A scalping strategy for options

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Forex Scalping Strategy

What is Scalping in forex trading: types of scalping, scalping forex signals, advantages and drawbacks. Scalping strategies in Forex: practical examples with MT4 screenshots.

Scalping strategies in forex are quite popular among beginner traders, although it is not really justified. High-frequency trading (holding the position for a very short time and closing it for a small profit) allows to take quick real-time profits and avoid swaps. Training scalping strategy forex on a demo-account helps a newbie improve reaction speed and learn to intuitively understand the behavior of traders in financial markets. However, one had better enter real trades on longer timeframes. From this overview, you will learn what forex scalping is, what the advantages and disadvantage of scalping are; you will also study practical examples of simple forex scalping strategies.

Forex Scalping strategy for beginners: basic rules, types of strategies, recommendations, practical examples of scalping trading strategies.

Scalping strategies in forex imply high-frequency trading techniques that suggest making money on multiple trades in a short period of time. For traders who are just starting to trade, this trading strategy is considered dangerous because the trend is chaotic in the short-term charts (the so-called price noise effect) and therefore, it can be hardly predicted. I, on the contrary, believe that a beginner should train scalping before dealing with middle- and long-term trading strategies. Scalping helps one train attention, reaction speed; it visually shows slippage problems. Although, you must be highly concentrated and emotionally stable when using scalping, if you have understood the theory, scalping forex strategy is an excellent simulator for practicing these skills.

Read on in the article:

  • What is Forex scalping
  • Types of scalping and general examples of scalping strategies
  • Advantages and disadvantages of scalping strategies
  • Practical examples of using forex scalping strategies: general entry rules for long and short trades, rules for setting stop losses and exiting a trade.

What is Forex scalping?

What is scalping in forex trading? It is believed that this is a type of trading, when a trader enters multiple trades in a short period of time and closes them in a few minutes. This is not an exact definition. Scalping suggests putting orders at a short distance from the opening point. The trader exits the trade in a short time, as soon as the price changes by at least a few pips, including the spread. Even one trade entered based on this principle already refers to scalping. Logically, in order to make profits, a scalper has to make dozens of such transactions within one day, but their number is not so important.

A key to success in scalping is to pick up a good moment in relation to the predictable volatility.

Types of scalping and general examples of simple scalping strategies:

1. Scalping on the news. At the moment of the important news releases or the publication of the economic data, there is a surge in volatility and trading volume that may continue from a few minutes up to a few hours. This is the best time for scalpers. There are two ways of trading.

  • You put opposite pending orders a few minutes before the statistics publication and cancel the losing order after the publication.
  • You enter several short-term trades for directly correlated pairs in the first minutes of they news publication in the general trend direction.

It is quite hard to make money by utilizing such a strategy. Both methods have their own advantages and drawbacks. You can learn more in this overview.

2.Types of scalping according to timeframe.

  • Pipsing. This simple forex scalping strategy is called the most profitable and most high-risk strategy (in terms of profit, the issue is very controversial). Trading is conducted on the M1 interval, transactions are held in the market for a few minutes. It happens that 1-2 points is enough for the scalper, since the maximum leverage (sometimes up to 1: 1000) is used.
  • Middle-term scalping. This strategy forex scalping suggests a relatively smaller number of trades, the holding time is about 5-10 minutes. Timeframe is M5. The leverage size is determined by the trader.
  • Conservative scalping. Holding time is up to 30 minutes, timeframe is M15.

3. Types of scalping based on technical strategies.

  • Scalping with analysis of several timeframes. Such a strategy is used when trading with the trend that is short-term. It can reverse any moment, so common trend trading strategies for hourly timeframes won’t work there. Such a trend may emerge, for example, during a short pause before the news release, that is rather controversial, judging by forecasts. Or it may start during a temporary balance of bulls and bears power. The forex strategies scalping of this kind suggest that you identify the beginning of a trend on the timeframe of H1-H4 by means of a trend indicator or a confirming oscillator. Next, you analyze the market and look for signals on the timeframe M5. A practical example of this strategy will be explained a little later.
  • Trading based on major currency pairs. The major pair is the pair, based on which the scalper takes trading decisions, but he/she is trading a correlated pair that is a little lagging. For example, they EUR/USD pair immediately reacts to the publication of the US statistics. If EUR/USD and USD/JPY are rising, then EUR/JPY will also rise.
  • Intuitive scalping. Taking into account that a scalper has little time to take decisions, there is a category of traders who use their intuition. They understand the market so well that they don’t need any technical indicators.

