Scalping is a trading approach with short term holding. For profitable scalping it’s essential to enter the trade in momentum of a current direction and exit fairly quickly – therefore scalping the momentum that is currently underway.
The most popular markets for scalping are those that are most volatile because we want to take advantage of quick market movements for short-term trading opportunities. When we were looking for a market to base this research on, we decided to Google “Most volatile currency pairs”, as scalping is very popular in forex trading.
The winner for the most volatile forex market was AUD/JPY. Now that we have the market, let’s look at its charts and analyze them.
Firstly, we have to establish a higher timeframe context – we do that with 77 Cygni on a 4-hour timeframe. Finding general direction increases our chances for successful scalping. We have marked out the timelines for bullish and bearish areas where all 77 Cygni components were in agreement about the direction (same color) – which side of the volume is dominating the market, buyers or sellers. Here are the zones:
Bullish zones on 77 Cygni:
- 24th February – 1st March
- 2nd March – 7th March
- 10th March – 13th March
Bearish zones on 77 Cygni:
- 8th March – 9th March
Now that we have higher timeframe context established, it’s time to look closer, on daily conditions. We will use 75 Cygni on 15-minute timeframe to do that, and will additionally mark our the areas where daily conditions are in agreement with contextual areas, where 75 Cygni trading zones overlap with 77 Cygni trading zones. We have marked out the bullish and bearish boxes which will be used for scalping. There are 9 bullish scalping boxes which will be used for buying the market – trading longs, and 4 bearish ones that will be used for selling the market – trading shorts.
Now let’s initiate the 71 Cygni and look at scalping opportunities in all the trading boxes. We have marked arrows for potential entries, where all the components in NanoVT agree about which side is dominating the market. Of course, there are many other ways you could take advantage of the market, but for this research we have used ‘all of the NanoVT components are in agreement’ criteria.
Let’s start with long trades in bullish volume boxes.
BOX #1: 8 scalping trades (approx.) – All trades were profitable, 7 out of 8 trades went into instant scalping profits // 100% success rate
BOX #2: 15 scalping trades (approx.) – 14 out of 16 trades were profitable, 10 out of 16 trades went into instant scalping profits // 87,6% success rate
BOX #3: 11 scalping trades (approx.) – 9 out of 11 trades were profitable, 8 out of 11 trades went into instant scalping profits // 81,8% success rate
BOX #4: 4 scalping trades (approx.) – 3 out of 4 trades were profitable, 2 out of 4 trades went into instant scalping profits // 75% success rate
BOX #5: 2 scalping trades (approx.) – 2 out of 2 trades were profitable, 2 out of 2 trades went into instant scalping profits // 100% success rate
BOX #6: 10 scalping trades (approx.) – 9 out of 10 trades were profitable, 7 out of 10 trades went into instant scalping profits // 90% success rate
BOX #7: 1 scalping trade (approx.) – 1 out of 1 trade was profitable, 1 out of 1 trade went into instant scalping profits // 100% success rate
BOX #8: 3 scalping trades (approx.) – 2 out of 3 trades were profitable, 2 out of 3 trades went into instant scalping profits // 66,7% success rate
BOX #9: 1 scalping trade (approx.) – 1 out of 1 trade was profitable, 1 out of 1 trade went into instant scalping profits // 100% success rate
Now let’s look at 4 bearish volume boxes for potential short scalping opportunities.
BOX #1: 1 scalping trade (approx.) – 1 out of 1 trade was profitable, 1 out of 1 trade went into instant scalping profits // 100% success rate
BOX #2: 7 scalping trades (approx.) – 6 out of 7 trades were profitable, 6 out of 7 trades went into instant scalping profits // 85,7% success rate
BOX #3: 1 scalping trade (approx.) – 1 out of 1 trade was profitable, 1 out of 1 trade went into instant scalping profits // 100% success rate
BOX #4: 1 scalping trade (approx.) – 1 out of 1 trade was profitable, 1 out of 1 trade went into instant scalping profits // 100% success rate
Overall Results
Long trading: 55 trades – 48 out of 55 trades were profitable, 39 out of 55 trades went into instant scalping profits // 87,2% success rate.
Short trading: 10 trades – 9 out of 10 trades were profitable, 9 out of 10 trades went into instant scalping profits // 90% success rate.
This trades and results are possible only when you have the right tools and analyze the right things, which is volume, becouse it’s responsible for moving the market. It is also very important to have a higher timeframe context, backed up by daily conditions. When those two are in agreement, best opportunities for scalping arrive as you are getting in and out of the market quickly, riding the waves of higher timeframes with larger volume sizes.
Stay on the right side of the market at all times, and happy scalping!