This technique is for traders who like getting in and out of trades in a matter of minutes instead of hours.
The type of chart set up that we use to trade the 1 minute charts is candlestick charts.
SET UP YOUR CHARTS
- Open a new EUR/USD 1 minute candlestick chart.
- Add Bollinger Bands set at 18, Exponential. Change the color of the middle band to bright green.
- Add a moving average 3 Exponential, Close and change the color to black.
- Add the MACD Histogram Study (default settings)
- Add the Relative Strength Index Study set at 14.
- Zoom in or out to your liking.
- Wait for the 3 EMA (black) to cross through the 18 Bollinger Bands Middle line (green).
- Wait for the Relative Strength Index and MACD Histogram to line up: Above 0 (MACD) and above 50 (RSI) for BUY signal. Below 0 (MACD) and below 50 (RSI) for SELL signal.
- Remember to take small profits.
- Practice this strategy on your demo account.
Here is a great example of how you can use the 1 minute charts to trade the economic news releases. To find out when the world economic news releases are, simply go to http://www.forexnews.com and scroll down to the bottom of the website for the list of the current week news releases that impact the Forex markets. In the above example, the economic news release was scheduled for 8:30 AM EST. At 8:33 the price jumped up 20 pips. Using our 1 minute strategy along with the news, is an effective way of
scalping profits on the FX markets.
**Tip: Remember to wait a minute or two after the announcement. Don't open a position before the scheduled time!
**Tip: There are news releases all throughout the week during the different time zones and trading sessions. This technique works well during overnight trading EST during the European and London sessions.
ATTENTION:
Using the 1 minute charts is fast moving. It might not be your style of trading. If you want to test out slower moving average combinations that whipsaw less often on the 1 minute charts, you can try these:
- 7 EMA, 18 Middle Bollinger Band
- 5 EMA, 20 Middle Bollinger Band
- 10 EMA, 20 Middle Bollinger Band
