Forex Scalping Tools To Help You Identify A Good Entry
March 19, 2009 by Kelvin
Filed under Forex Strategies
You have already seen my previous post on forex scalping system and how you should go about doing it. In this post, I will be going into details on what kind of Forex scalping tools you should use to make your trading more profitable.
As Forex scalping takes place in a short duration, your entry point becomes the most important factor of your entire trade. Therefore this post will focus on sharing with you how to scalp the forex by identifying a correct entry point.
Personally, I make use of the following tools when I am scalping the forex
1) Moving Averages
2) Major Support and Resistance Level
3) Stochastic
I use the 50 EMA as one of the support or resistance level depending on where the price is heading. If you take a look at your chart, you can see that the price usually will repel by the 50 EMA at least once before it can break through it.
If the price is above the 50 EMA and is moving down towards it, there is a high chance that the price will be repelled when it touches the 50 EMA line. At this point you can consider going long hoping that the price will be pushed up and the opposite is true as well.
However, you should also use the stochastic to help you see if the price is currently oversold or overbought. If the price is moving towards the 50 EMA and you have an oversold stochastic, you can then enter your trade when the price break through the trend line as there are a high chance that the 50 EMA will successfully repelled the price.
I will be writing more posts on how to execute your forex scalping trades.
Other Related Posts:
The best way to identify a oversold or overbought market is through the use of oscillator.
You can make use of Stochastic or Relative Strength Index (RSI) to help you. If the Stochastic moves up to the 80 mark, it is a good indication that the market is overbought and if it moves down to the 20 mark, it is a good indication that the market is oversold.
Do feel free to contact me if you have any further queries in this area.
Good luck to your trading!
thanks 4 ur kind information,however,i am a newbie and i like to know how to identify an oversold OR overbought market
nice tips. thanks