ForexLiaLearn the best scalping trading strategy for gold in this video. Use the DPO indicator with customized settings and set stop loss and profit targets.
Gold Best Scalping Trading Strategy – How to Use the DPO Indicator
Scalping trading is one of the most popular trading styles among traders, and when it comes to scalping gold, it can be a great way to make some quick profits. To make the most of scalping trading in gold, traders need to have a solid strategy in place, and in this article, we will discuss the best gold scalping strategy using the DPO indicator.
Why Use the DPO Indicator for Gold Scalping Trading?
The DPO or Detrended Price Oscillator is a technical indicator that can be used to identify overbought or oversold conditions, as well as trend changes. This indicator works by comparing the current closing price to a moving average, usually a period of 20 or 30 days, and then adjusting it to make it centered around zero.
One of the advantages of using the DPO indicator for gold scalping trading is that it works well in shorter time frames such as the five-minute time frame that we will be using in this strategy. The DPO indicator is also useful for identifying trend changes, which is an essential aspect of scalping trading because traders aim to take advantage of small price movements in a short amount of time.
How to Set Up the DPO Indicator for Gold Scalping Trading?
To set up the DPO indicator for gold scalping trading, we need to change some of the default settings. First, we need to set the period to 8, which means that we will be using the last eight prices to calculate the DPO. Secondly, we need to set the shift to 1, which means that we will be shifting the plotted DPO line by one bar to the left.
How to Scalp Gold using the DPO Indicator?
Once we have set up the DPO indicator for gold scalping trading, we can start to use it to enter and exit trades.
Step 1: Open Gold Pair in Five Minute Time Frame
We will be using the five-minute time frame for this strategy, so the first step is to open the gold pair in a five-minute chart.
Step 2: Look for DPO Indicator Blue MA Break Zero Level Black Line Upward
The next step is to wait for the blue moving average line of the DPO indicator to break above the zero level black line, indicating a potential trend reversal.
Step 3: Take a Buy Trade
When we see the DPO indicator blue MA break the zero level black line upward, this is our signal to take a buy trade.
Step 4: Confirm Buy Signal
To confirm the buy signal, we need to make sure that the price has closed above the previous candle’s high point.
Step 5: Set Stop Loss and Profit Target
Once we have confirmed the buy signal, we can set our stop loss at the previous candle’s low point and set our profit target at a ratio of 1:2, which means that the potential profit should be twice the amount of the stop loss.
Step 6: Win the Trade
If the price reaches our profit target, we win the trade.
Step 7: Look for DPO Indicator Blue MA Break Zero Level Black Line Downward
The next step is to wait for the DPO indicator blue MA to break below the zero level black line, indicating a potential trend reversal.
Step 8: Take a Sell Trade
When we see the DPO indicator blue MA break the zero level black line downward, this is our signal to take a sell trade.
Step 9: Confirm Sell Signal
To confirm the sell signal, we need to make sure that the price has closed below the previous candle’s low point.
Step 10: Set Stop Loss and Profit Target
Once we have confirmed the sell signal, we can set our stop loss at the previous candle’s high point and set our profit target at a ratio of 1:2.
Step 11: Win the Trade
If the price reaches our profit target, we win the trade.
Conclusion
In conclusion, scalping gold using the DPO indicator can be an effective way to make quick profits. By using the DPO indicator in the five-minute time frame with the eight-period setting and one shift settings, traders can identify trend reversals and enter and exit trades with high accuracy. Remember always to use proper risk management techniques such as setting stop-loss and profit-target levels to safeguard your trading account. Happy Trading!
