Introduction
Search for a 1 minute scalping strategy, and you will be flooded with results for indicator-based strategies.
While they may claim to be profitable, and we aren’t here to dispute that, what is worth questioning is that indicators, in general, are lagging behind the market. With that in mind, let us ask you this – would combining a lagging indicator with one of the lowest timeframes available be a wise choice?
It’s based on probabilities, you might say. So does trading an indicator-based 1 minute scalping strategy amount to flipping a coin? Is there a smarter way to build a 1 minute scalping strategy?
Maybe if we started by looking into liquidity and how it can affect short-term price movements, we might find a more reliable base for our 1 minute scalping strategy.
So, instead of giving you a couple of indicators and sending you on your way with false promises of untold wealth, we will look into what makes the market move and how to trade from these areas where we could reasonably expect a market reaction.
By the end of this article, we should have the makings of a profitable 1 minute scalping strategy that doesn’t rely on moving averages or magical levels but rather an understanding of liquidity and the unchanging reaction of the market from areas of liquidity.
What Is 1-Minute Scalping?
As its name suggests, 1-minute scalping focuses on short-term movements, using a 1-minute timeframe to execute trades and make trading decisions.
The goal here is to profit from small price movements. It involves taking advantage of the market volatility and high frequency of fluctuations observed on a short time scale.
As said, most 1-minute scalping strategies take advantage of popular forex indicators, such as MACD (Moving Average Convergence Divergence) or RSI (Relative Strength Index), to identify potential entry and exit points within that 1-minute timeframe.
Our recommended approach, however, is to take advantage of market liquidity…
How the Liquidity-Based 1-Minute Scalping Strategy Works
While indicator-based strategies are prone to drawdown periods, liquidity pools will always be there, and the price will always react in these areas.
As long as there is a market to trade, there will be liquidity pools.
These will continue to move price no matter the time of day, season or what your moving average crosses are saying.
Here’s a quick overview of how the liquidity-based 1-minute scalping strategy works:
Marking Up Liquidity in 1-Minute Scalping Strategy
Look at your charts in any time frame, thinking about the number of strategies available and where their orders (entries and stop losses) would be waiting to be triggered. Then, look at the most likely levels for market orders, and you’ll very quickly start to understand where these orders would be grouped or would start to pool together, allowing you to mark up liquidity pools that are usually present above old highs and below old lows.
These liquidity pools are orders present above old highs or lows that smart money targets. So our 1-minute scaling strategy will look to enter before the price reaches that old high when bullish or old low when bearish.
In the above chart, you will notice that most of the time, the price moves from a key level to above an old high where the liquidity pools are present.
For example, in a Bullish scenario, we look for an old high as a target, then work out our entry on the 1-minute timeframe at an order block or below an old low on the 1-minute chart.
But how can you time your entry for this 1-minute entry with tight stop loss?
If we were to scale down to the time frame we are looking to trade and transpose these lines, marking liquidity pools, we should get our answer.
Entering Trades on the 1-Minute Chart
In the above 1-minute chart, we can see that the price runs through an old low before offering a tradeable move higher.
So, for us to find an entry to trade, we would need to look at what would make for a reasonable entry point on the 1-minute chart.
So, first, we let the price run an old low. Then, secondly, we wait for the price to go above the high that formed just before running the old low that we have outlined in step 1.
Once that happens, we have a break in the market structure. This is like a signal for us to start looking for an entry when the price pulls back into a Fib below the 50% level, ideally between 50% and 88% Fib levels.
As a target, we would be looking to target the liquidity pool that is present above the highs.
If you would like help to have a full understanding of the market structure, then the Bank Level Trading Course is the right course for you. We will go into detail about all factors that will qualify market structure and how to identify key levels for entries.
By using the previously mentioned criteria, we can enter a profitable trade. For this example, we will be closing at 2 times our risk.
However, with a fuller understanding of liquidity, it would be possible to set targets in areas where liquidity pools have built up and, like smart money, close our position above those old highs, increasing our profit from 2 times our risk to a little over 10 times the risk taken on the trade.
Understanding liquidity pools is essential for this 1-minute scalping strategy because it will help us understand what we should focus on and where the price will go. Should we buy or sell? Where should our target be?
However, this 1-minute strategy is not limited to trading with the trend. In fact, you can use it to enter when the price is about to reverse using some powerful reversal forex patterns. This will give you a good idea of when the reversal in price structure is a high probability.
