1-Minute Scalping Trading Strategies With Examples
Scalping is a popular trading style capitalising on rapid, small price movements within minutes. 1-minute scalping strategies are often used by traders but require precise execution and solid understanding of technical indicators. This article explores four 1-min scalping strategies, detailing the indicators used alongside specific entries and exits.
Understanding 1-Minute Scalping
1-minute scalping is a fast-paced trading style focusing on taking advantage of small price movements within a minute timeframe. Traders using this approach rely on 1-minute charts to make quick, multiple trades throughout the trading session. The primary goal is to accumulate potential small gains that might add up to larger returns over time.
A scalp trading strategy requires a solid understanding of technical analysis and market conditions. Scalpers typically use indicators, price action patterns, and trend analysis to identify short-term market movements and potential entry and exit points. The rapid nature of 1-minute scalping demands precision and discipline, as even a slight delay can impact the trade outcome.
One of the key advantages of 1-minute scalping is the ability to generate frequent trading opportunities, which can be particularly appealing during volatile market conditions. However, it also comes with higher risks due to the speed and frequency of trades, meaning risk management plays a significant role.
Scalpers must also be aware of transaction costs, as frequent trading can lead to significant fees, which can erode potential returns. Choosing a broker with low commissions, tight spreads, and fast execution speeds is essential to maximise a scalping forex strategys potential. FXOpen provides an ideal environment for scalping trading strategies, with commissions from $1.50 per lot, spreads from 0.0 pips, and ultra-fast execution. Open an account!
Four 1-Minute Scalping Strategies
Now, lets take a closer look at four 1-minute trading strategies. To apply these strategies, see how they work in practice, and access each of these 1-minute scalping indicators, consider following along in FXOpens free TickTrader trading platform.
Strategy 1: VWAP + MACD
Indicators Used
- VWAP (Volume Weighted Average Price): VWAP calculates the average price a security has traded at throughout the day, based on both volume and price. It helps traders understand the trend and identify potential support and resistance levels.
- MACD (Moving Average Convergence Divergence): MACD is an indicator that visualises the relationship between two moving averages. MACD settings for a 1-minute chart are standard: the MACD line is derived from the difference between the 12-period and 26-period exponential moving averages (EMA), while the signal line is a 9-period EMA of the MACD line.
VWAP and MACD work well together by providing both trend and momentum analysis. VWAP helps identify the overall trend and significant price levels, while MACD offers insights into momentum changes. This combination can help traders determine entries by confirming trends and potential reversals.
Entry
- Traders typically look for the price to close through the VWAP, with the MACD turning from positive to negative or vice versa. This coincides with the signal line crossing over the MACD line.
- Alternatively, another common entry point is when the price uses the VWAP as a level of support or resistance, confirmed by the MACD turning from positive to negative or vice versa.
These triggers will likely occur within a few candles of each other, typically within 4 or 5 candles.
Stop Loss
- Stop losses are often set just beyond a recent high or low swing point, which helps potentially protect against losses if the market moves unexpectedly.
Take Profit
- Traders commonly take profits when the signal line crosses the MACD line in the opposite direction, and the histogram switches from positive to negative or vice versa. This approach allows traders to take advantage of momentum shifts and potentially lock in gains as the trend changes.
- However, some may prefer to exit at a significant support or resistance level in order to maximise potential gains.
Strategy 2: Keltner Channels + RSI
Indicators Used
- Keltner Channels: A volatility-based envelope set above and below an exponential moving average. The channels are typically set to two average true range (ATR) values away from the EMA. They help identify overbought and oversold conditions and potential breakouts.
- RSI (Relative Strength Index): A momentum oscillator that gauges the rate and extent of price changes. It ranges between 0 and 100, where readings above 70 signal overbought conditions, and readings below 30 indicate oversold conditions. RSI can also indicate bullishness when it crosses above 50 and vice versa.
The Keltner Channels and RSI strategy leverages volatility and momentum to identify effective trading opportunities. By combining the channels, which offer insights into breakouts, with the RSI, which gauges momentum, traders can uncover trading opportunities on the 1-minute chart.
Entry
- Traders often look for two or more closes outside of the Keltner Channel and ideally strong and/or consecutive green (bullish) or red (bearish) candles.
- This is confirmed by the RSI recently breaking above 50 for bullish signals or below 50 for bearish signals.
The combination of strong price action and momentum change helps traders identify potential trend continuations.
Stop Loss
- Stop losses are commonly set beyond the opposite side of the Keltner Channel to potentially protect against adverse price movements.
- For a higher risk-reward ratio, traders might place stop losses beyond a nearby swing candle.
Take Profit
- Traders typically take profits when the price crosses back beyond the Keltner Channel's midpoint or reaches the opposite side of the channel, indicating a potential exhaustion of the current move.
- Alternatively, profits may be taken when RSI moves beyond 70 (overbought) or below 30 (oversold), signalling potential reversals in price direction.
