Trading Strategy for Bitcoin Scalping

Mark the high and low of the first 4-hour candle that forms during the day.

Here's how to do that on TradingView.

First, choose any chart depending on the asset you're trading.

For this example, I'm using the Bitcoin chart.

Then, make sure the time frame is set to 4 hours,

which means each candle represents 4 hours of price movement.

Next, go to the time zone setting on the bottom right corner of the chart,

and select New York Time.

Now this step is very important,

because we want the first 4-hour candle to be based specifically on the New York time.

Next, hover to the first 4-hour candle that formed on today's date.

In this example, since it's June 23rd,

the first 4-hour candle that formed today is this one.

Then, simply draw a line at the high and low of that candle,

and extend both lines to the end of the day.

That's your 4-hour range on this chart.

Now, an important thing to remember is make sure that the first 4-hour candle

has fully closed before marking the range.

If the candle is still forming, wait for it to fully close first.

So once the 4-hour range is identified, we move on to step 2, which is the scalping setup.

So, after the 4-hour range is identified,

we go down to the 5-minute time frame to look for scalp setups.

So, the setup we're looking for is when the 5-minute candle closes outside of the range,

either the range high or range low.

But again, the key here is the candle must fully close outside, so wicks alone don't count.

After the breakout, we then wait for price to re-enter and close back inside the range again.

But make sure that all of this happens within the same day as the 4-hour range we marked.

Once that sequence plays out, we move to step 3, which is our entry.

In this example, since price broke the range high, that's a signal to go short.

For the stop loss, we place it at the exact high of the breakout move,

and for the take profit, aim for at least 2 times the stop loss size.

And here, price came down and hits the profit target.

Now let's look at another example.

Here, we're on the Bitcoin chart on the 5-minute time frame,

and right here, we've already got the 4-hour range marked out.

So that's step 1 done.

We can now move to step 2, look for the trade setup.

In this example, we can see that price came down and broke below the range low.

However, the candle didn't actually close below it, only the wick.

That means the setup still isn't valid.

But shortly after, we see another breakout, but this time,

the candle does close below the range low.

So that's the confirmation we needed.

Now, we wait for price to re-enter and close back inside the range again.

And right here, the candle closes back inside.

So that completes step 2.

Now we move to step 3, which is our entry.

Since price broke the range low and then re-entered, this is a signal to go long.

For the stop loss, we place it at the exact low of the breakout move,

and for the take profit, we set it at 2 times the size of our stop loss.

As you can see here, price moves up and hits the take profit target.

Now keep in mind, as long as we're still within the same trading day

as the 4-hour range we marked, we can still take more trades

if another valid setup shows up.

So, as we let the chart play out, we can see that price is trading

well outside of our 4-hour range.

However, it didn't manage to re-enter again until the end of the day.

That means for this trading day, there were no more valid entries to take.

But even with getting just one trade today,

it was a high-quality setup and we walked away with solid profits.

Now that you understand how the overall strategy works,

let's take a look at some real trade examples across different markets,

so you can see just how well this strategy performs.

So, let's start with crypto.

Here, I'm on the Bitcoin 5-minute chart, and I already have the 4-hour range marked.

Right here we can see price broke out and closed below the range low,

then it quickly closed back above.

That gave us a long entry.

Stop loss goes at the low of the breakout and take profit set at 2 times risk.

And as you can see, price hits the profit target, giving us a 2-hour profit.

After that, price went out of the range again but didn't close back inside,

which means there were no more setups for today.

Now for the next day, I marked the high and low of the 4-hour range.

Here, the 5-minute candle broke above the range high, then closed back inside,

so this will be a short signal.

Stop loss goes at the range high and take profit at 2 times risk.

And here, price hits the take profit target, giving us a 2-hour gain.

Next, price dropped and broke below the range low.

After that, it re-entered inside the range.

So this will be a long setup.

Stop loss goes at the range low, take profit at 2 times risk.

And once again, price hits the target, giving us another 2-hour profit.

On the same day, price gave us another setup.

It closed above the range high but then closed back inside.

That signaled a valid short entry.

Stop loss goes at the range high, take profit at 2 times risk.

And here, price also hits the profit target, giving us another 2-hour profit.

Later in the same day, price made a huge dip but then re-entered inside the range.

So this actually gives us a long entry setup.

But here's the thing with this setup.

The breakout was quite huge, which means if we were to place a stop loss at the low,

it would be a very large stop loss.

So for these types of scenarios, instead of using the exact low of the range,

I looked for the nearest key level to place the stop loss.

In this case, there was a small resistance level, so we set the stop loss there instead.

For the take profit, set it at 2 times risk.

Here, price hits the target perfectly, another 2-hour profit secured.

So that concludes the setups for today.

Now moving on to the next day.

Again, we have the 4-hour range marked.

Price broke below and closed under the range low but then came back inside.

That gave us a long entry.

Stop loss goes at the lows, take profit at 2 times risk.

And here, the trade actually ended up being a loss.

So this will be a 1-hour loss.

Now, the reason I'm showing you this is because I want to be fully transparent

about the results of this strategy.

I'm not only going to show you the wins but also the losses.

On the same day, price actually gave another long setup.

We can place a stop loss at the range low and take profit at 2 times risk.

And here, price moved up a little but then dropped back down and hits our stop loss once again.

So that's another 1-hour loss for the day.

After that, price didn't re-enter the range until the end of the day.

So that wraps up today's session.

Now, let's see the final results.

Here you can see all the trades we backtested.

Out of 7 trades we took, the strategy gave us 5 wins and 2 losses, with a total gain of 8-hour.

That's about a 72% win rate on the crypto market,

which is extremely impressive considering we only used the very basic version of the strategy.

Now of course, if we want to get a more accurate performance,

we would need to backtest using way more than just 7 trades.

So I definitely recommend you test it yourself on a larger sample.

But the point of this is just to show that even with using just the basic version of the system,

it can achieve profitability in real trading scenarios.

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