My Most Favourite Simple Forex Trading Strategy

Simple strategies are best
Try to stick to one strategy and master it
Don’t mindlessly search for different strategies
Practise and master one simple and effective Forex strategy

We always like to keep it simple. That's why we call simple and yet effective strategies KIS or "Keep It Simple". There are tons of different strategies out there. Still, we have chosen one simple and very effective scalping strategy for you to practise and trade.

What is Scalping About?

Scalping has been one of the most favoured strategies for traders who want fast profits without needing to be in front of the screen 24/5.

How Does Scalping Work?

Scalping is a trading method where we take advantage of both momentum and volatility. We don't do swing trading but instead look to take advantage of a temporary change in buying or selling pressure. For scalpers and intraday traders, trend direction is not that important. The crucial factor is aligning both momentum and volatility with now moment buyers or sellers. That way, scalpers are not limited to trend direction but rather to price action itself. There are many trading techniques out there. We will present you with one of our favourite scalping techniques traded on the Milton Markets platform. The strategy is named "The Slingshot" and should provide you with fast profits daily.

Indicators:

Bollinger Bands ( Period: 50 Deviation:2)
Exponential Moving Average ( 5 and 13)

Bollinger Bands

Developed by John Bollinger, the Bollinger Bands® measure market volatility and provide tons of helpful information:

reversal of the trend with the price action confirmation
consolidation before the breakout
volatility gauge and divergence
dynamic levels of support and resistance

The trademark of the indicator (further in the article: BB) is the dynamic utility of the indicator. When the upper and lower bands converge when the market is slow, and there is no volatility When volatility rises. The trend starts to form, BB diverges in the trend direction. BB is used for riding the trend and counter-trend movements where they serve as dynamic s/r lines. BB is a significant factor in FX trading, and its usage is vast. Source: Milton Markets MT4

Exponential Moving Average (EMA)

MA is similar to the simple moving average, except that more weight is given to the latest data. The EMA is quicker to respond to price movements than the SMA. The EMAs are used for trend spotting on many different systems, including but not limited to scalping and range bar trading. It can also be viewed as an advantage because the EMA is not so prone to whipsaws as the SMA. Source: Milton Markets MT4

Why is Scalping Important for Forex Traders?

The strategy is easy to use and effective. The Bollinger Band is a dynamic support and resistance indicator originally developed for stocks. Still, it has excellent use in the Forex market. Due to its nature it serves as a dynamic S/R level indicator, and it can be accurate in predicting reversals. With this strategy, you should be able to win frequently, but be sure not to overtrade. An additional benefit is that the profit factor in the strategy is higher than most scalping systems can offer, and that is because of unique indicator settings and the nature of the Bollinger bands. Besides scalping, during higher volatility, it also provides traders with intraday trading opportunities. It is also suitable for part-time traders. It doesn't require monitoring lower time frames used in other scalping or intraday systems such as 5 minute or 1 minute.

Pairs to Trade

The strategy should be used as a scalping or intraday trading system. We trade it on the M30 timeframe. It trades only major markets such as the EUR/USD, GBP/USD and AUD/USD. The high probability nature of the strategy might limit entries to a couple per session, but this can be a benefit as you won't be overtrading.

How To Trade the Slingshot

Long Trades

Wait for the price to break below the lower Bollinger Band and get back above it
Wait for the cross of 5 EMA (red) above the 13 EMA (blue)
Open a long trade
The target is Middle Bollinger Band for scalping
The target is the Higher Bollinger Band for intraday trading

Short Trades

Wait for the price to break above the lower Bollinger Band and get back below it
Wait for the cross of 5 EMA (red) below the 13 EMA (blue)
Open a short trade
The target is Middle Bollinger Band for scalping
The target is the Higher Bollinger Band for intraday trading

Stop Loss is placed above the swing high for short trades and below the swing low for long trades.

Long Trade Example

Source: GBP/USD chart Milton Markets MT4, M30 Timeframe

Short Trade Example

Source: GBP/USD chart Milton Markets MT4, M30 Timeframe

What Did We Learn from Scalping?

Ideally, the strategy should be traded on the Milton Markets platform due to low spreads. These strategies should be used as a scalping or intraday trading system. We trade it on the M30 timeframe. Scalping is generally applied to lower timeframes. It would be best if you always traded low spread pairs. Ideally, the spread for this strategy should be between 0.5-2 pips. We wish you great success with the Slingshot Strategy strategy.

Detailed Info on Scalping

How To Overcome Big Losses in Scalping?

First and foremost, make a trading plan that covers all the key elements. The process needs to cover:

the trading strategy
trading journal
written guidelines for what you will do and and look for in the markets
clearly defined risk.

In truth - We couldn’t have learnt from my mistakes if we hadn’t known what we were doing wrong. Reviewing all of our trades helped us identify the problem areas. Markets constantly change and it's especially important to review your trades when these changes occur.

What is the Common Mistake When Scalping?

A very common mistake among Forex traders is taking small profits and letting losses run. After one or two losing trades, they are very likely to make a small profit on the next trade - even though that trade could have turned i