Strategy 3: ALMA + Stochastic
Indicators Used
- ALMA (Arnaud Legoux Moving Average): ALMA is a moving average that aims to smooth price data while reducing lag. The settings used are 21 for the window size, 0.85 for the offset, and 6 for the sigma. This combination helps in identifying the trend with greater precision.
- Stochastic Oscillator: The Stochastic measures the location of the close relative to the high-low range over a set period. Settings of 21, 1, 3 are used to capture momentum and potential reversal points. A figure above 80 signals overbought conditions, while below 20 indicates the opposite.
Combining ALMA with the Stochastic Oscillator allows traders to identify potential reversals in trends. ALMA provides a smoothed view of the price trend, while the Stochastic Oscillator offers momentum-based signals, helping to confirm the strength of a move.
Entry
- Traders look for the price to close through the ALMA, ideally with a strong close, which suggests a potential trend change.
- This is confirmed by the Stochastic Oscillator crossing below 80 for a bearish signal or above 20 for a bullish signal, indicating momentum alignment with the trend.
Note that price may fluctuate above and below the ALMA in ranging conditions and produce false signals.
Stop Loss
- Stop losses are typically set beyond the nearest swing point, which helps to potentially protect against adverse price movements.
Take Profit
- Traders typically take profits when the Stochastic reaches the opposite territory (e.g., from above 80 to below 20 for a bearish move), indicating a potential exhaustion of the current trend.
- Alternatively, profits may be taken at identified areas of support or resistance, where price action historically reacts, providing a logical exit point.
Strategy 4: RSI + Bollinger Bands
Indicators Used
- RSI (Relative Strength Index): For this strategy, RSI setting for a 1-minute chart is a length of 4, with overbought and oversold boundaries at 80 and 20, respectively. These RSI settings for the 1-minute chart help in identifying short-term overbought and oversold conditions.
- Bollinger Bands: Bollinger Bands settings for a 1-minute chart are a 20-period simple moving average (middle band) and two outer bands set at a standard deviation level of 2 from the middle band. They help identify periods of high and low volatility as well as potential reversal points.
The combination of RSI and Bollinger Bands allows traders to identify potential short-term reversals in the market. The Bollinger Bands provide a dynamic range for price action, while the RSI helps confirm overbought or oversold conditions, improving the accuracy of entry and exit points.
Entry
- Traders often enter when the RSI crosses below 80 from above or above 20 from below, signalling an exit from potential overbought or oversold conditions.
- This entry is confirmed when the price is also touching or breaching the Bollinger Band, indicating the likelihood of a short-term reversal.
Stop Loss
- Stop losses are typically set beyond a nearby swing point or just outside the Bollinger Band, providing potential protection against significant adverse price movements and giving the trade room to develop.
Take Profit
- Traders commonly take profits when the price touches the opposing Bollinger Band, suggesting a potential end to the current price move.
- Alternatively, some may take profits when the RSI crosses into the opposing overbought or oversold territory, indicating a shift in momentum.
The Bottom Line
Mastering a 1-minute scalping strategy can potentially enhance your trading performance. To take advantage of these techniques, consider opening an FXOpen account. As a regulated broker, FXOpen offers access to over 600 markets for scalping, supported by commissions as low as $1.50 and spreads from 0.0 pips. With the right tools and strategies, you can navigate todays fast-paced trading environment effectively.
FAQs
What Is the 1-Minute Timeframe Trading Strategy?
The 1-minute timeframe trading strategy involves making multiple trades within a single minute, aiming to capture small price movements. Traders use a 1-min scalping strategy to identify quick trading opportunities and rely heavily on technical indicators for entry and exit points.
Which Indicator Is Best for 1-Minute Scalping?
There is no single best 1-minute scalping strategy indicator; it comes down to preference and experience. However, popular choices include the Moving Average Convergence Divergence (MACD), Relative Strength Index (RSI), Bollinger Bands, and the Volume Weighted Average Price (VWAP). Combining several indicators can potentially provide more reliable signals.
What Is the Best Timeframe for Scalping Crypto*?
The best timeframe for scalping crypto* depends on the trader's preference and strategy. While a 1-minute crypto* scalping strategy offers rapid trades and numerous opportunities, some traders prefer slightly longer frames like the 5-minute or 15-minute charts to balance speed and cryptocurrency* market noise.
What Is the Stochastic Setting for 1-Minute Scalping?
For 1-minute scalping, the Stochastic Oscillator is typically set to the standard settings of 14, 1, 3. These settings help capture short-term momentum changes, providing timely signals for entry and exit points. Adjustments can be made based on the trader's specific strategy and market conditions.
*At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules, respectively. They are not available for trading by Retail clients.
Read more: https://fxopen.com/blog/en/1-minute-scalping-trading-strategies-with-examples/
Text source: Forex Trading Blog
