Learn a new scalp and trading strategy that can be used for stocks, Forex, and crypto. Three free indicators are required for this strategy. Long positions require price action to go outside the bottom line and a green candle, while short positions require the opposite. The RSI must be oversold or overbought for confirmation, and stop losses should be set at the ATR stop loss line. This strategy has been shown to be accurate and successful on multiple charts. Examples are provided for the SP 500 ETF, ETH, and GBP/USD.

The Five-Minute Scalping Strategy: How to Use it for Stocks, Forex, and Crypto Trading

Introduction

There are countless trading strategies out there, each one claiming to deliver excellent results. However, few can hold a candle to the five-minute scalping strategy. In this article, we’ll be discussing this unique trading style, its benefits, and how to implement it for different markets, including stocks, Forex, and cryptocurrencies.

Setting Up the Chart

Before diving straight into the strategy itself, we need to set up our chart. We’ll be using Tradingview.com, a free platform that provides excellent charting features. For this strategy, we need to add three free indicators: the Nat Array Watson Envelope by Lux algo, ATR Stop Loss Finder by Very Fid, and the Relative Strength Index (RSI).

After adding these indicators, we’ll make some adjustments to their settings. For the Nat Array Watson Envelope, we’ll change the color to yellow, remove the labels and tables. For ATR Stop Loss Finder, we’ll change the multiplier to 0.5, and for RSI, we’ll change the RSI length to 5.

Implementing the Strategy

With the chart set up, it’s time to dive into the strategy itself. The idea behind this strategy is to look for long or short positions when the price action goes outside the Nat Array Watson Envelope’s bounds. For long positions, wait for the price action to go outside the lower boundary, followed by a green candle. For confirmation, the RSI should be below the 30 level, indicating oversold conditions. Place the stop loss at the ATR stop loss line’s bottom and aim for a risk-to-reward ratio of 1:1.5.

For short positions, the opposite is true. We wait for the price action to go outside the upper boundary, followed by a red candle. And for confirmation, the RSI should be above the 70 level. Place the stop loss at the ATR stop loss line’s top, and again, aim for a risk-to-reward ratio of 1:1.5.

Examples of the Strategy in Action

To illustrate the effectiveness of this strategy, let’s look at some examples. We’ll start with the S&P 500 ETF, where we see several instances where the strategy would have worked. In one example, the price action goes outside the lower boundary, followed by a green candle, with the RSI indicating oversold conditions. Placing a long trade at the end of that candle with a stop loss at the ATR stop loss line’s bottom would have resulted in a profitable trade.

For short positions, we see a similar pattern. The price action goes outside the upper boundary, followed by a red candle, and the RSI indicates overbought conditions. Placing a short trade at the end of the candle with a stop loss at the ATR stop loss line’s top would have resulted in profitable trades.

Moving beyond the S&P 500, we also see the strategy working for other markets. For instance, when looking at Ethereum cryptocurrency, we see an instance where the price action goes outside the Nat Array Watson Envelope’s lower limit, followed by a green candle and oversold RSI conditions, making it a perfect long trade. In contrast, when analyzing the GBP/USD Forex pair, we see that the price action didn’t meet our requirements, indicating the absence of a trading opportunity.

Conclusion

The five-minute scalping strategy is an effective trading technique that can deliver significant returns when executed correctly. With the right chart setup and an understanding of the key indicators, traders can confidently engage with stocks, Forex, and crypto, knowing that they’re trading profitably. However, as with all trading strategies, risk management is essential, and traders should employ stop losses and risk-to-reward ratios to mitigate their exposure to the volatile markets.