Do you want to learn the perfect way to trade the 5-minute chart? Many traders often consider lower time frame trading strategy as the key reason for blowing up the account. But how many traders in Hong Kong knows to deal with the lower period data. You should never expect to make a decent profit by trading the lower time frame without having a valid strategy. This article is only for the scalpers who can take the heat of this market. Read this article carefully if you want to master the art of a 5-minute trading strategy.
Find the key support and resistance
Though you will be trading the market in the 5-minute time frame, you must learn to find the key support and resistance in the daily time frame. Finding the key support and resistance greatly helps and allows the scalpers to execute the trade with a high level of accuracy. Does this mean you have to learn motile time frame analysis to use the 5-minute scalping strategy? Unless you study different time frame signals, you can’t make a profit by using such lower periods, the first thing which you need to do is to find the key support and résistance level.
Find the perfect moment to open the trade
You need to learn about the high impact news before you start trading the 5 minute time frame. If you place any trade during the FOMC statement, you are bound to lose money. Being a scalper, it’s your duty to find a stable market condition. For that, you have to learn about scheduled news in the Forex market. Never try to scalp in the 5 minute time frame during the major news as it can ruin your capital. Try to trade in a safe time when the market will not exhibit random spikes.
Using the 5 minute time frame
Before you start using the 5-minute time frame, you need to get access to the best Forex trading account. Unless you trade with a high-end broker, scalping will be hard since you do not get precise price feed. Once you have ensured a premium trading environment, switch the lower time frame. Look for potential price action signals at the critical support and resistance zone. Since you will draw the support and resistance in the daily time frame, you might have to wait for a long time to see a retest of the price. Once you the price respect a critical support or resistance level, execute the trade and start making a decent profit.
Using the stop loss
Setting up the stop loss in the 5-minute trading strategy is very crucial. Those who set random stops can’t make any profit. You must rely on the candlestick pattern formation to set the stop loss. But you must be careful about the spared since lower period trading strategy often requires the use of tight spread. And if you trade with tight spread, you might have to lose money due to the spread gap. So, focus on the dynamic spread so that you don’t have to lose a big sum of money. When you place the stops in each trade, make sure you are not risking more than 2% in any trade. Because if you do so, few losing trades will ruin your trading career. Always trade the market with low risk so that you don’t have to repent after losing a few trades.
Learning to trade the market in the 5-minute time frame is not all hard. Try to follow the rules of this article and you will see the change in your trading performance. Once you master this technique, you can secure your financial freedom in less than a year. But always remember, lower time frame trading is very risky and requires pin perfect execution of the trading plan. So, never become scalper unless you have strong confidence.