A Newbie Guide to Higher Profits with Harami and Scalping Price Action Patterns
If you are a newbie and happened to open the world of trading on Finteria binary options trading platform, two strategies you might come across are the Harami pattern and Scalping Price Action. Both of these patterns can be effectively used to make higher profits when used correctly. In this article, we will explore the basics of Harami and Scalping Price Action patterns and learn how they can help you in forex trading and on a binary options platform.
Harami Pattern: A Potent Reversal Signal
The Harami pattern is a well-known price action pattern that can be observed in forex trading and binary options. Derived from the Japanese word 'harami,' meaning 'pregnant,' this pattern typically consists of two candlesticks. The first candlestick is a large, bearish or bullish candle, followed by a smaller, opposite-colored candle within the body of the previous candle. This second candle signifies the potential for a reversal in the price action.
When the Harami pattern appears, it can signal that the current trend may be losing steam and a reversal is imminent. This information can be valuable for traders in predicting and capitalizing on potential market shifts. The key is to use the Harami pattern in conjunction with other indicators and tools, as relying solely on this pattern could result in false signals.
Figure 1. Harami Bearish trend - potential price decrease
Scalping Price Action: Quick, High-Frequency Trading
Scalping Price Action is a fast-paced, high-frequency trading strategy that relies on making numerous small trades to accumulate profits. It is particularly popular among forex traders, as the constant fluctuations in currency prices can provide numerous opportunities for quick gains. This strategy can also be employed on a binary options platform, where traders can make multiple bets on short-term price movements.
Scalping requires an acute understanding of price action, as traders need to act quickly to capitalize on small price changes. For newbies, this can be an exciting yet challenging endeavor. However, with the right education and practice, it is possible to become proficient in scalping and make consistent profits.
Making Higher Profits with Harami and Scalping Price Action Patterns
To maximize your profits using these two strategies, follow these tips:
Learn to identify the Harami pattern accurately: For newbies, it is essential to recognize the Harami pattern and differentiate it from other similar patterns. Practice by looking at historical charts and identifying Harami patterns to help hone your skills.
Combine the Harami pattern with other technical indicators: To increase the reliability of the Harami pattern, use it alongside other indicators such as trend lines, support and resistance levels, and oscillators. This will help you confirm the pattern's validity and make better trading decisions.
Choose a suitable time frame for scalping: Scalping is typically done in shorter time frames, such as 1, 5, or 15 minutes. The choice of time frame depends on your trading style, experience, and preference. For newbies, starting with a longer time frame (e.g., 15 minutes) can be a more manageable introduction to scalping.
Employ risk management strategies: Both the Harami pattern and scalping price action can carry a degree of risk. Ensure you use stop-loss orders and maintain a suitable risk-reward ratio to protect your trading capital.
Interesting Facts and Sample Cases
The Harami pattern can be considered a “leading indicator” as it signals potential reversals before they occur. This can provide traders with an advantage in preparing for upcoming market shifts.
The Harami pattern is often considered more reliable on higher time frames, such as the daily or weekly charts. This is because it eliminates some “noise” associated with shorter time frames.
Scalping can be particularly well-suited for trading during periods of high volatility, as the rapid price fluctuations can present numerous profit opportunities. However, increased volatility can also lead to heightened risk, so it is essential to employ appropriate risk management strategies.
Sample Case 1: Harami Pattern Profits
Imagine you are trading the EUR/USD currency pair on a forex trading platform. You spot a Harami pattern on a daily chart, with the first candle being a large bullish candle followed by a smaller bearish candle. This indicates that the current uptrend may be losing momentum.
To confirm the pattern, you observe that the price is also approaching a strong resistance level and an oscillator is showing overbought conditions. With these additional signals, you decide to enter a short position, anticipating a reversal. As expected, the price reverses and declines, allowing you to close your position and secure a profit.
Sample Case 2: Scalping Price Action Success
In this example, let's assume you are using a binary options platform to trade the GBP/JPY currency pair. You choose a 5-minute time frame and identify a strong trend in the market. As the price approaches a significant support level, you observe several small bullish price movements.
Using your scalping skills, you place multiple binary options trades, predicting that the price will continue to rise for short periods. As the price action unfolds, your predictions are proven correct, and your trades are successful. By executing numerous quick trades, you accumulate profits and enjoy the benefits of the scalping strategy.
To sum it up:
Both the Harami pattern and Scalping Price Action strategies offer promising profit opportunities for traders, particularly when used with other technical indicators and risk management strategies. While it may take some practice and experience to master these methods, the potential rewards make the effort worthwhile. If you're a newbie to forex trading or binary options, understanding and applying these strategies can be an effective way to boost your trading profits and overall success in the market.
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