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Forex trading system "Price Action Scalper"

Forex Trading System | Price Action Scalper
Added: 2011-04-16 00:12:34 by Dexter
4.57/5 (324 votes)

Learn to trade Price Action Scalper System

This system uses three different EMAs indicator, Heiken Ashi Smoothed indicator and fractal indicator to enter a trade. The EMAs determine the trend, the Heiken Ashi Smoothed indicator is used for more visual confirmation and the Fractal indicator is used to confirm the breakout of the trend. If someone is in London zone, you will likely get the nice setups around 3 am and get a nice chunk of pips in a couple hours of trading. GBPUSD is a very volatile currency pair and has a nice daily trading range to make a few pips out of it.

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Details

Categories: Technical, Scalping, Trend Following, Price Action

Timeframes: 5 Minutes

Currency pairs: GBPUSD

Trading sessions: European Session (London)

Indicators used

    Moving Average
    Period: 6
    MA method: Exponential
    Apply to: Close
    Moving Average
    Period: 12
    MA method: Exponential
    Apply to: Close
    Moving Average
    Period: 48
    MA method: Exponential
    Apply to: Close
    Fractals

Entry rules

The EMAs need to come to a POINT then they need to SHOOT out like a cone from that point. As the EMAs shoot out from the point, they need to line up such that for a SHORT setup, ema6 is less than ema12 which is less than ema48. For LONG setup, ema6 is higher than ema12 which is higher than ema48. Why 6, 12 and 48 EMA? Well, 6x5minute is 30minutes, 12x5 is 60minutes (hourly) and 48x5 is 4 hour exponential moving average. So we are looking at those 3 time frames to be in the same direction as our trade. The Heiken Ashi smoothed indicator is used for more visual confirmation. For long, Heiken Ashi candles need to be blue and whole price candle needs to be above the Heiken Ashi candles. For short, Heiken Ashi candles need to be red and price candle has to stay below the Heiken Ashi candles. The Down Fractal needs to form below the EMAs for SHORT. The Up Fractal need to form above the EMAs for LONG.  We open a short trade when the price is lower than the Down Fractal by 2 pips. We open a buy trade when the price is higher than the Up Fractal by 2 pips as shown in the following picture.

Trade management

The Take Profit and Stop Loss are described in the following exit rules.

Exit rules

The trade will exit by itself after we set the stoploss just below the previous up fractal for short trades or just below the down fractal for a long trade. The takeprofit will be equal to the stoploss as shown in the following picture.

Advantages

This systems trade in the trend, making it less risky than sideway trading. It also uses 2 pips above or below the fractal to confirm that there is a breakout of trend.

Disadvantages

The user needs to be waits patiently for the correct criteria to open up a trade as there will be sideways and choppy markets during certain time of the day.

Metatrader 4 chart template files

Comments

Submitted by saint on 2012-01-30 21:36:46

Heiken Ashi Smoothed
MaMethod: 2
MaPeriod: 6
MaMethod2: 3
MaPeriod2: 2

pls where an i going to put these setting on heiken ashi because i did not see anywhere to put the period and on mine it was heiken ashi no heiken ashi smoothed
thanks

Submitted by Dexter on 2012-01-30 21:53:07

I have updated webpage. Download link for Heiken Ashi Smoothed is now available in the "Indicators" section above.
Please click mouse right button on the link and choose "Save target As...."

Dexter

Submitted by Guest on 2011-12-28 15:02:03

Am I missing something or is there a rule missing? How can you enter a trade 2 pips above the fractal if the the candle hasn't closed yet. If you enter 2 pips above the fractal before candle close and the candle turns the other way and hits the HA, the candle is not completely above the HA. So you don't know if the candle will be completely above the HA untill it closed.

Another question: 2 pips above the fractal sign or 2 pips above the candle high?

Submitted by Dexter on 2011-12-28 15:24:18

Thanks for your interest. When Fractal is formed it usually takes a few candles to broke it up or down. See the example image. The breakout occurs few candles later. On the same candle i would not enter into trade as it may change.
Fractal price is the same price as candle high/low.