Among forex traders, scalp trading is a broad, popular trading technique, as it is amenable to the immediate profit-seeking behavior of small price movements. It sounds cool in a way, especially for new traders, but scalping isn’t as simple as it may sound. It requires discipline, patience and a tried and true approach. Because scalpers hope to make a tiny profit many times in the course of the day, the loss on any one mistake will be correspondingly small. 

A scalping approach requires a very high winning percentage when compared to a traditional trading strategy and proper entry and exit timing. One losing trade can wipe away the profits accumulated from multiple winning ones. In this writing, we will list several simple forex scalping systems that can be used with various indicators. These techniques will assist traders in finding significant value on the 1 minute, 5 minute, and 15 minute charts. 

The 5-Minute Forex Trading Strategy Explained Even More Clearly

A 5-minute forex strategy is a short-term trading technique that can be used on your 5-minute trading charts. This is great for anyone trading who wants to take advantage of fast market movement and wants to enter and exit several trades in a trading day. This approach generally includes:

• ◉ Analyzing 5-minute candlestick charts to detect trends and changes in trends 
• ◉ Pinpointing important support and resistance levels
• ◉ Observing price action patterns to anticipate market direction
• ◉ Using technical indicators to confirm potential trade setups
• ◉ Applying strict risk management techniques to protect capital

Identify short term price trends with the least risk potential to reduce market exposure and capitalize on profit opportunity.

This style of trading demands focus, discipline and a clear cut plan to exploit the lightning quick forex market. 

Benefits of the 5-Minute Forex Scalping Strategy

• ◆ Saves Time

The 5 min method is very time consuming and you will need to deal with delayed time and slippages. This opens the door to a number of potential trades that can be taken throughout the day without needing to sit behind the computer for the majority of the day.

• ◆ Lower Market Risk

As their positions are opened for a very short time, traders are much less susceptible to the dangers of sudden price movements or unexpected news releases when these are adverse to their longer-term trading choices.

More Trading Opportunities

And in the brief period, they can make a lot of trades in a day. For players with high skill and low variance, this can lead to large total gains in the long run.

• ◈ Sharpens Price Action Skills

Such a fast chart trades teaches traders to watch price and changes very, very closely. This assists to create better familiarity with the business sector and for more effective decision making at short notice.

Additional Technical Indicators for Scalping

Other Useful Tools alongside Scalping Indicators Apart from the list of indicators mentioned in the scalp trading strategies and here, traders have many more options that they can choose from. Among which are the EMA, the Parabolic SAR and the RSI.

Lets continue the list below to show you other useful trading indicators that might work for you depending on the currency pair and the market conditions, and may be used along with one of the mentioned indicators as an excellent scalping strategy. Each of them provides a slightly different insight into the price action, all of which can be useful to traders when used in conjunction with other tools in the traders’ toolkit. 

Effective 5-Minute Forex Trading Strategies

To help you increase your chances of success with 5-minute forex: Below are some proven price action strategy to help you identify high probability trade setups and make better trade decisions:

• 1. Pin Bar Reversal Strategy

The pin bar is a very strong reversal pattern that represents a potential change in the market, or it can just be used as a continuation signal. 

• ◉ A long wick (at least two-thirds of the candle)
• ◉ A small body
• ◉ Little or no shadow on the opposite side

How to trade it:

• ✦ Bullish Pin Bar: Identifiable by price action when forming a pin bar at a key support level or after retracement in an uptrend.
• ✦ Bearish Pin Bar: Notice it in resistance or partial retracement of a downtrend? Sell!
• ✦ Entry: Set a stop order below (bullish) or above (bearish) high or low of the candle.
• ✦ Stop-Loss: Below the wick (long) or -Above the wick (short).
• ✦ Take-Profit: Take-profit for the next primary support and resistance or a risk to reward ratio of 1:2.

2. Inside Bar Breakout Strategy

Inside bars indicate a contraction in the market and can result in significant moves to the upside or downside when a trend is taken into consideration. 

• ◉ A smaller candle in the area of the prior candle
• ◉ Shows market hesitation or balance between buyers and sellers

How to trade it:

• ✦ Locate an inside bar on the 5-minute chart.
• ✦ Confirm the trend on the higher timeframe.
• ✦ Trade when the breakout aligns with the overall side.
• ✦ Entry: Use buy/sell stop orders above and below the "mother bar" (the bar before the inside bar).
• ✦ Stop-Loss: Below (for longs) or above (for shorts) the mother bar.
• ✦ Take-Profit: Set based on the average daily range of the pair.

