Making a profit with Scalping trading using Envelopes

What is scalping?

Is a way to make a big profit by repeating the transaction from a few minutes to many a day, increasing the frequency even with thin profit margin.

This type of transaction increases the profit margin by increasing the transaction frequency.


Sample of envelopes trading

Envelope is a line deviating within a certain range above and below the moving average line

Predicting a trade involves identifying trend of price changes within certain deviation range from the moving average line.

Step 1: Capture medium and long term trends

First, determine the medium and long term trends (upward or downward trend) with a 4-hour or 1 day time frame in MT4.

Short-term trading will start from the position where the trend is up or down in the medium and long cycle.


Determine the trend of 75EMA plotted on daily chart


Step 2: Display the 5 minute time frame in MT4

Scalping Trading, displaying a chart on a 1 minute or 5 minute time frame.

The time frame used by each trader for Scalping strategy is different. It may be simpler for beginners to use the 5-minute time frame, as in this time frame price fluctuations will not put a lot of pressure on the trader.


Step 3: Plotting Envelopes and moving average

The technical analysis tool is displayed on a 2-line MT4 chart.

First, display the 75EMA (exponential moving average).

Second, display standard deviation of the Envelopes from 0.07% ~ 0.14%.

Furthermore, the value of the deviation will vary depending on each currency pair, market price situation and time frame. At the market price in this example, the time frame is 5 minutes and the deviation is 0.04%.


Example example shows 75EMA and Envelope lines on the EUR / USD chart with 5-minute time frame


Step 4: Start trading

Envelopes is a line deviating in a certain range from the moving average.

Is a strategy that is useful in predicting a trade that uses a price changes within a certain range of the envelope.

In step 1, medium and long term trends have been identified as “bullish", so to close an order with lower risk, you should place a buy order in short term trading.


Sample trading using envelope indicator

In the example above, you can predict the trend of the transaction by placing a buy order at the middle value of the envelope or the lower band of the envelope (14EMA) and closing the order at the upper band of the envelope. In addition, you can place a buy order at the orange 75EMA line and close at the upper band of the envelope.

In case the prices fall below the 75EMA line, it is necessary to place a stop loss order to limit losses.