In this article, we are going to introduce a scalping trading system designed for trading spot Forex and precious metals which can be quite profitable if the trader follows the rules carefully. This system is based on custom technical indicators for Metatrader 4, so unfortunately it can only be used on this trading platform.
Firstly, it uses a trend indicator based on the RSI along with an accurate scalping indicator that shows a buy/sell arrow.
The system is built to buy and sell currency pairs and precious metals in an existing trend, based on the “buy low, sell high” principle.
As always it is recommended to test the system on a demo account before using it for real money trading.
Trading System Setup
- Recommended Markets: This system was initially developed to trade major currency pairs and precious metals. However, it can also be tested on other markets, such as indices.
- Recommended Time Frames: The system can be used in the 5-minute, 15-minute, and 30-minute time frames during the London and US sessions.
- Technical indicators:
- RSIFilter (default setting), is an indicator based on the classic RSI.
- Buysellarrowscalper indicator (default setting).
You can download the custom indicators at the following link:
-RSIFilter and Buysellarrowscalper custom indicators
Scalping Gold trading system rules
The rules for opening and closing positions are as follows:
Buy positions
- RSIFilter indicator is light blue (uptrend).
- Buysellarrowscalper indicator traces a blue arrow.
-Buy position stop loss: A stop loss is placed slightly below the most recent support.
-Options for closing the buy position:
- Close the position when the Buysellarrowscalper indicator traces a red arrow.
- Use a fixed take profit target, like 30 pips for example. The take profit level depends on each trader and their risk appetite, however, it is recommended that you try to maintain a Risk/Reward ratio on all your trades of at least 1:1.
Sell positions
- RSIFilter indicator is red (downtrend).
- Buysellarrowscalper indicator traces a red arrow.
-Stop loss of the sell position: A stop loss is placed slightly above the most recent resistance.
-Options for closing the sell position:
- Close the position when the Buysellarrowscalper indicator traces a blue arrow.
- Use a fixed take profit target, like 30 pips for example. The take profit level depends on each trader and their risk appetite, however, it is recommended that you try to maintain a Risk/Reward ratio on all your trades of at least 1:1.
Examples of buy/sell signals generated by the system
The image above is an example of the application of this trading system on a spot gold price chart with a 30-minute time frame. Here we can see the buy and sell signals of the system (indicated below the corresponding arrows) that occur when the direction of the arrows of the Buysellarrowscalper indicator agrees with the direction of the trend indicated by the RSIFilter. This last indicator allows us to trade in the general direction of the gold trend, which significantly improves the reliability of buy and sell signals.
As we see in this example, we had several winning trades.