At the request of a few others, I would like to take this opportunity to start this thread pertaining to scalping a few pips from this particular pair. Have had good results over this past year utilizing this system, and wish to see if there is some interest generated in the forum. Rules are simple:
Open a 5m chart and plot the following:
(1) 2 SMA and 5 SMA with a weighted close.
(2) Stochastics set at 5-3-3.
(3) ADX set at 4.
Trigger is when 2 SMA hits or crosses 5 SMA, Stochastics read above 20 for a buy signal or below 80 for a sell signal, and ADX has converged or crossed from the bottom heading north. The ADX colors I utilize are green for the +DI and red for the -DI.
Those of you that are system traders will easily recognize this aspect of the ADX indicator. Goal is to obtain 3 pips net profit per trade and stop loss is 5-6 pips depending on your own tolerance. I personally use a MENTAL stop loss with all trades and have my finger set to close a trade at all times. This will help relieve the neccesity of adding a take profit and stop loss manually and ease concern for brokers who may or may not hunt stop loss levels.
You will need to be quick on the trigger here and concentrate. In addition, I never trade during major news announcements and trade from 5:00 a.m. to 11:00 am PST. This time offers decent volatility and encompasses the later part of the London session and first several hours of the U.S. session.
With these simple rules, you can easily set up the stated peramaters and back test this system on your own. You will find it to be approx. 90% effective and generate approx. 8 - 12 trades daily during this time frame. It is important to note that, as with other menchanical systems, all indicators are lagging so the best way to confirm signals is to have a 1m chart open and set the same indicators (with the same settings) to this chart.
There are no S/R levels and trend is not of paramount concern when seeking only 3 pips. Simple mathematics will indicate that, by trading one (1) full contract, one is easily able to generate $200.00 - $300.00 daily to begin with. Obviously, as your account grows, you will be able to trade multiple contracts and earn a very nice income.
If you want to actively trade - this works well, it is not a set and forget system. Further, it may be effective on higher TF's, but, I prefer the 5m exclusively. Like they say, "if it ain't broke, don't fix it".
Thanks for your time and best of fortune trading.
