hey guys in this video I will show you how I sculpt the markets using a simple energy setup strategy that helps me to spot high probability areas on a chart so scalping is basically a technique which involves opening and closing the trades in a very short period of
time in order to obtain quick profits this trading method is based on opening trades and closing them with small profits on lower timeframes my scalping setup is based on finding confluence the confluence is an area with multiple support and resistance levels both static and dynamic a confluence of
support or resistance is more relevant to traders as it includes two or more important focus points on the chart although it might seem complicated finding conference on the chart is not difficult you just have to train your eyes to spot chart areas where multiple levels meet finding confluence
on your charts it's very important for scalping because these areas offer high probability trade opportunities before you continue with the scalping setup let me tell you something important finding confluence it's a quite subjective and is dependent on the trader skill experience and tools used on the chart my
personal role is to find areas with at least two support and resistance levels one of them must be a static level in the other one a dynamic level so we need three confluence conditions to be met for our scalping strategy first we need an obvious area of support
or resistance support and resistance is practically the foundation of technical analysis and these levels serve as a starting point for developing an idea of what may happen next in what concerns the price movement so we first look at recent market swings and try to spot areas of static
support or resistance as a rule of thumb if the line includes three or more swing points it means that the support or resistance level is more relevant but drawing horizontal lines around recent market swings can be very subjective and in most cases we can usually only approximate those
areas that's why we need to add something else for our scalping confluence set up the second conference condition involves the 200 EMA as a dynamic area of support and resistance I prefer to add the 200 EMA because as a dynamic area of support and resistance level is constantly
changing depending on recent price action in the case of esthetic support or resistance level you already know at the beginning of the trading day where those levels are you know in advance where the possible areas of interest are located on the chart with dynamic support and resistance you
don't know an exact number as these levels are changing depending on market fluctuations this is a good thing for our scalping setup because we can use both static and dynamic levels in our advantage so we add the 200 EMA and start searching for areas of confluence between the
dynamic support and resistance and the static support and resistance our third component in our scalping setup is the stochastic used to pinpoint market entries the stochastic oscillator will help us to spot divergences on the chart if you are not familiar with divergences the divergence occurs when the price
for a lower low while the stochastic forms a higher low indicating a possible buy or when prices form a higher high and the oscillator forms a lower high indicating a possible sell divergence occurs when the price action is different from the action of the stochastic oscillator when a
divergence occurs a potential change in price direction could be on a course so now we have the full set up we are looking for confluence of dynamic and Static support and resistance levels respectively recent market swings and 200 EMA and we pull the trigger if we spot a
divergence on the stochastic oscillator let's see the scalping strategy in action in this chart we see this level of static support and resistance and here is the confluence area with the 200 EMA the dynamic support and resistance indicator so we have this potential area but we cannot enter
the market blindly we need to confirm it with the stochastic we have a regular divergence and we also have a hidden divergence which is a more powerful set up all our conditions were met so after the crossover of the stochastic lines we can enter long on the market
because we trade based on confluence the stop-loss order would be placed below the confluence area the profit target depends on your trading style and risk aversion you could aim for a two-to-one ratio or put your stop to break-even once in profit and write a risk free trade here's
the same setup we have a confluence area between the recent market swings and the 200 EMA in the divergence on a stochastic oscillator if you incorporate also some price action techniques the scalping setup will become even more powerful look at the flag pattern developed which is another confirmation
that a long position was the only alternative ensure positions were out of a question here we have a short scalping trade we have a clear resistance area right around here the 200 EMA serves as a dynamic area of support and resistance and around here we have our confluence
area we have a hidden divergence on a stochastic and once the stochastic lines crossed we had the conformation we needed and the high probability trade was on the short side I know that there are some of you who are also trading on crypto markets I personally don't trade
cryptocurrencies because I prefer to understand the fundamentals behind the market before I decide to put my money on it so I've not tested this copy strategy on crypto markets but you can back test it on demo account to see if it has potential on this Bitcoin chart I
found the confluence pattern and the stochastic entry here but I am not familiar with the spreads on crypto markets so I cannot tell for sure if you can profit from it in the long run why I am talking about the spreads because of the nature of the scalping
you need to trade only the instruments with the lowest spreads as a scalper by default you will use lower stop losses aiming for small profits the higher the spread the lower your stop-loss will become I personally never sculpt an instrument that has a spread higher than two points
because the risk reward ratio is not worth it like I said before scalping may seem easy but is not if you want to make money from scalping it's imperative to have a disciplined approach to trading keep your price charts clean without plotting a lot of indicators and focus
also on reading and understanding the price in order to increase your chances to sculpt the right way if you got any value from this please consider subscribing to our channel share and like this video as it will help us a lot in the future until next time
