Scalping Strategy Trading Secrets with The Ultimate Fibonacci EA (Expert Advisor)
Scalping Strategy Trading Secrets, using the Ultimate Fibonacci EA
What is scalping?
Scalping is an in and out trading style. A scalping strategy is meant to capture small price moves on a low timeframe such as the one minute timeframe and is one of the most exciting forms of trading. Not only is it extremely exciting, but it can also be very profitable. A scalping trade is sometimes shorter than one minute from entry to exit. Sometimes it can play out for several minutes, but is always meant to be fast in and out trades.
The reason why many beginners are drawn to scalping is because of the potential to increase their account size rapidly and in a short amount of time.
Simply put, "If I'm a good trader with low starting capital, then the more trades I can get in, in the least amount of time, the better".
This is absolutely true. In one day, a scalper can capture multiple trades, by trading down on the one minute timeframe as opposed to watching paint dry on the 1 hour or daily timeframe.
The goal of the scalper is to find a strategy that is successful and accurate and then to implement it in as short a time as possible, while applying the power of compounding.
The Power of Compounding
Did you know that starting with $500, it only takes 109 trades to reach $100,000.00? That's assuming you made 5% profit per trade.
So, even if after multiple trades, you only managed to profit 5% per day, you will still have $100,000.00 in less than 6 months. Now imagine if you really put your heart and soul into it and on average were making 7% per day? Now you're only looking at 79 trades to 100k. Divide that by 5 days a week and then 4 weeks per month and you are looking at reaching your goal in less than 4 months!
How compounding works is simple... If you have $100.00 and you risk 2.5% and make 7% today, you now have $107.00. Now tomorrow you risk the same percentage but the dollar amount has increased a tiny bit and so does 7% profit. 7% now equals $7.49. After today you now have $114.79. Each day your investment percentage is adjusted to the new balance and the take profit also adjusts. This is compounding.
You just need the right strategy and a compound calculator. (Don't worry, we've got you covered)
Scalping Strategy using Fibonacci retracements
We have created a very powerful strategy that can actually be used on every time timeframe, but works great for scalping. It is based on the very fundamentals of Fibonacci, which any learned trader will know, fills up every chart like air fills a balloon. Fibonacci is seen everywhere in trading.
What are Fibonacci retracements?
Fibonacci retracements are based on the Fibonacci sequence. The sequence is simple. Each new number is the result of adding the 2 previous numbers together. 1+1=2, 2+1=3, 3+2=5, 5+3=8, 8+15=13, 13+8=21, 21+13=34, 34+21=55, 55+34=81 and so on for infinity. This sequence is seen all throughout nature like in the following images:
When you take the numbers from the sequence and divide them by their previous number, you begin to get closer and closer to a powerful number, called the golden ratio.
34/21=1.619
55/34=1.618
89/55=1.618
This number is recognized as the golden ratio and is a powerful number in trading. We use it for price retracements as 61.8%. It's other companion number is 38.2% which is the inverse of 61.8.
The Fibonacci Retracement Tool
The tool we use for our scalping strategy is the Fibonacci Retracement tool, which is one of the most powerful tools in trading. As a scalper you will use this tool frequently.
You simply draw it from the start of a price move to the end of the move. You then wait for the price to retrace to the Fibonacci key levels (38.2%-61.8%). Once it enters this zone, you now wait for a confirmation to enter your trade.
New Highs / New Lows
Before we get to the strategy, there is key we must understand in order to unlock that door so we can enter it. That key is "New Highs a New Lows".
The following is the foundation of all trading. See this in its full light and you will have grabbed hold of an extremely valuable asset that will be yours to have forever.
An uptrend is a series of new highs and a downtrend is a series of new lows. The key to this is in the Higher Low that made the Highest High(Uptrend) or the Lower High that made the Lowest low(Downtrend).
In an uptrend, every time a new high is made, the swing low that made that high is the structure that holds the whole trend up. When this low gets crossed, the trend is over. The same applies in a downtrend.
Real world example of New Lows (Downtrend):
Fibonacci Retracements
Fibonacci Retracements are where we are going to look to enter trades. But first you need to know when a retracement has started.
Looking back at our example of New Highs and New Higher Lows, we saw the trend break... As soon as that trend breaks, we are in a retracement, assuming that overall move was a new high on a larger scale.
Every time a series of higher highs or lower lows breaks, that entire move becomes ONE move that we can look for a retracement on. In trading, everything happens on all scales simultaneously though, so you will need to incorporate moving averages and higher timeframe analysis to get the full picture. For now though we will stick to the basics.
Let's see a real example:
When the Higher Low that made the Highest high breaks, we are in a retracement for that entire move. The move that was multiple higher highs, now becomes one move. We will then draw our Fibonacci Retracement tool to watch for our entry.
As you can see price came right to our 61.8% line and instantly reacted with 2 powerful upward candles(Bullish) that engulfed the previous candle. This would be our entry signal and our stop loss would go under the candle that dipped into the 61.8%. We would follow this trade until structure breaks.
This simple entry (The engulfing entry, is one of our main entry methods for scalping phase 1 type trades). There is much more to learn to get you scalping like a pro though.
Here is another Example of an Engulfing Entry:
Phase1, 2 and 3 trades
Our strategy divides scalping setups into 3 Phases. You can also look at them as "Types".
Phase 1 trades:
These are fast trades that will only last a few minutes usually. Depending on the situation they can be opened instantly when price touches the 50% zone (Between 38.2%-61.8%), stop loss going below the pervious swing. You can also use Engulfing entries as confirmation instead of blind entries. You will learn more about this scalping strategy in our full guide.
Phase 2 trades:
Phase 2 trades are when phase 1 trades have broken structure. We now expand our retracement tool and look to enter trades using "Swing" entries or "MACD" entries, which you can learn about in our free trading strategy guide (That works great for a scalping strategy).
Phase 3 trades:
Phase 3 trades are when phase 2 trades have broken their structure. We now expand our retracement tool even larger and look to enter trades using ONLY "Swing" entries.
In the image below you can see how all 3 Phases fit inside of Phase 3. In fact they have to, because Phase 2 can't exist without Phase 1 breaking structure and Phase 3 can't exist without Phase 2 breaking its structure. There are many many Phase 1 setups in the image below. There are 3 Phase 2 setups and 1 Phase 3 setup that just began.
FREE STRATEGY GUIDE
We would like to invite you to enjoy a more in depth strategy guide that will cover every area of this scalping strategy. The guide is free and very powerful and will work on EVERY timeframe. The reason it is free is because we will also show you how our "Ultimate Fibonacci EA" is designed specifically for this strategy and would like to encourage you to try it for free for 14 days, with no commitments needed. You don't need our EA to succeed, but it makes it a lot easier.
With our EA you simply draw your fib tool and let the EA do the rest, from entries to exits...
Click here to grab hold of our free strategy guide to complete your scalping strategy training. You will also receive a FREE working copy of our EA that will expire after 14 days of use.
Here is our HUD for the Ultimate Fibonacci EA.
If you would like to learn more about our EA right now, check out our video:
You can find our EA in the MQL5.COM marketplace: "The Ultimate Fibonacci EA"
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