340# Momentum Trend Scalping System
Forex Strategy for slower time trame
Submit by Marco 19/05/2013
This is our powerful method to be used by traders who like quick action or more
trading opportunities! This fast moving forex strategy works well in conjuction
with the economic news releases in the 1 minute chart. Otherwise, it's safer to
use Momentum Trend Scalping System in the slower time frames. The caution with this forex strategy is whipsaw, but if you learn to take smaller profits, you will find this technique a valuable tool.
** Trade the EUR/USD or the USD/JPY for the smaller 3 pip spread.
SET UP YOUR CHARTS for this forex strategy:
(NOTE: we're now using Simple Moving Average or SMA)
1. Open a EUR/USD or USD/JPY candlestick chart with a white background.
2. Add a moving average of 3, Simple, Close. Change the color of the 3 sma
line to black.
3. Add the Bollinger Band with the middle band set at 10 Simple, color red.
4. Add another moving average of 50 Simple, any color.
5. Add your bottom indicators in the following order: Chaos Awesome Indicator
(or Macd Histogram or Line), The Ultimate Oscillator (or Momentum), the MA
of RSI or plain RSI) and the StochasticRSI or Slow Stochastic set at 14,5,3,E.
Optional for the super advanced trader, the Directional Movement System and
Support and Resistance.
Special instructions on how to use the MA of RSI:
The MA of RSI stands for Moving Average of Relative Strength Index.
When the RSI moves above the 50 line, it's a buy signal. When it moves
below it's 50 line, it's a sell signal. This line is a leading indicator and is
leading towards the new trend.
The MA is the red and blue line. When the red line moves up through the blue
line, it's a buy signal. When the red line moves down through the blue line, it's
sell signal. The MA lines are slightly lagging but confirm the RSI.
Special instructions on how to use the Directional Movement System (DMS):
DMS lines should be used as filters to confirm the trend. This indicator is
good for use in any time frame.
A buy signal is generated when the +DMI (green line) crosses the -DMI
(red line) to the upside. A sell signal signal is generated when the -DMI
(red line) crosses the +DMI (green line) to the upside.
The black line is called the ADX. When the black line is under the green
and red line, this is a 'stay aside' signal and it is usually a time of
consolidation, a gathering of momentum for a breakout or breakdown.
If you stay out of a position when the black line is at the bottom under both
the green and red line, it will keep you out of a short term move which may
The black line confirms the trend by following whichever line (red or green)
that happens to be moving up. If it doesn't follow the red or green line up,
it is NOT confirming the trend. However, it's hard to tell sometimes because
the black line is a lagging indicator and gets a late start.
If the black line rises to 30 or 40 and turns down, the existing trend is
waning and it is time to take profits.
Here's the Forex strategy:
Enter a long position when the fast black 3 sma has crossed up through the
middle Bollinger Band, 10 sma (red). At the same time, the Chaos and
Momentum should be crossing their zero lines, going up. The red line of the MA
of RSI should be crossing up through the blue line and the green +DMI line
should have crossed up through the red -DMI line.
Enter a short position when the fast black 3 EMA has crossed down through the
middle Bollinger Band, 10 EMA (red). At the same time, the Chaos and
Momentum should be crossing their zero lines, going down. The blue line of the
MA of RSI should be crossing down through the red line and the red -DMI line
should have crossed up through the green +DMI line.
When to take your profit:
The Chaos will turn color, the Momentum will turn towards it's zero line, the MA
of RSI lines will cross, and the black ADX line will turn down.
When the 3 SMA flattens out, be prepared to sell the position. When the 3 SMA
crosses thru the 10 SMA sell the position immediately.
Don't wait for all of these things to happen at the same time; if any one of these
things happens first, sell your position immediately.
NOTE: You may only be able to book 5 -20 pips, unless there's a breakout, so
use as much margin as your available margin will allow you to safely use, BUT
only after you have mastered this difficult technique. Review the Money
Management rules and # of (mini) lots to trade with for your account size.
** This is very fast action so practice this a lot in your demo account before
attempting to do this live. If you only have a few hours to trade, this will give you
more trading opportunities.
Here are some screenshots of “Momentum Trend Scalping System” :
Playing the News Release in the 1 minute chart:
Note: if you can get very good at using Momentum Trend Scalping System technique to play the US news releases, you can make very good weekly money, without
trading more than a few times a week for only a short period of time.
This is an example of a US news release at 8:30 am EST, a standard
time for releasing US economic news that normally moves the market
quite a bit.
The line is the entry point and the oval in the Chaos is the exit when the
bars turn color.
Notice how you could have entered this trade a little earlier than normal
at 8:29 am, as all the indicators were bullish (Euro going up). Or you
could have waited a few more minutes to be on the safe side.
Either way look at where you would have bought, it was around 1.2550.
The first sell signal happened when the Chaos turned red about 10
minutes later and you could have sold at 1.2600 for a 50 pip profit.
At about 8:45 you could have jumped back in long and taken another
approx. 50 pips right before 8:59 am.
A total of almost 100 pips in just 24 minutes!
This forex strategy is great for those people with a J.O.B. to go to!
Here's the same news breakout trade shown in the 15 minute chart. Look at
how you could have made another 50 pips if you had stayed in the trade
Notice how the long time period before 8:30 am EST was quiet, not any market
movement. All the traders were waiting for the big US economic news release.
Then, the Chaos broke above it's zero line, the red MA line crossed above the
blue line, the Ultimate Oscillator was above it's 50 line, the blue DMI line crossed
above the red DMI line and the StochRSI crossed above it's highest line....all
very bullish signals.
