Forex scalping is a trading strategy utilized by foreign currency traders to quickly open and close off positions. Forex Scalping is a preferred strategy used by many traders to make quick trading positions. Through scalping, traders can open and liquidate trading positions swiftly. Although the term quick is not precise, because it is meant to imply a few minutes but could take longer, though many traders employ forex scalping for their trading by opening and closing positions within one to three minutes.
The concept of forex scalping is born from the need to make regular and consistent profits. It is undeniable that forex scalping is employed by traders who spend shorter time trading and thus, it is believed that scalpers are exposed to lesser risk than long term and intraday traders. This offers one clear advantage, less exposure to risk.
While forex scalping can be done manually, it can also be done through automated processes using software while more sophisticated scalpers use a scalping software hosted on a Forex VPS.
Regardless of the form you choose be it manual or automated forex scalping, some oversight may be necessary to make periodic evaluation and conduct continuous test of your strategy.
Will every trader succeed at Forex Scalping?
While forex scalping may have its benefits, it is absolutely not suitable for every trader as traders should make tailor-suited strategies that aligns with trading objectives. The returns generated from forex scalping isn’t much and frustration of booking profits in bits can be discouraging for many traders who can’t stand the process of waiting to book supposedly tiny profits.
Attention and skill is an important characteristics of forex scalpers, if you like to find out if forex scalping is for you, you can find out by testing first and if you find it interesting, with some adjustments and modification you could be marching towards success in your trading career.
FACTS TO KNOW ABOUT FOREX SCALPING
FOREX SCALPING STRATEGY
Forex scalping is time consuming since it requires constant analysis and placement of multiple orders. Therefore, a well mapped out scalping strategy should be in place, since the trader has only a few hours a day to scalp currencies. The need for a scalping strategy can not be over emphasized as a well thought out strategy will be beneficial to the forex trader. For such a forex trading strategy to succeed, the trader must grasp a better understanding of market forces, when to open and close positions within limited time frame etc. Scalping strategies abound, depending on the preferences of the scalping trader, they include:
- Scalp with EmaPredictive
- Neptune System
- Open Range Scalp
- The 5minutes Standard Deviation Scalp
- Support and Resistance Dynamics
- Ema Bands and
- The Bollinger Bands Scalp and The 1 Minute Scalping Strategy which will be x-rayed in this article.
Below are a few scalping strategies, which when effectively utilized would sustain favorable trades and reduce trading risk.
THE 1 MINUTE SCALPING STRATEGY
A one-minute scalping strategy is a delight for new entrants into the world of forex. It is a day to day trading strategy that requires lots of concentration and its time consuming. It is regarded as one of the most resourceful trading strategies especially for beginners. It involves opening a few positions, gaining a few pips and then closing position.
STRATEGY VALIDITY/TRADING TERMINALS
- Currency Pairs Validity: Every Currency Pair (the lower the spread, the better)
- Used Time Frame: 1 minute
- Needed Indicators: 100 EMA, 50 EMA and STOCHASTIC 5, 3, 3
- Preferred sessions: High volatility, London, New York
The 1-minute scalping strategy can be used on currencies that are not too volatile to reduce the risk of massive loss, it is advisable to scalp forex with currencies like GBP/USD, EUR/USD, USD/CHF and AUD/USD if you’re new to forex scalping, and as you become more proficient at scalping, you could try other pairs that experience more volatility.
HOW TO SCALP FOREX WITHOUT GETTING BURNED?
Scalping may be highly rewarding, it is not a suitable strategy for every type of trader, and hence, utmost care is required to survive scalping. However, in order not to get overwhelmed, with wrong calls leading to losses, certain principles guiding the art of scalping needs to be observed as it comes with its own challenges. In order not to get burnt in the process of scalping, traders should:
- Have a solid understanding of how the market works
- Identify loop holes that exist and how to avoid them.
- Pre-news trading (specifically between 3.00pm and 7.00pm EST)
- Scalp the market using a counter-trend strategy. Trade when all the world banks are closed.
- Trade patiently and diligently towards profit maximization
- Understand price action, watch the charts and see the order flow before determining the best time to enter, based on the absence of buy and sell orders.
- Ability to think fast and clear following trading indicators.
- As a scalp trader, you need to be attentive and show outmost concentration skills in monitoring your positions, because none of such positions should be neglected.
If these principles are consistently observed with patience and diligence, the forex scalper will come out good, not dismissing the fact that mistakes are bound to me made and losses made. However, a potent scalping system will be a plus for effective scalping.
FOREX SCALPING SYSTEM
A forex scalping system gives the forex trader an intuition whether to trade or not at a particular point in time. If done manually, the trader searches for signals and analyses such signals in other to make calculated decisions whether to buy or sell forex.
On the other hand, if the manual system proves too cumbersome, the scalping trader may decide to make use of the automated system, characterized by the use of software. Here, the trader gives instructions to the automated system (Computer software) on signals to look out for and how such signals should be interpreted. The following are a few forex scalping systems utilized by forex scalpers for effective and profitable trading:
- PSAR Rapid Forex Scalper System
- 20 Pips Double EMA Forex Scalping System
- 15 Pips Free Scalping System
- Buy sell Arrow Scalper
- Forex Sniper Scalping System
- Fisher EMA Forex Trading Strategy etc.
- MAAngle Scalping Forex Trading Strategy
- Integrated Commodity Channel Index Forex Trading Strategy
- Forex Sniper Scalping System etc
Scalping opportunities abound in the forex market and traders who are enthusiastic about tapping into these possibilities should have a working strategy at their disposal. The above scalping systems fills that vacuum as the scalping trader only needs to identify a system that best suits him.
SCALPING FOREX WITH BOLLINGER BANDS AND MAXIMIZING PROFITS
Bollinger Bands is considered as a reliable and profitable trading strategy and is often adopted by technical forex traders. This strategy tells the scalping when the market is experiencing increased or decreased volume and it helps the trader makes informed decisions.
A simple approach in using Bollinger bands and maximizing profits depends on its usage. Bollinger Bands is simple to apply and can be easily understood, for example, go long when the bands slope up, go short when the bands slope down and stay out of the market when the bands are flat. For the chart set-up, preferred currency pairs are the EUR/USD, GBP/USD and GBP/JPY. The Europe and US trading sessions is ideal for scalping using Bollinger bands.
A set of 22 rules guards the Bollinger Bands forex scalping trading system. The squeeze for instance as a rule signals a period of low volatility and is regarded by scalpers to be a potential sign of possible volatility and trading opportunities.
Depending on the needs of each scalping trader, the various systems and strategies highlighted earlier on has its own merits and de-merits. A proper understanding of the market, a well thought out strategy if adhered to, could go a long way in saving a scalper from drowning in losses. Therefore, outmost care should be top priority as you trade in foreign exchange.