Profitable Contrarian scalping

This trading strategy uses a volume-weighted moving average (VWMA) with different lengths to identify trend reversals and scalp against the prevailing trend. Contrarian entries are taken on crossovers between these VWMAs, with specific conditions for short and long entries.

To trade this strategy manually on TradingView:

• Set up three VWMAs: VWMA1 with a length of 5, VWMA2 with a length of 200, and VWMA3 with a length of 20, all applied to the simple moving average (SMA) of close prices with a length of 5.
• For short entries: Enter a short position when VWMA1 (the shortest VWMA) crosses over VWMA2 (the longest VWMA).
• For short exits: Close the short position when VWMA1 crosses under VWMA3 (the intermediate VWMA).
• For long entries: Enter a long position when VWMA1 crosses under VWMA2.
• For long exits: Close the long position when VWMA1 crosses over VWMA3.
• Plot the VWMAs on your chart to visualize the entry and exit conditions.

Improving a trading strategy involves fine-tuning its parameters, enhancing its risk management protocols, and integrating it with other indicators for better confluence. To optimize the 'Profitable Contrarian Scalping' strategy for manual trading on TradingView, consider the following actionable steps:

• Adjust the length parameters of the VWMA. While the script uses fixed lengths of 5 for VWMA1, 200 for VWMA2, and 20 for VWMA3, these could be modified according to the volatility and the average true range (ATR) of the specific asset being traded to better align with current market conditions.
• Introduce additional confirmation indicators to the VWMA signals, such as Relative Strength Index (RSI) or Stochastic, to gauge the overbought or oversold conditions. Enter trades when VWMA-based signals coincide with extreme readings on these oscillators.
• Implement more sophisticated stop-loss strategies, such as a trailing stop based on a percentage of the current trade profit or a volatility-adjusted stop using the ATR to better protect against market reversals.
• Explore price action patterns like pin bars, engulfing bars, or inside bars near the VWMA cross points to fine-tune entry and exit points.
• Use multiple time-frame analysis to identify overarching trends on higher time frames, like 5-minute or 15-minute charts, and undertake scalping strategies in the direction of these trends for additional context and confirmation.
• Consider session timing, focusing scalping activities during peak market hours when liquidity and volatility are higher, thus potentially increasing the strategy's effectiveness.
• Incorporate sentiment analysis, keeping an eye on news releases, market sentiment indicators, and economic calendars to avoid being caught on the wrong side of market-shifting events.
• Manually backtest the modified strategy over different market phases, including both bull and bear markets, to assess its robustness and make further adjustments as needed.
• Practice the strategy in a simulated trading environment to become familiar with the nuances of executing it manually and hone your quick decision-making skills, which are critical in a fast-paced scalping strategy.

By iteratively refining these aspects of the strategy through careful analysis and recorded observations, you can work towards creating a more robust, adaptable, and profitable scalping trading methodology.

This scalping strategy is tailored for traders who are comfortable with a high-frequency, high-intensity approach, and who are able to make rapid decisions based on real-time market data. Scalping requires a significant time commitment and continuous attention, making it ideal for active traders who can dedicate the time to monitor the markets extensively during trading hours.

The style is congruent with contrarian trading methodologies, where trades are taken against the prevailing market trend in anticipation of a reversal. It suits traders who possess:

• The ability to react quickly to fast-changing market conditions.
• An aptitude for managing the stress associated with quick turnaround times and frequent trading.
• Technical proficiency to interpret short-term chart movements and indicators.
• Discipline to adhere to tight stop losses and take profits.

The strategy is also geared towards those with experience in chart analysis, specifically on the 1-minute time frame, who seek regular, small gains rather than large profits from fewer trades.

Key Takeaways:

• Strategy Essentials: Utilizes smoothed VWMA indicators on a 1-minute chart for contrarian scalping trades.
• How It Works: Trades are taken against the trend when certain VWMA crossovers occur, aiming for quick reversals.
• User Profile: Best suited for active, disciplined traders who can manage the stresses of high-frequency trading.
• Trading Style: Contrarian, with a focus on short-term, small gains rather than chasing larger profits.
• Execution Methods: Can be automated using TradingView script, employed manually or a mix of both for flexibility.
• Enhancements: Fine-tune VWMA lengths, integrate other indicators, and backtest to adapt to market conditions.
• Risk Management: Tight stop-loss placements, potential for trailing stops, and attention to trading sessions for higher effectiveness.