The best indicator for scalping gold is the one which can help you to find zero float entries. I mean the indicator that can spot the zones and areas from where the market turns, mostly with very high accuracy.
I know it’s difficult and also not possible in forex sometimes because of high spread rates, but it is possible in gold trading even on a seconds timeframe because most brokers offer ultra-low spreads for gold trading, and you can easily do scalping and make huge profits in a very short time.
In this post, I will teach you about the supply and demand zones indicator, which is the best for scalping in gold. I will also teach why it’s perfect for scalping. So, I will first explain the characteristics of a scalping indicator and then will show you how the supply and demand indicator fulfills these requirements.
Make sure to read the post until the end without skipping any section so you don’t miss any important points.
What are important features a scalping indicator must have?
01 Zero float entry or Zero drawdown entry
For scalping, the most important point is to find an indicator that’s based on a set of rules which can help you find zero float entries on the candlestick chart. It means the price will just hit the order and go away in profit. It should not make a drawdown because, in scalping, our lot size will be huge and even a minor drawdown can blow the account.
So, choose an indicator which is based on technical analysis that offers zero drawdown entries.
02 Stop loss is a must
Many indicators will try to hedge the trade if something goes wrong, or they will not use a stop loss. But this is too risky. A stop loss is always important, and this prevents you from a big loss and also gives you more chances to become a better trader. Blowing an account again and again will disturb your trading psychology and will also ruin your risk management.
This is not the way to become a professional trader. So always choose an indicator which opens trades only with a tight stop loss and no hedging.
There can be many stops due to a tight stop loss level, but one big win will cover the previous losses, leaving your balance in the green. So, patience is the key.
03 Logical system
The indicator must be made based on solid and proven technical analysis tools. It should not be made on the basis of hit or miss, or any compounding or hedging-based rules. Because in the long run, such systems will always fail. So, you will have to rely only on an indicator that is made on a set of proven, price action-based rules.
Also, the risk management factor is important, but this is something you can also do based on your account balance.
I hope after knowing these three things, you will come to know that not every indicator can be used for scalping in gold (XAUUSD).
Why the supply and demand indicator is the best for scalping in XAUUSD?
Before showing you the results of why the supply and demand indicator suits scalping, let me explain to you a bit about supply and demand.
Actually, supply and demand zones are the areas on the price chart where many pending orders of institutional traders get filled. So if we are identifying these zones correctly, then we can also place orders with the institutions and make a profit by following them.
Supply and demand zones are based on four important market concepts:
Once these conditions are fulfilled, the indicator will plot a zone highlighting the important price bounce level. Most of the time, the price will just hit the zone and go away. These zones work because they are based on solid principles of supply and demand. Not only this, Forexbee traders have also added a set of confluences to these zones, so the indicator only identifies the high-probability ones.
Also, the most beneficial thing is that these supply and demand zones work on the lower timeframes in the same way as they work on the higher timeframes. I mean, a supply zone on the 1-minute candlestick has the same importance as a supply zone on the daily timeframe. So you can scalping trade on the lower timeframe with the supply and demand indicator easily.
I have also shown you some images where the price is reacting to the supply and demand zones drawn by the indicator. This proves that the indicator plots important and only strong SnD zones on the chart.
The bottom line
In this article, I showed you that for scalping on the lower timeframes, you need to pick an indicator that is based on a logical system and supports zero-drawdown entries with a tight stop loss level. If you have any other indicator that follows these three rules, then you can also use it for scalping. However, according to my recommendation, the supply and demand indicator is the best for scalping trading.
Also, most traders discourage scalping due to the very fast speed of the market, but I think it mostly depends on your temperament. If you are comfortable with fast trading for a period of time instead of waiting for days, then it’s perfect for you. This is because the market works the same on lower timeframes as it works on the higher timeframes.
If you have any questions, then don’t forget to ask in the comments; I will try my best to help you.
Thanks!
