If you want to trade for consistent profits with a very effective scalping strategy, this is the complete guide for you.
Following through on this Smart Money Concepts (SMC) scalping strategy should bring you on an easy path to high risk-to-reward trades, banking consistent profits, and trading only for a couple of hours a day.
Let’s break down an actual example of a 7R trade on EUR/USD during the London session. It is the same strategy that helped thousands of traders get funded and enjoy regular payouts.
What Is Scalping, and Why SMC?
Scalping is the strategy where one makes money out of the short-term price movements that take place within minutes. The SMC aims at understanding market structure, liquidity, and the behavior of smart money to perform high-probability trades with precision.
The secret to successful scalping is to have:
- A defined intraday bias
- A good understanding of the market structure
- A very clear trading plan for your session window
Step 1: Define Your Intraday Bias
Before trading, you must first establish the direction the market wants to go for the day. This begins by analyzing the 15-minute timeframe market structure.
- Bearish Bias: Price makes lower highs and lower lows, meaning it’s in a downtrend. Expect to sell at pullbacks into the areas of supply.
- Bullish Bias: Price makes higher highs and higher lows, resulting in an upward trend. Buy on dips into areas of demand.
For instance, on April 9th, the market structure going into the London session of GBP/USD was bearish. There was a clear swing high and swing low identified. The trade expectation was to pull back into a premium price area and then continue lower.
Step 2: Identify the Trading Range
To identify trading opportunities, plot the current trading range:
- Swing High and Swing Low: Locate the most recent high and low on the chart.
- Draw the Range: Use these two points to make a box that then acts as the trading range.
- Expectations: If it is bearish, look for a pullback into the premium half of the range to continue lower.
Step 3: Identify Major Market Events
Price action tends to be somewhat predictable during sessions:
- London Session: Watch for price manipulation as the session opens.
- Liquidity Pools: Asia High and Asia Low are typical grabs for liquidity when the market gets ready to flip.
The market will often trade the one side of the Asian range (Asia Low), then hit the other side (Asia High) to shake them out.
Step 4: Wait for Confirmation on Lower Timeframes
Once the larger timeframe bias is confirmed, go down to a 1-minute chart to confirm:
- Liquidity Sweep: Look for a manipulation of key liquidity levels, such as the Asia Low.
- Change of Character (CHoCH): A CHoCH signals a shift in market structure from bearish to bullish (or vice versa).
- Entry Point: After a CHoCH, wait for price to pull back into the accumulation area (e.g., a strong momentum candle range).
Step-by-Step Example: GBP/USD (April 9th)
Analysis Before London Open
- Bias: Bullish, since 15-minute structure showing higher high and higher low.
- Key Levels:
- Swing Low: Recent higher low.
- Swing High: Draw on liquidity (target).
- Plan: Wait for manipulation below Asia Low with subsequent bullish reversal signal on 1-minute chart.
Execution on the 1-Minute Chart
- Manipulation of Asia Low: Price broke beneath the Asia Low, taking out liquidity.
- Change of Character (CHoCH): A pullback and close above a key internal structure confirmed a bullish change.
- Entry Point: Find the accumulation range that is causing the breakout and place the order at the base of this range.
Entry, Stop Loss, and Take Profit
- Entry: Buy order at the accumulation range.
- Stop Loss: Below the manipulation low.
- Take Profit: At the draw on liquidity, often the swing high or a clean resistance level.
Example:
- Risk-to-reward ratio: 1:7
- Entry at the accumulation zone post-manipulation.
- Stop loss placed very tight below the recent low.
Daily Trading Cycle
This strategy is based on the daily trading cycle, which is comprised of:
- Asia Session Range: Forms the crucial highs and lows.
- London Session Manipulation: Usually works on targeting Asia High or Low.
- Reversal and Continuation: A reversal after manipulation proves the intraday trend.
Key Points for Scalping Success
- Have a Bias: Begin with a directional bias, always based upon the 15-minute chart.
- Understand Liquidity: Identify and anticipate liquidity grabs at session highs/lows.
- Wait for Confirmation: Use lower timeframes like the 1-minute chart to confirm entries.
- Risk Management: Always maintain a strict stop-loss and target realistic profit levels.
Conclusion
The 1-Minute Scalping Strategy is amazingly profitable when it is executed with discipline and precision. By mastering market structure, liquidity concepts, and session dynamics, you can consistently achieve high risk-to-reward trades.
Remember, success in scalping requires patience and practice. Start by backtesting the strategy and refining your execution. With time, you’ll develop the confidence to trade like a pro and capitalize on the immense opportunities the market provides.