3. Engulfing Candle Strategy

Engulfing patterns indicate a change in momentum and can be used to time entries in the 5-minute chart.

• ◉ A candle that completely engulfs the body of the preceding candle
• ◉ Bullish Engulfing: Green is long enough to cover red sessions
• ◉ Bearish Engulfing: A Bearish Engulfing Pattern is characterized by a large red real body engulfs a preceding smaller green real body.

How to trade it:

• ✦ Engulf candle around significant levels of support and resistance.
• ✦ Confirm with the prevailing direction or look for reversals at OB OS levels.
• ✦ Entry: Trade the next candle after the engulfing pattern.
• ✦ Stop-Loss: Just a few pips behind (for a bearish setup) or below (for a bullish setup) the engulfing candle.
• ✦ Take-Profit: Take aim at the next support/resistance area or aim for a 1:1.5 risk-reward. 

4. Double Top/Bottom Strategy

These reversals provide us with defined entry points after a failed breakout through a significant area of resistance.

• ◉ Two tops (double top) or two bottoms (double bottom) at similar price levels
• ◉ Suggests a possible trend reversal

How to trade it:

• ✦ Spot the formation and rinse and repeat when formation breaks the “neckline” (support for double tops, resistance for double bottoms).
• ✦ Enter: Sell after a double top break (or buy after a double bottom).
• ✦ Stop-Loss: Behind the top (double top) or the low point (double bottom).
• ✦ Take-Profit: From the tops/bottoms to the neckline, measure that distance and place it from the breakout level. 

5. Trend Line Break Strategy

5-minute chart trend lines can be used to help determine counter-trend and continuation set ups. 

• ◉ Join 2 swing lows (on an uptrend) or 2 swing highs (on a downtrend)
• ◉ The more touches, the stronger the trend line

How to trade it:

• ✦ Draw trend lines on the 5-minute chart using swing points.
• ✦ Watch for a clear break and close beyond the trend line.
• ✦ Entry: Enter on the candle following the breakout.
• ✦ Stop-Loss: Set the stop loss below the recent swing low (long) or above the recent swing high (short).
• ✦ Take-Profit : The nearest critical level or 1:1.5 risk ratio.

These tactics are based on clean price action and mostly focus on economic data or corporate releases, but their exact subject will be different for you depending on your trades, as long as you follow their guidelines, taking into account jewel time signature. And, of course, always use them in conjunction with solid risk management for the best results. 

The Best Forex Brokers for Scalping

➛ FP Mаrkets - is аn Аustrаliаn broker founded in 2005. Orders аre executed with high speed — perfect for scаlping аnd аuto-trаding.

◉ Min. EUR/USD Spreаd: 0.0 pips

◉ Commission per Lot: $6.

◉ Execution Speed: High

➛ RoboForex is an international broker founded in 2009. RoboForex Beginner-friendly, trader-friendly.

◉ Min. EUR/USD Spreаd: 0.3 pips

◉ Commission per Lot: $10.

◉ Execution Speed: Medium.

➛ Pepperstone was founded in 2010 in Melbourne, and on the surface, it's range of 90 trade-able currency pairs seems similar to v. Accommodating global traders and providing several languages Pepperstone offers several languages to cater to the needs of global traders.

◉ Min. EUR/USD Spreаd - 0.2 pips

◉ Commission per Lot - $7

◉ Execution Speed - High

➛ FxPro uses its own liquidity aggregator and advanced order matching technology, which allows you to execute more than 84% of orders at the requested price or better.

◉ Min. EUR/USD Spreаd - 0.2 pips

◉ Commission per Lot - $7

◉ Execution Speed - High

Guidelines for Entering a Long Trade

• ➛ Clear Setup: Seek out currency pairs which are below the 20 EMA and MACD in negative.
• ➛ Confirm Signal: Wait for price to close above the 20-period EMA.
• ➛ MACD is either crossing from negative to positive or has turned positive within the last 25 minutes (equivalent to five or fewer bars on a 5-minute chart).
• ➛ Entry Point: Place a buy order 10 pips above the 20-period EMA.

