Many traders are looking for the best indicators for scalping in Forex.
Let me clarify upfront. In my view, if you’re serious about scalping in Forex, you should be looking for strategies that work, rather than magical indicators that will suddenly aid you in scalping.
Price action > indicators. I’ll touch upon this topic as well.
Indicators worth noting
OK, I don’t want to make the introduction too long.
You were looking for the best indicators for scalping. I can recommend the ones below.
Indicators for entry signals:
We will start with indicators that you can use as a signal source to open position.
Two important remarks:
- There are no indicators that will provide 100% profitable signals. There will also be false signals, so a lot here depends on risk management.
- Consider entering with a pending order, slightly below/above the candlestick where there was a signal. It will enhance your efficiency.
RSI HistoAlert:
RSI HistoAlert is based on the traditional RSI.
The difference is that instead of a line chart, we have a histogram of changes.
Additionally, we have the option to set different colors to see when there’s a brief correction.
TMA Slope True Scapler:
Remember that if you want TMA Slope to be faster then you should play with eintPeriod parameter:
Stochastic:
Stochastic is a good indicator, BUT:
You need to spend time to find the best parameters for a given time frame and instrument.
Then the signals should be fast.
Additional trend confirmation:
Using indicators for scalping, you need to learn to differentiate those giving you entry signals and those indicating the direction to open a trade.
Most often, you want to trade with the trend, then you will likely use MACD or averages.
If you want to scalp during a direction change/correction, pivot points will be helpful.
Averages:
We’re talking about classics here like basic averages such as 5, 8, 21, 34, 50, 100, 200.
Approaches vary. Some prefer when the price is above 50, 100, 200 and when 5 is above 8.
Consider incorporating analysis from higher time frames.
MACD:
Here, instead of classic parameters, we’re talking about settings like 21, 30, 5, or others that work for you.
Take a position in the direction consistent with MACD and the signal line.
This means if the signal line is greater than MACD, you look for a long position. If the signal is less than MACD, you look for a short position.
Look/wait for signals from indicators described above, like RSI histo, etc.
MACD is built in all trading platforms, but sometimes you don’t get a classic one.
Then you should search for a classic one custom indicator. For example, in Metatrader 4 it would be MACD True indicator.
CCI:
CCI is based on averages. So if we have CCI with a parameter of 21 and CCI is above 0, it essentially means the price is above the average of 21.
The advantage of CCI is the additional information and easier visualization of how much we have oversold/overbought.
It mainly refers to levels 100 and 200.
Potential Reversal/take profit targets indicators
Pivot Points:
Especially those based on H1, H4, and daily.
They show potential spots where there might be a smaller or bigger reaction.
There’s no guarantee, if the trend is strong they might be overlooked.
However, if the price reacts to them, then you can look for opportunities to enter in the opposite direction.
Avoid the trap of seeking the holy grail
There are tons of indicators, one might get the impression that finding the best one will be challenging.
From my experience, strategies based on price action, support resistance zones, etc., work better than indicators.
This doesn’t mean you can’t build a strategy based on indicators.
You can. I gave examples of indicators above that can potentially help you build a solid strategy.
However, to even discuss building strategies with the help of indicators, you should understand what’s happening with the price.
The market situation, what price action says, where significant SR levels are, where key Pivot levels are, etc.
Then introducing a more mechanical approach to strategies with the help of indicators makes sense, and I definitely see this approach as viable.
If you’re just looking for a single indicator that magically tells you when to scalp, then this direction doesn’t make sense.
