34# Precision Scalping Trading System

Submit by Lorenz 09/2024

Overview

This Trend scalping strategy is designed for traders seeking to capitalize on short-term price movements in the market using the Slow MACD and a Trend Arrow indicator. The strategy leverages the MACD to determine market bias (either bullish or bearish) and uses the Trend Arrow for precise entry points. The trade exits are managed with a predetermined profit target or a ratio-based stop loss.

Setup Strategy

Time Frame 1-5-15-30 min.

Currency pairs volatile pairs with low spreads.

Indicators Required

Slow MACD (Moving Average Convergence Divergence):
- Settings: 200, 400, 2 (default)
- Used to determine the market bias.
Trend Arrow Indicator:
- Used to identify entry signals in the direction of the market trend.

Trading Rules

1. Market Bias Determination:

Bullish Bias (MACD > 0):
- Only take buy (long) trades.
Bearish Bias (MACD < 0):
- Only take sell (short) trades.

2. Entry Rules:

For a Long Trade:
- The MACD histogram must be above zero (indicating a bullish bias).
- Wait for a green (upward) arrow from the Trend Arrow indicator, signaling a potential upward movement.
- Enter the trade immediately at the close of the candle where the arrow appears.

For a Short Trade:
- The MACD histogram must be below zero (indicating a bearish bias).
- Wait for a red (downward) arrow from the Trend Arrow indicator, signaling a potential downward movement.
- Enter the trade immediately at the close of the candle where the arrow appears.

3. Exit Rules:

Profit Target:
- Set a profit target based on a predetermined number of pips that is appropriate for the specific currency pair being traded.
- Alternatively, use a Risk/Reward Ratio of 1:1.2 (e.g., if the stop loss is 10 pips, the profit target should be 12 pips).
Stop Loss:
- Place the stop loss just below the most recent swing low for long trades or just above the most recent swing high for short trades.
- The stop loss ensures that if the trade moves against you, losses are minimized.
Manual Exit:
- If the market shows signs of strong reversal against your position (e.g., MACD crossing over to the opposite side or a strong candlestick pattern in the opposite direction), consider manually exiting the trade before the stop loss or profit target is hit.

4. Trade Management:

Position Sizing:
- Always calculate your position size based on your account equity and risk tolerance, ensuring that no single trade risks more than 1-2% of your trading capital.
Trade Frequency:
- This strategy is designed for fast execution on lower timeframes (e.g., 1-minute, 5-minute charts). Be prepared for multiple signals during a trading session, but only take trades that align strictly with the rules.
Market Conditions:
- Avoid trading during periods of high volatility news releases, as these can lead to unexpected market movements that may not align with the strategy's indicators.

Strategy Optimization

Backtesting: Before applying this strategy in live markets, conduct thorough backtesting on historical data to fine-tune settings and validate performance.
Continuous Learning: Regularly review trades to understand what works well and what doesn't. Adjust the strategy as necessary to adapt to changing market conditions.

This scalping strategy, when followed with discipline and precision, can offer traders a robust method for capturing small but consistent profits from short-term market fluctuations.

Note: in the folder there are two templates the one called Trend Scalping Strategy has a slightly faster setting.