As you can interpret, the price rallies, puts in a swing high, declines and then enters a short-term downtrend, before rallying back to the prior high. The USD/CAD chart below shows an overall downtrend on this 4-hour chart. Let’s look at a supply and demand example, coupled with trading with the trend. Swing traders typically use hourly, 4-hour, and daily charts to find trade setups, although they may use 15-minute or 5-minute charts to fine-tune their market entries. While this is one example of a scalping strategy, all the prior discussed strategies and concepts could be used for price action.Īny of the price action strategies mentioned above can be used as part of a swing trading strategy. This occurs during a pullback.īelow, arrows mark the engulfing patterns that signal potential trade entries on the Alcoa 1-minute chart. To do this, traders look for engulfing patterns to signal an entry, such as when a candle in the trending direction envelops a candle in the pullback direction. Many scalpers typically use 1-minute charts.Ī scalping strategy aims to trade in the trend direction and enter during a pullback when the price starts moving back in the trending direction. Scalping involves entering and exiting a position quickly to take advantage of small price movements, for whatever a small price move is considered to be for that asset. In the share market, it may mean risking a few cents a share in or order to make a few cents. In forex scalping, this may mean using a 3 to 5 pip stop loss and a 5 to 10 pip target. Scalping is a trading strategy where profits and losses are taken quickly, as trades typically last a few minutes or less.
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