I won’t describe the subdivision by the indicator type (graphic, level analysis and so on) as it rather logic. The classification can be extended, and I will appreciate if you, my dear readers, help me by offering your variants of scalping strategies in the comments following the overview.

Rules for successful scalping trading:

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  • There must be no restrictions by the broker for employing this type of strategies. There must be no restrictions in the offer concerning the number of trades open and the minimum holding time.
  • Instant execution. It greatly depends on the broker, liquidity providers, internet connection and the trading platform itself.
  • Big financial leverage. Professional scalpers employ the leverage from 1:500-1:1000 and higher, but according to the rules of European regulators, the maximum financial leverage is 1:50.
  • The instrument must have the best liquidity

So, I think you now understand what is scalping in forex trading. Let us discuss the advantages and disadvantages of forex scalping strategy.

Advantages of forex scalping strategies:

  • It suggests trading based on fundamental analysis. Technical indicators are rather used as supplementary tools due to the price noise in the short-term timeframes. Although, beginners are not recommended to trade on the news, in terms of training and utilizing simulators, this can be easier and more interesting than technical analysis. Everything is subjective, but I would say this is a benefit of scalping.
  • It gives the opportunity to make big profits. Everything is relative, but if you are a professional, high-frequency trading can bring higher returns compared to day trading strategies. In scalping, a trader manages to gain on almost every price change in both directions, while in intraday trading, part of the profit is “lost” due to pullbacks and corrections. Besides, it doesn’t depend on the trend.
  • Scalping allows making profits when the market is trading flat.
  • There are no swap costs (for keeping the position open through the next day).

I would call training to trade scalping is the biggest advantage. Due to high-frequency trading, the trader learns to better understand the principles of entering and exiting trades, the nature of the market, and learns to develop intuition. After mastering scalping that is far more complex, intraday and long-term strategies will seem easier.

Disadvantages of forex scalping strategies:

  • Spread. Doesn’t matter how long is your position held open, the spread will be the same. It takes most of the profits in scalping.
  • Technical problems: slippages, a delay in order execution, failure of the terminal and so on.
  • In scalping, just a second sometimes matters, and a delay may result in a loss that may exceed a small profit.
  • Market noise. Random price swings, insignificant for long-term timeframes, may close the order by a stop loss in the short-term periods.
  • Limited choice. Only liquid currency pairs with a moderate volatility are suitable for forex scalping. Exotic pairs are not appropriate.
  • Quality of market data and the restrictions by the broker. Some companies either prohibit scalping, or there is a restriction on the minimum holding time for a trade.
  • Emotional stress, you have to be constantly focused on small things. You have to monitor you trades all the time and take your decisions quickly. Sooner or later, a scalper feels emotional exhaustion, loses focus. The problem can be partially solved by scripts and trading robots.

To make profits from scalping one needs to use high leverage, which significantly increases the risks. But still, despite all the drawbacks of scalping trading, forex scalping is, first of all, satisfaction and excitement. That is why many traders like forex scalping so much.

Best FX currency pairs for scalping

The choice of trading instrument is important not only for a scalping, however, in a scalping where there is, literally, a fight for each point of profit, and the sharp shift can lead to a loss, its importance comes to the forefront.

Basic requirements to a currency pair suitable for scalping

  • igh liquidity and low floating spreads. This requirement is met by frequently traded currency pairs with large trading volumes, like EUR/USD, GBP/USD. To compare spreads for different pairs offered by different brokers, you can use the data form MyFxBook.
  • Moderate volatility. Liquidity and volatility have a kind of inverse correlation. It is hard to buy/sell a currency pair with high volatility. And vice versa, high-liquid currency pairs have low volatility. It is very important to retain the balance, volatility calculator can help you do it. Based on the calculator, the best currency pair for scalping is EUR/USD.

