You can now download the RSI Scalping Forex Trading Strategy for free on AtoZ Markets indicators gallery.
The oscillating indicator we will be looking at will be the Relative Strength Indicator (RSI). Normally, traders use it to determine overextended prices.
If the RSI is above 70, the market is said to be overbought. If it is below 30, then the market is said to be oversold. But I find that this is not the only way to look at RSI.
Instead, in a bullish bias market, we will be looking first for RSI to drop, before it continues its bullish trend.
Since this is a scalping strategy, we will be using the 1-minute chart exclusively. For those who are not yet adept to quick trading, you may use the 5-minute chart, however, that would already border more towards a day trade type of time frame.
Try this scalping strategy with a reputable broker on a free account:
There will be advantages and disadvantages for both timeframes though. The 1-minute chart will have more noise, but personally, I find it easier to predict due to the short span of time I hold the trade on this timeframe. The 5-minute chart will have less noise, but I find that many things could happen that could reverse the market sentiment during the span of time I hold trades on the 5-minute chart.
How to trade with RSI Scalping Forex Trading Strategy?
Buy Entry:
- Price should be above the 200 EMA (green moving average)
- The RSI should go below 40 but not go below 25
- Wait for the RSI to go back above 40
- Enter at the close of the candle corresponding to when the RSI crosses above 40
Stop Loss: Set the stop loss at the swing low generated by the bullish price thrust
Take Profit: Set the take profit at 2x the risk on the stop loss
Sell Entry:
- Price should be below the 200 EMA (green moving average)
- The RSI should go above 60 but not go above 75
- Wait for the RSI to go back below 60
- Enter at the close of the candle corresponding to when the RSI crosses below 60
Stop Loss: Set the stop loss at the swing high generated by the bearish price thrust
Take Profit: Set the take profit at 2x the risk on the stop loss
How to download and install an indicator?
In order to install the indicator on your MT4 platform, you need to follow these steps:
- Click on the “Download Indicator” button located at the bottom of the screen.
- Save the file to your computer.
- Extract and move the files into the MT4>Indicator folder of the MetaTrader4 software file directory.
- Restart your Metatrader platform.
- Navigate to “Indicators.”
- And select the “RSI Scalping Forex Trading Strategy” template to apply it on the chart.
Note: This indicator was developed by T. Morris. AtoZ Markets does not carry any copyrights over this trading tool.
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