An entry and exit level for most traders, especially the novices, is hard to identify. Scalping turns out to be one of the most popular trading styles because most of it relies on creating minimal, small yet fast profits at a price movement. The issue is determining what could be the scalping indicator that does not cost much and over your spending capabilities on very pricey trading tools. Starting to learn often involves racking up expenses quickly, and free tools rarely can provide enough precision.
Fortunately, the platform provided by TradingView is very comprehensive with tools to help traders make more accurate scalping trades. Among such tools, Fibonacci retracement levels and Heikin Ashi candles are recognized as strong, free indicators for entry points that have a high chance of occurring. These indicators are a product of traditional traders and limit conjectures at the time of entry and exit into a trade making use of predictable market patterns.
In this article, I’ll dive deeper into how you can use the Fibonacci retracement tool in conjunction with Heikin Ashi candles to improve your scalping trades. We will go through step-by-step instructions for setting these indicators up, explain how to use them effectively, and offer tips on optimizing your trades using this method. By the end of it, you should have a working, no-cost strategy to help you make the best scalping trades.
Why Fibonacci and Heikin Ashi Candles Are the Best Scalping Indicators
Scalping is very dependent on rapid, precise decisions. Both Fibonacci retracement tool, as well as Heikin Ashi candles, are great at the depiction of the trend as well as retracements thus making it easier to spot an optimal entry and exit point. Here’s why these indicators are so effective:
1. Simplicity of Fibonacci Retracement Levels
These retracement levels guide traders on various areas that might be used by price to reverse during a retracement. Using the chart, markings along these lines depict areas around which it’s probable for prices to bounce within a trend. The financial markets recognize these levels to great extent hence reliable.
2. Clarity with Heikin Ashi Candles
It eliminates part of the “noise” which is present in conventional candlestick charts, smoothes price data and thus reduces false signals, giving a sharper view of a trend direction so that one can catch the best entry points.
Using both Fibonacci retracement and Heikin Ashi candles scalpers may have simple but very high accuracy strategy.
Step-by-Step Scalping Guide Using Fibonacci Retracement and Heikin Ashi Candles
Here is how you can use those two indicators together in order to make better scalping trades:
Step 1: Identify a Strong Trend
First, identify a significant price move or trend. The fibonacci retracement is most efficient in established trends, whether the market is moving up or down. This strong trend will be your basis for drawing the Fibonacci retracement levels.
Step 2: Draw your Fibonacci Retracement Levels
After establishing a trend, utilize the Fibonacci retracement tool within TradingView, or your preferred trading platform. To plot the levels on the chart, you can follow these procedures:
- In an uptrend, drag the tool from the swing’s lowest point to its highest.
- In a downtrend, drag it from the swing’s highest point to its lowest.
You would locate the retracement levels at 0.382, 0.5, and 0.618. These levels represent the places where the price usually retraces before it proceeds along the trend line in the prior direction. Of the three, the 0.5 level is typically the most exact and is best considered the halfway point of the trend.
Step 3: Change the Chart Type to Heikin Ashi Candle
Proceed to the toolbar at TradingView and click on the Heikin Ashi candles. It will give you a much smoother chart by averaging the value, which will easily point out trends as well as cancel out false signals; this is especially very useful in scalping where timing is everything.
Step 4: Wait for the Price to Retrace to Fibonacci Levels
Now, wait for the price to pullback into one of the Fibonacci retracement levels. Generally speaking:
- A shallow pullback to the 0.382 level often is a strong trend signal, and the price is likely to move fast.
- A deeper pullback into the 0.618 level gives better risk/reward but might be less aggressive about it.
Step 5: Enter on Heikin Ashi Candles with No Upper Wicks
Once the price touches the Fibonacci level chosen, keep a close eye on the Heikin Ashi candles. You are looking for wickless candles- in a downtrend, they will have no upper wicks, and in an uptrend, no lower wicks. Wickless candles are a strong indication of strong momentum in the direction of the trend and great trading signals.
Tips to Improve Your Fibonacci-Heikin Ashi Scalping Strategy
Even so, while using Fibonacci and Heikin Ashi candles is good for scalping, there is a way to optimize this strategy even further:
- Deeper Retracements For Better Risk-to-Reward
While the price often retraces to the 0.5 or 0.618 Fibonacci levels you get a better risk-reward ratio when trading. This can help set tighter stop-losses while maximizing potential profits. - Set Targets Based on Fibonacci Extensions
You can use Fibonacci extensions for setting profit targets. Common extension levels include -0.5 and -0.618, so using those will give you ideal setups for setting realistic profit targets. In this way, you’re not only retracing but also extending the Fibonacci to manage your exits. - Monitor Price Structure and Adjust Entry Points
If the price continues to consistently break below previous structure levels, you will continue to apply the Fibonacci retracement tool from the most recent swing highs and lows. From time to time, you will reset these levels, keeping your entry points relevant to the ongoing market trend.
Quick Example of the Best Scalping Indicator in Action
Let’s walk through a simple example of exactly how this strategy would work in real-time.
- Identify the Trend: We have an impulse up on a major currency pair, in this case EUR/USD. There’s strong impulse up, which then pulls back.
- Draw Fibonacci Levels: Using the Fibonacci tool in TradingView draw a retracement from the swing low to the swing high of the trade. We see the retracement levels to 0.382, 0.5 and 0.618.
- Wait for Price to Retreat to a Level: The price retreats to the 0.5 level. We continue using Heikin Ashi candles to affirm the strength of the trend.
- Look for Wickless Heikin Ashi: After the price has retreated to the 0.5 Fibonacci level, we wait for wickless Heikin Ashi candles. In an uptrend, we only look at the price that has no lower wicks. It means the price momentum should continue up.
- Set Target at Fibonacci Extension: Take a target for Fibonacci extensions, aiming for -0.5 or -0.618 levels for the gain to be maximum and impeccable.
Why This is the Best Scalping Indicator Ever
Using Fibonacci retracement with Heikin Ashi candles forms a very potent simple strategy available to anyone involved in trading. This setup is particularly alluring for new traders because it is inexpensive yet very effective at getting extremely tight entry and exit points. This strategy cuts much of the market “noise” and gives clear vision to help avoid emotional trading.
Advantages of Using This Strategy
- No Cost: This strategy is very accessible since the Fibonacci candle and Heikin Ashi candle are free on TradingView.
- Accurate Trades: Combining retracement levels with Heikin Ashi candles is a way of making high-probability trades.
- Noise reduction: The smoothed chart reduces misleading signals, so you get a cleaner view of the market direction.
Indeed, the combination of Fibonacci retracement levels and Heikin Ashi candles gives the best scalping setup ever. This is true; that is, the method remains accurate, simple, yet accessible, perfect for getting into trading efficiently without unnecessary additional costs on expensive indicators. Having learned how to apply correctly Fibonacci retracement and learn how to read Heikin Ashi candlesticks, you will definitely obtain better trade entries and trade exits.
This is definitely the game-changer if you are looking for a way to maximize your scalping trades without paying a dollar. You can become a new trader or an experienced user looking for a reliable technique with the Fibonacci-Heikin Ashi setup in order to make confident and profitable trades. So go ahead, start right away, polish your skills with the best ever scalping indicator, and take your trading journey to the next level!