For night (flat) scalping, you can trade the pair with a relatively low volatility USD/CAD, AUD/USD. I want to stress that the meaning of the best currency pair for scalping is subjective. The price movements depend on both external macroeconomic factors and on the FX manipulations by large investors (market-makers). That is why, at different times, different currency pairs from major forex pairs or cross-currency ones may turn to be the best for scalping. Therefore, there are a few tips on how you can select the best fx pair for scalping:

  • You should feel comfortable when trading. Find your own trading style and the best-suited currency pair, spending as much time as you need on training on a demo-account.
  • Be flexible. Today you achieve positive results when trading one currency pair, tomorrow, you may take profits from scalping another currency pair.
  • Manage forex risks. In addition to general risk management rules about the volume of open positions, there is one more rule concerning scalping. You should not enter trades for the two rising currency pairs at the same time. Although, it can double your profit, it also doubles your potential risks, as both pairs may reverse at the same time.

There are no recommendations regarding the best indicators and technical tools for scalping. Everything is individual here. Someone is satisfied with the MT4 standard indicators, someone installs unique author’s tools. Trading performance depends not so much on the tools as on the ability to use them.

Forex scalping strategies – practical examples

Forex scalping suggests that a forex trader should constantly monitor the trades and the positions opened. The strategies described further are based on technical indicators, but they are used as supplementary tools to the intuition and practical experience. Therefore, before you start employing these strategies on a real account, practice them on a demo account over and over until they are entirely automatic.

How to install scalping strategy templates in MT4

Each of the trading systems described below suggests employing combined indicators that are not included in MT4 and other platforms as standard ones. In each overview, you will find a link to the archive, which you need to download and add to MT4. Each archive has two files: an indicator (.mq4 or ex4.) and a template (.tpl). They are installed as follows: in MT 4, click on “Menu – Open Data Catalog”:

  • Indicator. Open the folder MQL4/Indicators and past there the fail with the corresponding extension.
  • Template. Open the folder “Templates” and past there the template, restart the platform. Now, the template can be added to the chart of the currency pair.

The uploaded indicator can be found in the tab “Custom indicators”, the uploaded template is in the tab “Charts/Templates”. According to the type of the operational system the names of folders may differ. If you fail to sort it out and can’t find the answer on the Internet, write in the comments and I will help you.

1. Classical Forex scalping is best trading strategy for beginners

This strategy is based on 4 basic technical tools combined in a single template: two simple moving averages, RSI and MACD. The strategy is classical, based on the principle “Don’t reinvent the wheel, learn to feel the market”. Recommended timeframe is M5. The 1-minute timeframe will send many false signals, but you can try to search for signals in non-standard timeframes from 5 to 15 minutes. Recommended pairs: EUR/JPY,EUR/GBP – there are the most of effective trading signals for them.

  • The benefit of the scalping strategy for beginners. You train the skills of application of standard indicators, improve your attention (by searching for multiple conditions met at the same time).

You can download the scalping strategy template via this link.

Settings of the indicators:

  • МАCD: fast ЕМА (12), slow ЕМА (26), MACD SMA (9), apply to — Close.
  • RSI: Period (26). Settings for levels may be left default – (50). Apply to — Close.
  • LWМА (linearly weighted moving average): Period (10), Apply to – Close. Shift — 0.
  • EМА (Exponential Moving Average): Period – (20), Apply to – Close. Shift— 0.

The best time for forex scalping is the European session, at this time, these pairs are most actively traded, and so, the liquidity in the market is the highest.

Conditions for entering a buy trade:

  • МАCD has been below a zero level for some time, afterwards, it paints a graph above zero.
  • RSIin the same candlestick range breaks through level 50 upside.
  • LWМА(orange line) is above the EMA (blue line). The perfect condition is when the LWМА in the same interval breaks through the EMA from below.

