which we will use for entry signals.

Timing is also everything with this system. The best times to trade this system are after

the London market opens, or after the New York market opens. You should not trade

this system when the Asian market is open, as you won’t have as much success with it.

Our whole point here is to ride out the short term trends while the trend is making

higher highs (and lower lows), and to constantly squeeze 10 – 15 pips out of a trade

while only risking five. If you follow our entry rules, this system does work well. The

basic idea shown on a chart:

Trading Rules for the 5 Minute System

The rules for this system are quite simple. To lay them out for you, we:

1. Look for a trend on the five minute chart. This means that the currency

will be making higher highs (in an uptrend), or lower lows (in a

downtrend).

2. Look at the EMA 50 to determine trend direction and strength. The more

it is slanting up or down, the stronger the trend is.

3. Wait for the currency to enter the halfway point between the EMA 21 and

the EMA 10. If you are in an uptrend this is your buy signal. In a down

trend it is your sell signal.

4. For a stop use 5 pips (plus the spread).

5. Set a take profit at 10 pips (plus the spread).

6. Continue scalping until the trend stops (50 EMA Turns Sideways)

Let’s look at this on a chart to add some clarity:

In the picture 5 min scalping system in action.

Looking at the above chart, let’s simply walk through the steps. I’ve listed 7 entry points.

Of those seven, only 4 are valid, but we’ll get to that. Let’s walk through the steps we

take to take advantage of the short term trend:

Trend Determination: We have determined we are making higher highs, and

the EMA 50 is pointing up. This tells us we are in an uptrend.

#1 Signal – Price retraces to the midpoint between the EMA 10 and the EMA 21.

We set a five pip stop and buy.

#2 Signal - Price retraces to the midpoint between the EMA 10 and the EMA 21.

We set a five pip stop and buy.

#3 Signal - Price retraces to the midpoint between the EMA 10 and the EMA 21.

We set a five pip stop and buy.

#4 Signal - Price retraces to the midpoint between the EMA 10 and the EMA 21.

We set a five pip stop and buy.

#5 Signal – Price did not make a higher high – this could indicate the trend is

changing. We don’t take this trade.

#6 Signal – Price did not make a higher high – again we don’t take this trade.

#7 Signal – Price did make a higher high, but the EMA 50 has turned sideways,

we do not take this trade.

Let’s look at this system whole system in reverse to have an example of short trades with

the 5 minute system. Looking at the chart below we first determine that we are in a

downtrend, and then we have 5 entry signals on this chart.

In this case all of the entry signals are valid. The #3 trade would have stopped out, but

we would have had four profitable trades by scalping 10 pips at a time from this trend.

This system is simple and if used the way we have laid it out it can be extremely

profitable. We aren’t quite done yet though, there are a ways to add to the profitability of

this system.

Letting Profits Run

I do suggest you trade the system as I laid it out in the previous section while you get

used to it. But, as a variant, after you gain some experience you can let your profits run

to earn more from the market.

Using this method we won’t be making multiple trades, instead we just take the first

signal, set our stop to breakeven once we are 10 pips ahead, and then let it run. Using

the same example from the previous section:

With this method we take the first entry signal once we’ve determined that we are in an

uptrend/downtrend. Looking at the chart above the bar hits the midway point between

the EMA 10 and EMA 21. We enter the trade.

We still use our 5pip + spread stop, but this time we don’t set a take profit. Instead we

wait until the trade moves 10 pips in our favor and then set our stop to the breakeven

point. From there just let the trade ride.

To exit the trade, there are two strategies that you can use.

1. Wait until the EMA 50 begins to flatten out as shown in the screenshot on the

previous page. With this method we would have earned 50 pips compared to the

35 we would have earned from our previous example.

2. Wait until the EMA 50 actually turns up – with this particular trade we would

have held if for most of the day and earned 100 pips.

Write a comment

Comments: 6

#1
Jay (Sunday, 22 March 2015 22:19)

Thank You. Works Well
#2
onekason (Wednesday, 28 October 2015 14:17)

ok.thanks,i will try it ASAP.if it works,i will continue with it and share the good news to other traders
#3
周杰伦 (Sunday, 31 January 2016 08:52)

k.thanks，我会尝试ASAP.if它的工作原理，我将继续与它分享给其他交易者的好消息
#4
Đạt (Thursday, 23 March 2017 13:45)

Should be more parabolic indocator tool better
#5
Linh (Thursday, 27 April 2017 15:40)

Hi, can you tell me more about the higher high in the screen shot? Is that the hightest price of the next candle is higher than highest price of the previous candle?.
Because when i look at the first screenshot, i don't see i that way.
#6
Kurmangali (Wednesday, 10 January 2024 07:16)

For more clarity, you can add a Bollinger indicator

164# 5 min Scalping System

EMA Forex Strategies