Stop-Loss Placement:

• - Aggressive: Place your stop-loss below the most recent swing low on the 5-minute chart.
• - Conservative: If you are a Conservative trader, risk 20 pips below the 20-EMA.
• - Profit Strategy: Take profit on half of your position when the price reaches a level equal to your entry plus the amount you risked.
• - Manage Remaining Position: Move the stop-loss on the remaining half to breakeven once the first target is reached.
• - Trailing Stop : Continue trailing the stop on the remaining position at the higher of two levels: the breakeven point or the 20-period EMA minus 15 pips.

5-Minute Scalping Strategy – Short Trade Rules

• ◆ Setup:

Wait for the price to close below the 20-period Exponential Moving Average (EMA).

Make sure it has been at least 5 bars (25 minutes) since MACD has been negative.

• ◆ Entry:

Open a short position when the price is 10 pips above the EMA.

• ◆ Stop-Loss:

Your stop-loss would be placed over the most recent swing high or 20-pip EMA

• ◆ Profit Target:

Set your initial profit target 20 pips below the entry price.

• ◆ Position Management:

Trail stop to breakeven with the first profit target. Trail the stop / stop loss at breakeven as the trade moves.

How to make a 5-Minute Forex Trading Strategy Work for You

A successful 5-minute forex day trading strategy has three key principles: following a full model, consistency, and being able to adjust plans.

But discipline is all about keeping to a trading plan, whatever the market, whatever your instincts tell you.

This sort of consistency is important if you want to try and measure performance over the long term. You vice how hard and goddammit figure out what other people have done in similar cases and then apply their rules to yourself time and time again, learning from your results and figuring out how to refine your approach.

Flexibility that makes traders able to react well to sudden changes in market conditions. This is particularly so for short term tactics, such as scalping, where the need for quick adjustment is the difference between profit and loss. These are complementary principles that feed off of each other to build a rock solid foundation for success: 

• ◈ Discipline - Stick to the plan
• ◈ Consistency - Apply the same method regularly for improvement
• ◈ Adaptability - Shift tactics when markets change
• ◈ Mix those to form a better 5-minute trading strategy.

Having the right mindset and regularly reviewing and adjusting your plan will help achieve much better results in a fast paced market such as forex.

Best MACD Settings for 5m Chart

Although some traders like to use the 24-, 52- and 18-period, the 12-, 26-, 9-period is the standard and most widely used settings for trading on a 5-minute chart.

Advanced 5 Minute Forex Trading – 5 Minutes a Day of Pure Time To Be A Profitable Trader.

• ✦ Multi-Timeframe Analysis : Over higher time frames, i.e on 1-hour or 4-hour charts, for better context and make better entries at exit at the 5-minute chart level.
• ✦ Price Action Confluence : Search for convergence where price action signals such as pin bars, inside bars or Key levels line up to increase the chances of profitability on your trades.
• ✦ Breakout Trading: Look for and trade breakouts as price strongly moves through major support and resistance, in the hopes of catching fast-moving trends.
• ✦ Adapting Around News Events: Be prepared to make changes in or steer clear of trading around major economic news releases, when volatility can spike and prices can turn in a short-term direction.
• ✦ Position Scaling: Perfect your risk management and profit potential by taking portions of positions, little by little, as opposed to all at once. 

5-Minute Buy and Sell Rules

• Buy Signal:

Look to go long when the price moves above the EMA lines, and at the same time, the MACD is either already above the zero line and has stayed there for the past 25 minutes, or it crosses up through the zero line from below.

• Sell Signal:

Now, look to short the market at a potential rejection of these levels when price breaks below the 20-period EMA and when the MACD histogram is below the 0-line for the 25 minutes or just recently crossed down through the 0-line.

Cons of 5 Minute Forex Scalping Strategy

The intent of this strategy is to capitalize on short-term trend reversals, using the XMA and MACD indicator to signal the moves. Yet these tools don’t always fit together perfectly, and, as a result, traders can receive confusing or misleading trade signals.

It is also worth noting that price ranges within a scalping strategy can be—to a degree, too wide, too tight as the market’s largesse waxes and wanes. The price would then often whip back and forth around the EMA and the MACD would sharply oscillate between positive and negative values, making it more difficult to time entries precisely. 

Conclusion

The 5-minute trading strategy in forex helps pinpoint momentum shifts in forex pairs. For, the objective is to model and sense reversals as soon as possible, to get into a trade and then to (using risk mechanisms like a trailing stop) render that movement in your favor, lock in profit and protect it. But this is such a technically based strategy, it is the type that will come and go with the market mood.