You enter a trade at the next candlestick after the major condition has been met, the MACD has crossed zero level. The rest of signals in this case are confirming signals, but you shouldn’t enter a trade unless all the conditions are satisfied. The expected profit is 5 pips, not including the spread coverage. When the target profit is reached, you may hedge the trade by a trailing stop or exit it. The second variant is safer.

Pink boxes and arrows in the chart highlight the indicators values that provide a signal when occur at the same time. Horizontal red lines mark from top to bottom: take profit, entry point and stop. It is also clear from the screenshot that the trade could have been entered one candlestick earlier. During the important news releases, this strategy doesn’t work.

Conditions for entering a short trade:

  • МАCD has been above zero level for some time, and then, it paints a graph below zero.
  • RSI in the same candlestick range crosses level 50 from above.
  • LWМА (orange line) is below the EMA (blue line). A perfect case will be if the LWMA in the same interval breaks through the EMA from above.

You enter a trade in the same way: as soon as the MACD breaks through zero level, you may enter a trade.

You shouldn’t count on a big profit. The strategy suggests gaining just a few pips. Signals appear almost every day, so you may trade no more than one or two currency pairs. If you have managed to pick up the start of the trend, the target profit size can be increased.

2. Scalping in a saturated market

This scalping strategy aims at picking up the moment of the maximum market saturation. That is the situation when the trend is already exhausting and there is inertial price movement just ahead the reversal.

The strategy uses the Laguerre Volume indicator that helps you identify the moment of the market volume saturation. Its designer, John Ehlers was originally working with equipment designed for the processing of space signals in the1970s. As he was a proponent of the theory of cycles, the indicator was developed based on this theory. It was finally modified by a French mathematician Laguerre.

The indicator is efficient at signaling the start and the end of micro-trends. I don’t suggest you try to understand the calculation formula of the indicator unless you are an expert at higher mathematics and programming. You just need to download here the template. The strategy will also suit those who are just beginning scalping as the timeframe of M15 allows you to estimate the signal without haste and provides more time for taking your trading decision. The currency pair is USD/CAD, it is traded when the market is trading flat after its saturation.

  • Benefits of this trading strategy for beginners: it is a simple strategy the doesn’t require high concentration and emotional stress from a trader.

Settings for Laguerre Volume: gamma = 0.618, the number of bars = 5000, Levels: 1; 0.75; 0.5; 0.25; 0. The gamma value is used for calculation of the indicator’s levels. The higher is the value, the more smoothed will be the line. The value of 0.618 in this case is the optimal balance between smoothing and lagging.

Conditions for entering a long position:

  • The trading is conducted during the period of nigh flat from 00.00 to 07.00 ЕЕТ. After active trading during the European session, there is the exhausting phase with inertial price movements.
  • Laguerre Volume first breaks through level 1 and then reaches level 1.
  • During the indicator rise to level one, there is a growing candlestick with the body that is not less than 3 pips.

You may enter a trade on the next candlestick hedging it by a stop loss at a distance of 8-10 pips. Target profit is 5 pips, after that, you can either fully close the position or can close a part of it moving the stop to the entry level or leave the position open protecting it by a trailing stop.

Conditions for opening a short position:

  • You trade from 00.00 to 07.00 ЕЕТ.
  • Laguerre Volume first breaks through level 1 and then reaches level 1.
  • During the indicator’s rise to level 1, there is a falling candlestick with the body that is not less than 3 pips.

The entry principle is similar.

The Laguerre Volume doesn’t always rise at the interval from 0 to 1 ideally straight. Sometimes, there are pullbacks, and then, it resumes going up. That is why, if the indicator hit, for example, level 0.9 and reversed downwards, you’d better not enter a trade. The straighter is the indicator’s trajectory in the way to level 1, the more accurate is the signal. You shouldn’t also enter a trade if the indicator tests the level twice, as it is presented in the figure above. You can test the strategy on the pairs, including the Australian and the New Zealand dollars, other currency pairs shouldn’t be traded with this strategy.

3. Trend Line forex scalping strategy

Unlike other trading systems, this trading approach suggests entering a series of trades at the very beginning of the trend. In theory, one could put a single entry and hold it till the trend reversal but scalping also implies taking profits from pullbacks/corrections. In addition, this strategy allows making money on short trends.

