A 5-Step Scalping Strategy - Blog
With the exit of the previous position came the entry point for the next trade. Thus, we go long and we enter the best trade of the four cases! Well, that my friend is a good trade! This 5-minute chart strategy involves the Klinger Oscillator and the Relative Vigor index for setting entry points. We try to match long and short signals with the two oscillators, which will be an indication to trade the equity.
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When we get these two signals, we open a position and we hold it until we see a candle closing beyond the period LSMA. This is the 5-minute chart of Yahoo for Dec 8, The two instruments at the bottom are the RVA and the Klinger. The blue curved line on the chart is the period LSMA. On this chart, we have four trades. The green circles show the four pairs of signals we get from the RVA and the Klinger.
First, we get a bullish signal from the Klinger, which is confirmed by the RVA after 4 periods. When we get the confirmation, we go long. We manage to hold the trade for four candles before we see a bearish candle below the LSMA. Four periods later, the Klinger and the RVA give us bearish signals at once and we go short. We get a slight bearish move of four periods before a candle closes below the LSMA.
The third trade is the most successful one.
START TRADING IN 10 MINUTES
Six periods after the previous position, we get matching bullish signal from the Klinger and the RVA. Thus, we go long with Yahoo. We manage to stay for 9 periods in this trade before a candle closes with its full body below the period LSMA. Notice that at the end of the bullish move, there is another bearish candle, which closes below the LSMA, but not with its full body.
Therefore, we disregard it as an exit signal. With the next candle, we get bearish signals from the RVA and the Klinger and we go short with the closing of the previous long position. We get out of this trade after 5 periods when a bigger bullish candle closes above the LSMA. The reason for this is that this strategy distributes the trading along the entire trading day. In the example above, we covered the whole day with only 4 trades. Furthermore, we generated an impressive amount per share! In the other two strategies, the number of trades per day will be significantly more.
Yet, some of you will like fast-paced trading and will like to exit the market more frequently.
5 minutes trading
Just remember in trading, more effort does not equal more money. One thing you will want to do with 5 -minute charts is to use multiple time frames to help support your point of view. The reality, 5-minute charts are great for stocks with lower volatility. However, if you are trading low float stocks you will want to use a one-minute chart to track price movement.
How to Trade the 5 Minute Chart Profitably Using Just Price Action
At the same time where you need to monitor price movement on a lower level, you also will need to monitor the bigger trends. To do this you will want to look at a daily or hourly chart. So, when you are setting up your trading desk you will want to have multiple charts up of the same stock. Below is a screenshot from Tradingsim of an example of how you need to view stocks on multiple time frames. The 5-minute chart is your anchor and was showing a consolidation was taking place. The one-minute chart also displayed a similar consolidation pattern.
Lastly, the daily chart shows that after a nice run-up, GEVO was starting to stabilize after a retracement of the rally. So, in this example, as a trader, the big thing you are looking for is alignment of the same narrative across multiple time frames. Even if you are not trading 5-minute charts, it is essential that you keep an eye on them. The majority of day traders are using 5-minute charts to make their trading decisions.
Therefore, these traders tend to control the action. If you are trading with minute charts, be mindful that a sharp counter-trend move can occur at the close of a 5-minute bar. Remember, a close at the high or low of a 5-minute bar is a potential indication that a minor reversal is in play.
Day traders should not immediately exit their winning position but should rather look at this as a sign of a potential trend change. Also, the morning is where all the action takes place in the market.
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If you are going to trade during this time of day, remember the two most common setups — pull back and the breakout. You will need to assist help from other time frames. The one minute chart for very volatile stocks and the daily charts to identify long-term trends for support and resistance levels. Want to practice the information from this article? November 6, at pm. December 13, at pm. The stock market is open for 6. August 10, at am. Your email address will not be published. This site uses Akismet to reduce spam.
Learn how your comment data is processed. Just as time frames don't affect volatility, time frames don't impact the information you see—though they will display that information differently. Shorter time frame charts reveal more detail, while longer-term charts show less detail. The detail is still included in the long-term chart, but the chart zooms out to emphasize long-term trends rather than short-term detail.
When day trading stocks, monitor a tick chart near the open. So many transactions occur around the market open that you could have several big moves and reversals within a few minutes. These are tradable moves, but they occur so quickly that traders may miss them if they're viewing a one-minute chart. Despite the high volume of trading, only one or two one-minute bars may have formed, making it difficult to determine trade signals. On the other hand, traders viewing tick charts may have 10 or 20 bars form within a couple of minutes after the markets open, and those bars could provide multiple trade signals.
This scenario is especially likely when trading high volatility stocks. Once you determine the number of ticks per bar that best suits the stock you are trading, you can continue to trade off the tick chart throughout the day. It provides the most detailed information and will also let you know when nothing is happening. If only a few transactions are going through, it will take a long time for a tick bar to complete and for a new one to begin. A one-minute chart, on the other hand, will continue to produce price bars as long as one transaction occurs each minute.
This can create the illusion of activity during slow trading periods, but traders who see that the tick chart isn't creating new bars will know there is little activity. Therefore, they may decide that it's better to sit on the sidelines day traders want movement and volume—those factors boost liquidity and profitability. As the day progresses, your tick chart is going to accumulate a lot of bars, especially if it is a volatile and high-volume trading day.
This can create too much detail. When zoomed in, it may be difficult to see the entire price range for the trading day or even the entire current trend. That is when it helps to open a one-minute or two-minute chart. It acts as a summary of the tick chart, giving traders more context about the activity. The one-minute and two-minute charts are especially helpful in assessing trends, monitoring major intra-day support and resistance levels, and noting overall volatility.
Most day traders trade near the open, but stop trading by about 11 or a.