The Owl Method: A Simple Scalping Trading Strategy
In today’s post, we will share with you a practical scalping strategy you can use in your trading effortlessly. This strategy has little to no possibility for subjectivity, so you will know exactly how to trade each situation.
First, we are using unique settings for the Ichimoku indicator. These are not particularly far from the default settings, but still different. So, the settings are as follows:
8, 21, 55
As you can see, these are Fibonacci numbers (although close to the default ones).
The Ichimoku indicator is a trend-following tool. So naturally, we are using it for that purpose here, specifically for our entry and exit signals. The cloud of the Ichimoku indicator is used for the stop loss.
Below we show a trade example using this strategy:
The entry trigger (in this case, bearish) is the Tenkan Sen and Kijun Sen crossover below the Ichimoku cloud. A bullish crossover would be the opposite and would signal we need to take a long trade.
So, is that all? Not entirely. As you can see, we have another indicator plotted at the bottom of the chart. You may recognize it as the MACD, and you would be correct.
The lines at the bottom are the MACD indicator. But we use some uncommon settings for our purpose here.
The MACD settings here are:
144, 377, 233
You may again notice that these are Fibonacci numbers. With this strategy, we look for the MACD to give the same signal as the Ichimoku indicator. You can probably tell this by looking at the chart above. A bearish signal on the Ichimoku should be supplemented by a bearish signal on the MACD.
You may be wondering how the MACD helps this strategy when it is also a trend-trading tool like the Ichimoku. The key is in the settings.
The MACD, in this case, uses much longer-term periods for its settings. Thus, the MACD shows us the larger trend in the market while the Ichimoku gives us the swings within that larger trend.
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Happy trading!