The strategy applies the following indicators: Stochastic Oscillator and the Awesome Oscillator. Two moving averages analyze the trend line in the hourly timeframe.

  • Advantages of the strategy for beginners: it is a good example of how you can make money on scalping additionally using a longer timeframe.

The currency pair is GBP / USD, the main trading timeframe is M5, the auxiliary one is H1. Trading is conducted at the European session. You can download the strategy template here.

Settings of indicators:

  • Stochastic: %К – 14, %D – 7, Slowing — 7, Moving Average Method – Simple, levels – 20 and 80 (default).
  • Awesome Oscillator: all settings are default.
  • SMA 1: Period 50 (red line), Apply to – Close.
  • SMA 2: Period 200 (blue line), Apply to – Close.

Conditions for entering a long trade:

  • Analysis of H1 timeframe. Both moving averages are directed upward. Red MA is above blue MA.
  • Analysis of M5 timeframe. Stochastic was in the oversold zone (in the range between 0-20) and goes beyond the zone at the signal candlestick. Awesome Oscillator paints a green column below zero level.

The more vertically the stochastic goes outside the oversold zone, the more accurate is the signal. After all the conditions on the next candlestick are met, you can enter a trade. The target profit is about 10-15 pips, the stop can be put at the same distance or a little further.

Conditions for entering a short trade:

  • Analysis of H1 timeframe. Both moving averages are directed downward. Red MA is below blue MA.
  • Analysis of M5 timeframe. Stochastic was in the overbought zone (in the range between 80-100) and goes beyond the zone at the signal candlestick. Awesome Oscillator paints a red column above zero level.

The entry rules are similar. If the trend is strong, you may enter a series of trades.

4.Psych levels scalping trading strategy

Psychological levels trading suggests two scenarios: breakout of the channel border with the start of the new trend or a rebound from the border (support/resistance level) and the return to the middle of the channel, that is to the balance level. This is a perfect scenario. In practice, everything may be a little different:

  • The channel border breakout may be an inertial price movement and there may not start a new trend; the price may go back to the channel after a short movement.
  • The movement inside the channel can also be chaotic. After a rebound from the border, the price does not manage to reach the middle (let alone the opposite border) and reverses.

All these are risks for a day channel trading strategy, but not for scalping that allows you to make profits both form the channel breakout and from the price swings inside the channel. Psychological levels in this case serve as a target reference that helps you at least approximately assume the potential pivot points inside the channel.

The strategy suggests building a Moving Average “Envelope”, where the price will return. Stochastic will identify the probability of the channel’s borders breakout, internal levels are built based on Fibonacci levels. Stochastic in this case will be a supplementary tool, moving averages and levels with the coefficients of 61.8; 161.8; 261.8; 361.8 are combined in a single indicator, MaEnv that you can download via this link. Moving averages in the indicator are constructed by summing 3 LWMAs with periods of 30, 50 and 100, weighted by the closing price.

  • Benefit of the strategy for beginners: an excellent combination of scalping and a channel strategy.

Timeframe – М5 (5 minutes), currency pair- EUR/USD. MaEnv default setting. Stochastic settings: %К – 14, %D – 3, Slowing – 3, Prices – Low/High, Moving Average MEthod — Simple. Levels are standard (20, 80).

Conditions for opening a long position:

  • Candlestick closes below the red line.
  • While the price is below the red line, oscillator goes down into the oversold zone (below level 20).
  • Both the price and the stochastic must be below the red line for now longer than 10 bars.
  • The price goes up above the red line

After the candlestick closes above the red line, you enter a trade and put a stop at a distance of about 10 pips. You exit the trade when the orange line is reached (Fibonacci level 61.8).

Conditions for entering a short position:

  • Candlestick closes above the red.
  • When the price is above the red line, oscillator goes up into the overbought zone (above level 80).
  • Both the price and the stochastic must be above the red line for no longer than 10 candlesticks.
  • The price goes down below the red line.

