Scalping Strategy: Trading with the Trend

This scalping strategy helps you make profitable trades by following the trend. We’ll use a few simple tools and indicators to guide us. The key is to trade in the direction of the trend, not against it.

Step 1: Follow the Trend

We start by identifying the trend using the 200-day Exponential Moving Average (EMA). This tells us if the market is moving up or down.

How to Spot an Uptrend:

• Go to Tradingview
• Then click on Add indicator

• Add the 200 EMA on your chart.

• If the price is above the EMA, the market is in an uptrend.

• Only trade when the price is above the EMA.

Step 2: Using the RSI Indicator

The RSI (Relative Strength Index) helps us see whether the market is overbought or oversold. For this strategy, we’ll use a custom version of the RSI.

Setting Up the RSI:

• Add the RSI Divergence indicator.

• Turn off the bottom three settings for a cleaner chart.
• Change the middle line to white for better visibility.

When to Enter a Trade:

• If the RSI is above 50, it means the market is in a bullish trend, and it’s a good time to buy.

• Only enter when the RSI is above the middle line.
• Also, make sure of the uptrend with 200 EMA.

Step 3: Look for Momentum Candles

We use momentum candles like the Engulfing Candle to spot strong price moves. An engulfing candle happens when the current candle fully covers the previous one.

Bullish Engulfing Candle:

1. Look for a green candle that fully engulfs the previous red candle.
2. This shows the start of a strong price movement.

We will Automate Finding the Bullish Engulfing Pattern

Go to the indicators tab and search for engulfing candles as shown in the image.

After this, you can see arrowes on the chart and you can disable red arrows to avoid confusion we will only be focusing on green arrows.

How to Enter the Trade

Once we have the trend, RSI, and momentum candle(green arrow by engulfing candle indicator), we can enter the trade.

1. Trend: Price must be above the 200 EMA.
2. RSI: RSI must be above 50.
3. Engulfing Candle: Look for a green engulfing candle.

When these three conditions match, you can enter the trade.

Set Your Stop Loss and Take Profit

For your safety, always set a stop loss and take profit.

1. Set your stop loss at twice the size of the entry candle.
2. Aim for a 2:1 reward-to-risk ratio.

Why Follow These Rules?

The key is to only trade when all conditions are met. This strategy prevents you from making emotional trades. If the setup isn’t perfect, don’t trade.

Example of a Perfect Setup

Here’s how a perfect trade looks:

1. The price is above the 200 EMA.
2. The RSI is above 50.
3. A bullish engulfing candle forms.
4. You enter the trade with your stop loss and take the profit set.

Conclusion

Trading with the trend is a simple yet powerful strategy. By using the 200 EMA, RSI, and momentum candles, you can improve your chances of making successful trades. Stick to the rules, and you’ll see better results.

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