The 1 minute Scalping Strategy Results
By testing this model over 1 week, Monday to Thursday, trading only 1 asset, we achieved the following results:
A total of 13 trades were taken, keeping to the target of 2 times risk; 10 trades ran to the profit target of 2 times risk, and 3 trades closed as a loss. So the week closed at 20R – 3R = 17R in total gained in four days. Actual profit value is dependent on your risk profile. As an example for this model, the risk was 0.5% per trade, which means our week closed out at 8.5% in profit.
To put that kind of profit in context, if you were to join a funding program, like the 2-step challenge The Day Trading Funding Program, you probably would have achieved the profit target in just 2 weeks, even if our funding program gives you a max of 45 calendar days to pass its challenge.
Pros & Cons of 1-Minute Scalping Strategies
1-minute scalping strategies can be an excellent addition to your forex trading efforts (provided you know how to use them, of course). But as beneficial as scalping can be, it also comes with several pitfalls to keep in mind to take full advantage of all the opportunities it offers.
Here’s a quick overview of key pros and cons to expect from 1-minute scalping strategies (or forex scalping in general, for that matter):
| PROS | CONS |
|---|---|
| No overnight risks caused by market fluctuations outside trading hours | A challenging test for risk appetite and quick decision-making skills |
| Higher flexibility in adjusting the scalping strategy | A lot of “background noise” that can be overwhelming (especially for new traders) |
| Increased chances for making a profit due to frequent and smaller market moves | Scalping requires a substantial amount of time, resources, and attention |
| Higher trading volumes that allow to cover potential losses | Trading costs decreasing your earnings |
Why Use 1-Minute Scalping Strategies
No overnight risks: Trade results from 1-minute scalping are available in, well, one minute. This means that traders don’t have to worry about overnight price fluctuations, allowing them to quickly exit trades and minimise exposure to unforeseen market changes.
Higher flexibility: Scalping strategies can be adjusted on the fly, providing traders with the opportunity to react swiftly to market conditions. If a trade does not go as planned, immediate feedback allows the trader to analyse mistakes and adjust tactics without waiting long, potentially reducing future losses.
Better profit probability: Scalping takes advantage of rapid and smaller forex movements that occur within 1-minute intervals. This allows traders to accumulate small profits that, over the course of the trading day, can lead to bigger gains.
A better chance to make up losses: 1-minute scalping involves making many trades in a short period, which means that while losses on individual trades can be small, the volume of trades can help to compensate. This strategy relies on winning more often than losing, even if the margin on each trade is small.
1-Minute Scalping Pitfalls to Keep In Mind
A test for risk appetite and decision-making skills: Scalping requires a trader to make fast, one-minute, frequent decisions with a high level of precision. This can be mentally exhausting and is not suitable for everyone. Traders must be able to handle high stress and make quick judgments to be successful.
Background noise: In a 1-minute chart, much of the price movement can be considered “noise” — random and unpredictable fluctuations that can mislead traders about true market direction. This makes it difficult to develop a clear strategy based on technical analysis as the data can be overwhelming and less reliable.
1-minute scalping requires commitment: Effective scalping requires not only an understanding of the market but also sophisticated trading systems and algorithms to process data quickly and efficiently. Traders must commit tons of time and resources to develop or purchase these systems and continuously monitor their trading.
Multiple transaction costs: Each scalping trade incurs transaction costs, including spreads and commissions. These can add up quickly when making multiple trades a day, significantly reducing profitability, especially if many of these trades are not substantially profitable or if they result in losses.
Are 1-Minute Scalping Strategies Worth It?
The above results speak for themselves, but one must remember that this 1-minute scalping strategy has been built around Liquidity Pools, a concept that has its foundations in Smart Money Concepts. This means it’s not just some random hit-and-miss indicator-based strategy but one built on the trader having a solid understanding of Market Structure & Liquidity Pools.
So, while this strategy is profitable and, on the surface, looks fairly simple, it would be considered too advanced for most traders. That’s because, A, trading in such low time frames requires a mighty level of focus, and B, identifying high probability setups requires a lot of experience.
Long story short, the results will vary based on the trader’s application of this 1 minute scalping strategy.
If you would like to look further into how you can learn this 1-minute strategy, we encourage you to join our Bank Level Trading Course.
Improving your knowledge by studying the 1-minute strategy in depth is the best way to build your knowledge of the market structure and, as a result, your ability to build and trade strategies like this.