The exit conditions are similar. Other lines are auxiliary, but, if they start indicating a reversal and the profit has already covered the spread, exit the trade and expect when the price goes beyond the envelope for the next time. If the price for a long time is between the red and the blue lines (from 8-10 candles and longer) or outside the red line, you do not enter a trade.

Conclusion. Scalping is one of the forex trading strategies suitable for both currency pairs and other assets CFDs. Scalping is convenient in trading flat and when the market is not trending. Some people consider it to be highly profitable; others say it is highly risky. In any case, before you start scalping, any scalping strategy forex needs to be practiced and improved on a demo account. I hope this practical case study has helped you answer the questions you had. If it is not so, write your questions in the comments and we will try to answer them together. I also invite you to discuss in the comments the best optimal and profitable forex scalping strategies or share them with beginners! I wish you successful trading!

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Price chart of USDJPY in real time mode

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

Scalping and strategy for it in binary options

“Scalping”?

Scalping is a short term trading with the aim of obtaining profits on small time frames from 30 seconds to 5 minutes, sometimes a bit more.

To understand what is scalping in binary options, let’s make a little comparison with long-term trading.

Often traders trade on higher timeframes beginning from H4 and ending with the weekly charts. That is, the expiry time can vary from half of a day to a few months.

If we talk about scalping in the binary options market, it implies the opening of a large number of short-term transactions in PUT and CALL at different or same asset within the same trading day.

In this article, we will consider concepts such as: scalping with binary options, trading rules, types of scalping strategies, scalping market depth, examples of best strategies for scalping, and so on.

Scalping with binary options: trading rules

Scalping on binary options

Scalping in binary options market involves trading on small time frames, like M1-M5. Some people manage to scalp a market on turbooptions. By the way, for this reason there is a simple but profitable strategy for turbooptions. Although some trade on time frames M30-H1. The more the timeframe, the more accurate the signals are processed. It is a proven truth.

Don’t be afraid to experiment. If you are dodn’t manage to trade in plus on small timeframes, you may make money on the older time intervals.

Try to consider the trading signals in the direction of the global trend. For example, if trading on M5, then look in which direction the trend on the H1 timeframe is moved.

And remember that scalping in binary options is a risky thing. Therefore, the deposit should always have cash reserves.

Do not worry, if the deal is unprofitable. Certainly subsequent trades will be profitable, if scalper trader does not deviate from his trading strategy.

To recover lost, usually the method of martingale will help. With proper use, it is possible not only to leave a losing trade but also to earn something.

Follow risk management. That is, do not risk one deal a significant portion (20-50%) of the deposit. The rate on each trade is 2-5% of the total deposit.

Create a trading plan that will always be in a prominent place to stop the trade. Every trader who is scalping in the market of binary options has its own plan. Someone stops trading after 2 or 3 profitable trades, and someone has 5 deals.

Do not be greedy. Everything should have a measure. Earned $50 or $100, do not trade more, as the excitement sooner or later take its toll.

Well, the last rule of trading for scalping: a trader must have a proven trading system on which he scalps the market. Most importantly, stick to its rules.

Types of scalping strategies

Before describing the types of scalping strategies, you should know that they require the following conditions:

  • there should be high liquidity;
  • the tool should have a high, but controlled volatility;
  • stock quotes that are delivered to the terminal must be correct and complete;
  • broker with low commissions or spreads;
  • all trading orders should be executed fast.

Note that scalping, including in the market of binary options, involves the execution of a trader’s psychological stability, as well as careful execution of capital management.

Systems for classic scalping

If we talk about classic scalping strategy, its application implies opening of orders when the market formed the difference between supply and demand. Thus, this imbalance is causing volatile price movements, which itself can be used for profit.

This scalping strategy performs well when trading futures on stocks.

The main advantage of a classic scalping is that with it you can track the status of transactions of all participants in the exchange market. It’s kind of a table of values, using which the classic scalping can be profitable.

Traders believe that if a person is able to “read” the DOM, so he has 50% of the success in his pocket. For profitable scalping using depth of market, this skill is simply necessary.

The trader should be interested in large applications, the value of which originates with 200 or more units. Large application – the signal that the big players entered the game. They are known to be always driving the market. So where they go, we follow.

