Functions of EMA 200 and Stochastic Indicators:
1. EMA 200 (Exponential Moving Average):
- Used as a trend filter.
- Identifies an uptrend when prices move above EMA 200.
- Identifies a downtrend when prices move below EMA 200.
2. Stochastic:
- An oscillator indicator to measure market saturation levels.
- Used as a signal trigger when price movements reach overbought (overbought) or oversold (overbought) conditions.
5-Minute Scalping Entry Rules:
Buy:
- Ensure prices are in an uptrend or above EMA 200.
- Monitor the Stochastic curve and wait for oversold conditions.
- Open a Buy position around the Stochastic line at 20.
- Place a Stop Loss 10-15 pips below the entry point.
- Set a profit target around 20-30 pips.
Sell:
- Ensure prices are in a downtrend or below EMA 200.
- Monitor the Stochastic curve and wait for overbought conditions.
- Open a Sell position around the Stochastic line at 80.
- Place a Stop Loss 10-15 pips above the entry point.
- Set a profit target around 20-30 pips.
Tips to Maximize Profit:
1. Avoid Sideways Conditions:
- This strategy is more effective in trending markets, not sideways ones.
2. Use Price Action Analysis:
- Utilize candlestick reversal patterns when Stochastic reaches overbought or oversold zones.
3. Utilize Trailing Stop:
- Implement a Trailing Stop as a dynamic Stop Loss to secure profits.
The 5-minute scalping strategy with EMA 200 and Stochastic relies on trend identification and overbought/oversold signals for entry and exit positions.
Traders are advised to understand market conditions and avoid trading during sideways markets.