XAU/USD - Scalping StrategyStrategy Summary:
This strategy is designed for the M1 and M5 timeframes and has been personally tested, demonstrating strong results. It is a mechanical system with strict rules to ensure discipline and consistency in trading decisions.
Whilst I have personally used this system on XAU/USD it can be applied to other volatile asset classes.
Indicators Used:
1. 55-Moving Average (High) and 55-Moving Average (Low):
* These create a channel to filter out trades during choppy market conditions.
* No trades are taken if the price is within this channel.
2. Heiken Ashi Candles:
* Used to identify the trend and determine entry/exit points.
* Stay in a trade as long as candles remain green (for buys) or red (for sells).
3. Optional Indicator:
* 200 Moving Average on a Higher Timeframe (HTF):
* Use this for directional bias:
* Only take buys if the price is above the 200-MA.
* Only take sells if the price is below the 200-MA.
Entry Criteria:
Buy Setup:
1. Price breaks above the 55-MA (High) with a green Heiken Ashi candle.
2. Stop loss options:
* Below the previous candle's low.
* ATR x 2.5.
Sell Setup:
1. Price breaks below the 55-MA (Low) with a red Heiken Ashi candle.
2. Stop loss options:
* Above the previous candle's high.
* ATR x 2.5.
Risk Management & Rules:
1. Avoid Trades in the Channel:
* No trades if the price is between the 55-MA High and Low.
2. Risk Management:
* Risk no more than 0.5% of the account balance per trade.
3. Profit Targets:
* Fixed Risk-Reward Ratio: 1:1.5.
* After reaching 1:1.5, either:
* Move stop loss to breakeven.
* Take partial profits and stay in the trade until the Heiken Ashi candle changes color.
4. Session Focus:
* Trade during the Asian and New York sessions.
Key Notes:
* Align your trades with the Higher Timeframe Trend for better success.
* Adding the 200-MA on from a higher timeframe can provide an additional layer of confluence:
* Take buys only when price is above the 200-MA.
* Take sells only when price is below the 200-MA.