In other words, when you see a large bid to buy, starting from 200 and above the base units. So you need to open a buy trade and Vice versa. In binary options this type of option is CALL.

Trend scalping, sliding trade or trade from the levels inside

Sliding trade or trading from the levels inside the trading day, and trend scalping involves finding potentially profitable areas on the chart where there is a retracement, and then there is the continued movement in a particular direction.

Usually it not possible to open trades according to this strategy, because it has to run suitable conditions for their discovery. For example, the price reached a certain level, bounced off it or a while “trampled” on its borders. It is therefore advisable to choose the expiry time from 15 minutes.

Scalping from the strong levels

As you can see, this trading system works and so you need to try to use it in scalping in binary options.

Scaling on strategy on rebound

Impulse or so-called breakout scalping

Breakout or impulse scalping involves search of the strongest price movements through technical analysis. They can be seen by applying certain indicators. Breakout or impulse scalping with binary options is very popular among traders.

Breakout scalping strategy BO

Examples of best strategies for scalping

Next, we present examples of the three best, in my opinion, strategies for scalping in the binary options market. They also are the explanations for buying (CALL) and selling (PUT).

Universal trading strategy Trend action with fractal support/resistance

This trading system can be used not only for Forex but also for binary options.

It is used for all currency pairs. Trading hours: London, New York.

What indicators contains Trend action with fractal support/resistance strategy?

  • Fractal Support and resistance;
  • MA in color (100, 3);
  • Pivot and psycolevel;
  • Volumes indicator;
  • Support and resistance;
  • Non lag MA (35);
  • Heiken Ashi histogram;
  • Clive histogram CCI.

Here is how it looks on the chart:

Trend action with fractal support/resistance strategy

Conditions for the purchase of the PUT option(below)

  1. Red Non lag MA (35) must be below the red line MA in color (100, 3).
  2. Bearish red candle closes below the Non lag MA (35).
  3. TrendCCI indicator changed the green color to red.
  4. Heiken Ashi Histogram also took red and touches the moving average.
  5. Volumes indicator also highlighted in red.

The expiration time: three candles or 15 minutes.

Rules for sale by Trend action with fractal support-resistance strategy

Conditions for the purchase of a CALL option(above)

To purchase option type of CALL following conditions should be met:

  1. Green Non lag MA (35) crosses green MA in color (100, 3).
  2. Bullish blue candle closed above Non lag MA (35).
  3. TrendCCI changed the color from red to green.
  4. Heiken Ashi Histogram of blue color and it breaks or touches the moving average.
  5. Volumes indicator highlighted in green.

On the chart it looks like this:

Rules for buying by Trend action with fractal support-resistance strategy

Universal trend strategy “Dream of the scalper”

This trading system I invented in the course of writing this article. So we can assume its author one. It has only three indicator:

  1. Moving Average with a period of 9.
  2. Heiken Ashi Histogram.
  3. MACD (13, 26, 9).

Conditions for the purchase of an option type CALL (above)

  1. The price is above the moving average MA.
  2. Heiken Ashi Histogram has a blue color and breaks above the blue moving average.
  3. MACD has a value greater than zero.

Rules for buying on the strategy of “Dream of the scalper”

Conditions for the purchase of the option type PUT(below)

  1. The price is under the moving average MA.
  2. Heiken Ashi Histogram highlighted in red and breaks blue moving average.
  3. MACD has a value less than zero.

Rules for sale by the strategy “Dream of the scalper”

As you can see, nothing complicated. The main thing for a profitable trade in binary options is to follow the rules of the trading system.

Binary options strategy Binary Cash (Comodo)

Another good strategy for the binary options market, which is often used by fans of scalping.

It can be used only for the four currency pairs:

Timeframe on which the analysis is performed – М5.

Binary Cash (Comodo) strategy works best 9.00 to 21.00 Moscow time. During important news it is better not to trade 30 minutes before and after.

It looks the following way:

Binary Cash (Comodo) strategy

Conditions for the purchase of an option type CALL (above)

As soon as green up arrow and a signal appear, – buy a CALL option, the expiry time of 15 minutes.

