Best Forex Indicator for Scalping? Hardly can any new trader involve in forex and not give in to scalping. Scalping is a strategy used by traders to accumulate little profits as price changes. They enter each trade to exit within a short period. These traders use various scalping strategies and indicators to achieve this feat. In this post, you will learn some of the best forex indicators for scalping if you decide to scalp. However, scalping is a daunting task that involves a lot of emotion and requires you to decide within a second.
Don’t allow anyone to deceive you because it is not easy to find the best forex indicator for scalping. Notwithstanding, with our experience, we will provide the best forex indicator for scalping that equips you effectively to have a successful scalping. Without wasting any time, let us look at a few of these indicators that can be the game-changer in this adventure.
The Moving Average is one of the critical indicators traders use for all strategies. Many traders love it in scalping because of its flexibility and ease when used. The moving average is one of the best forex indicators for scalping because it works on all timeframe. All you need is a combination of different moving averages and see the magic.
To utilize this best forex indicator for scalping, you can use three simple moving averages of 5, 8, and 13 periods. The best timeframe will be on a 2-minute chart because it helps determine the strength of the current trend. It works for both ‘sell’ and ‘buy’ positions if you follow the trend correctly.
The strategy is quite easy for a novice to understand. The goal is to check when the 5-8-13 moving averages line up without anyone intersecting each other. The next thing to take a look at is the direction of the moving averages. That is if the candlestick is below or above the moving averages. If the candlestick is above, then you should be thinking of entering a buy position, and if it is downward, then a sell position. The price should be glued to the 5 or 8 moving average. However, if the price penetrates the 18 moving average, then this signals a change in momentum.
Note: The idea is to wait for the 5-8-13 moving average lines to spread out either upward or downward before entering a position.
For a scalper, the stochastic indicator is one of the best options because it helps traders know the actual movement of price. The stochastic indicator is quite different from the Bollinger bands or moving average. The indicator is used in combination with other indicators to get a better profit.
A simple trick to using the stochastic indicator for scalping is by combining it with a moving average (200 SMA). The 200 SMA acts as a separation line, which serves as a border in a bullish or bearish market. The best timeframe for this strategy is the 5-minute timeframe. All you need is to insert your stochastic indicator with the following parameters – 5, 3, 3, in combination with the 200 SMA.
You must be picky when using this strategy because you would be tempted to enter in any crossover. However, to enter a buy signal, the stochastic must cross below the 20 mark level. And for a sell signal, it must be above the 80 mark level.
Parabolic SAR (Stop and Reverse) is the best forex indicator for scalping that helps to indicate a trend. It is easy to interpret because whenever the parabolic SAR goes upward, it means the market is on a downtrend and vice-versa for a downtrend. The SAR positions either below or above the price to indicate the starting of potential retracement.
Most traders use the Parabolic SAR indicator to ascertain the momentum of a currency pair and find the best to enter a stop-loss. The best time to use this indicator for a scalping strategy is when the market is displaying a steady trend. Nevertheless, advanced traders use other momentum and candlestick patterns to get the exact strength of the trend. Using the parabolic SAR alone as an indicator can result in misleading signals.
The last indicator for the best forex indicator for scalping is the Bollinger Bands. To effectively use it for your scalping activities, you need to apply the period 12 with a deviation of 2 using the 5-minute timeframe. Whenever the price touches the lower band of the Bollinger bands indicator, you should buy. Furthermore, if the price gets to the upper band, you should sell. Always remember to use a stop loss and take profit point in case the trade goes against your analysis.
Every indicator has a flaw, and the Bollinger Bands indicator isn’t an exemption. This strategy works best if the market is ranging or moving sideways. If you decide to try it on a trending market, the result won’t be anything pleasant.
Closing Remarks Best Forex Indicator For Scalping
The MT4 platform has some of the best forex indicators for scalping to help identify entry and exit positions in the market. Although they are good indicators, it doesn’t mean you won’t take the time to analyze the market because various factors affect it. Interestingly, the best forex indicator for scalping helps traders develop a consistent strategy. Irrespective of your experience in trading, scalping requires time and emotion, but if done rightly, it can generate huge profits.
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Notwithstanding the indicator you decide to use for your scalping, it is crucial to backtest these strategies before trying it on a real account. The truth is there are numerous scalping techniques online, but finding one that works effectively isn’t quite easy. Backtest your strategy and find a system that works for you. Additionally, following proper risk management and trading strategy can affect the success of your scalping in a market that is volatile.
That’s not all, as there are alternatives too that could support you to get your desired outcome in Forex, so check it out via this link.