The next screen shot shows a “Momentum Trend Scalping System” trading session in the 5
This was an usual trading session where you could have played the shorts and
longs for a 20-30 pip ride each way, starting just after 1:35 am EST. Right at
7:00 am EST is when the US market opens, making for increased trading
volume and volatility. I think playing Momentum Trend Scalping System in a 5 min chart is
difficult...much easier in the 10 min chart
Next, we'll show a Momentum Trend Scalping System screen shot of a 10 minute trading
You could have entered short a little earlier, when the black 3 sma crossed down
below the red 10 sma. When you did enter short, the StochRSI was at it's low
point, the MA of RSI had crossed down and the RSI was below it's 50 line, the
DMS had crossed with the red line crossing above the blue line, and the Ultimate
Oscillator had crossed down below it's 50 line.
See how the 3 sma flattened at the bottom in both trades before the Chaos
turned green? That was your early warning sign that the down momentum was
waning and get ready to take profits. Then take profit when the Chaos turned
In the first short play, after taking profit, you could have jumped back in short, as
the black 3 sma had touched the 10 red sma and bounced back down. The
Chaos turning red again is a confirmation of the continued downtrend. The
Ultimate Oscillator also broke down thru it's 50 line again, signalling a bearish
Notice that you want to avoid trading when the Chaos and the MA of RSI are flat
and when the black ADX line is under the red and blue DMS lines. The market is
really only busy during 3 am to 11 am EST. The rest of the trading day/nite is
pretty whipsaw, better to avoid unles you're a position trader.
Here's a Momentum Trend Scalping System trading session in the 30 minute chart:
The entry point is the line and the exit is the oval when the Chaos turns color.
This screen shot shows you how to get involved in just the biggest moves. If you
can leave your computer on all day and nite and simply monitor your 25-35 pip
trailing stop when you're able, you can have stress-free trading. You can let
yourself either get stopped out or, if you're awake at the right time, you can take
profit when the Chaos changes color.
Momentum Trend Scalping System” Advanced Trading Tips
1. The slower 10 SMA line is a really good trend line...if it's flat, the
trend is flat and you don't want to enter because you'll get whipsawed.
2. Especially watch the Momentumor Ultimate Oscillator, it MUST be above or
below 0 for a good strong push. Again, the biggest moves come when the
Chaos crosses it's zero line, accompanied by Momentum or Ultimate doing
the same thing.
3. Watch the flattening of the 3 line for your clue to get ready to sell. When the 3
sma flattens, get ready to sell when it crosses the 10 sma. Sometimes it just
kisses the10 sma and you won't sell. Watch your Chaos, Momentum and
Ultimate indicators for the clues to sell. Review the section entitled Finding
the Tops and Bottoms.
4. If the middle Bollinger Band (which is a 10 sma) crosses the 30 sma, this is a
strong continuation of the move. This is usually a breakout, and it's what we're
hoping for, waiting for. However, be careful around the 30 SMA, as it can act
5. The black line must not be under both the red and green DMI lines to enter
either a long or short position. This is a consolidation period with little
movement. Avoid whipsaws and 'stay aside'...wait for the bigger moves.
6. Remember to put in your stop immediately after you take your position, and
make it a 10 - 15 pip stop in the 1 min chart, a 15 - 20 pip stop in the 10 min,
and 20 -35 pip stop in the 15-30 min chart. However, don't let yourself get
stopped out at the beginning of a trade, close the position immediately when
you're sure it is not doing what you want.
b. Protecting Your Profits
When your position breaks even and goes into a 20 – 25 pip profit, move your
stop to breakeven. If the price moves into more profit, keep moving your stop
every 10-20 pips. Don't ever sell a position out of fear, rather let your stop sell
for you...except when you see it topping or bottoming and all your indicators say
it's time to sell, you've reached maximum profit, then sell when the 3 sma either
crosses through the 10 sma or the Chaos turns another color. Again, you should
review the section entitled Finding the Tops and Bottoms.
We take every perfect setup and lots of small profits in the hope that one of the
plays becomes a breakout, so we play them all, but only when all of our
indicators are in agreement. You only need one good breakout in a day for a
good daily profit. If you're playing during the busiest time of the day, you can
usually catch a breakout early and be done for the day.
There's no need to hold dangerous overnight positions and no need to hedge.
c. How to Use and Interpret SMA in the “Momentum Trend Scalping System:
The beauty of using SMA in a moving average crossover combo,
is that the faster more current SMA line FLATTENS as the price
movement slows down and starts to reverse (this is all behind
the scenes in the math algorithms) so it forewarns us when the
price is about to change trend dramatically.
We prepare to sell our position when the fast 3 SMA line FLATTENS.
We sell our position when the fast SMA crosses the slower 10 SMA.
And, the slower 10 SMA line, which is a little more lagging in reflecting the price,
also flattens when the trend is reversing. It's a good warning to NOT jump into a
trade no matter what the other indicators say, until this slower 10 SMA line
shows a clear trend, either up or down.
This keeps you from quick unexpected movements of the price, which is what we
call 'whipsawing'. It keeps you from jumping into a play too early and possibly
getting stopped out.
If you wait for the slow 10 SMA line to show a trend, then it's much safer
to jump in, with less possibility of 'whipsaw' or getting stopped out. Also,
remember that if the black DMI line is under both the red and green DMI lines,
this is a 'stay aside' time of consolidation
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