Conditions for the purchase of an option type CALL (above)

Conditions for the purchase of the option type PUT(below)

Wait when you see the red down arrow with a beep, and then buy a PUT option. Expiry time 15 minutes.

Conditions for the purchase of the option type PUT(below)

The basis of success in scalping

In order to make scalping in binary options trading profitable, you need to adhere to certain rules:

  • do not deviate from the conditions of proven trading strategy;
  • control losses;
  • not to be greedy (to have a sense of proportion);
  • choose a reliable binary options broker.
  • keep a diary of transactions;
  • conduct analysis of mistakes;
  • do not trade during emotional arousal.
  • To have endurance.

If these recommendations are implemented, scalping in binary options will always be profitable.

60 Second Scalping Strategy for Binary Options

The 60 second option is a binary option system that provides traders with the opportunity to generate significant returns to their portfolio using a product that is very easy to understand and develop strategies around. The best strategies to use when trading 60 second binary options are scalping strategies that are often used by traders who are attempting to take small amounts out of a market multiple times a day.

There are a number of technical analysis tools that a trader can use to scalp the market. These include the Bollinger bands and the parabolic stop and reverse. Technical analysis is the study of price action and helps traders specific points were a security is poised to change direction. When using these tools to scalp a market and trade 60 second options, a trader should consider using 1 minute time periods as a way of finding the best trading opportunities.

Using Bollinger Bands to Trade the 60s Option:

Bollinger bands were created by John Bollinger as a way of capturing the distribution of a security over a specific period of time and finding specific points were a security’s price action is overstretched. The default setting for a Bollinger band uses a 20 period moving average and generates a 2-standard deviation both above and below the 20-period moving average. The standard deviation shows how much variation or dispersion from the average exists. The standard deviation of a probability distribution is the square root of its variance.

All of these default settings can be changed to generate a distribution that will either increase the number of signals with less accuracy or decrease the number of signal with more accuracy. For example if the Bollinger bands were altered to 1 standard deviation around a 20-period moving average there would be more samples were it moved outside of its range than if it were moved to 3-standard deviations around the 20-period range. Additionally, if a 20-period moving average were changed to a 100-period moving average, the number of points that would move outside of the range would decrease relative to a 20-period moving average.

The chart above shows the EUR/USD one minute chart that is overlaid with Bollinger bands. The default setting of 2-standard deviation with a 20-minute moving average is used in this chart. The green arrows represent periods where a trader would purchase a 60 second binary call options when the price of the EUR/USD touched the lower Bollinger band, while the red arrows show a spot where a trader would purchase a binary option put when the EUR/USD touched the upper Bollinger band.

By changing the default as seen in the chart above to 3-standard deviation around a 20-minute moving average it is obvious that the number of instances where prices move to the upper end or the lower end of the range is reduced. This is because a 3-standard deviation move occurs much more infrequently and only occurs in 1% of the situations.

Using the Parabolic Stop and Reverse

Parabolic SAR, created by J. Wilder in 1978, is a technical analysis tool that refers to a price system that is also based on time. The stop and reverse signal rails price as the trend extends over time. The indicator is below prices when prices are rising and above prices when prices are falling. If prices begin to fall after a period when they are climbing they will hit the stop and reverse point and a signal is then generated.

The parabolic stop and reverse is a complex algorithm, but what is important is that an investor understands the concept as opposed to the calculation. The stop and reverse follows price action and can be considered a trend following indicator. Once a downtrend reverses and starts up, SAR follows prices like a trailing stop. The stop and reverse, follows prices similar to a trailing stop loss and continuously rises as long as the uptrend remains in place. Once price stops rising and reverses below the reverse indicator, a downtrend starts and signal moves above the price.

As seen in the chart above the stop and reverse is either above the trend or below the trend and is a continuous indicator that given investors an opportunity to scalp the market. Using a 1 minute bar, a trader can use this signal to take binary option call position at the green arrows when the down trend reverses or put options near the red arrows when the uptrend reverses.

More About Adam

Adam is an experienced financial trader who writes about Forex trading, binary options, technical analysis and more.

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