Forex Trading Strategies - Scalping

Forex Trading Strategies - Scalping

There are several forex trading strategies on the market. Which one is the best?
In this article, we try to help you cover the most important things
about the pros and cons of scalping.


Scalping is different from day trading. During the trading day, the trader will open a position and then close it again during the current trading session, never taking the position into another trading session or holding the position overnight. However, although a day’s trader may wish to trade once or twice a day, or even several times a day, scalping is even more frantic, and there will be multiple trades during the trading hours.


How Forex Scalping Works

Day traders may use 5-minute and 30-minute charts, while scalpers usually use 1-minute charts. In particular, some scalpers like to try to capture the high-speed movements that occur when publishing economic data and news. This news includes the publication of employment statistics or GDP data-whatever is important on the trader's economic agenda.

Scalpers like to try to get 5 to 10 pips from each transaction and repeat this process throughout the day. Point is the abbreviation of "point percentage", which is the minimum exchange rate fluctuation that a currency pair can withstand. Using high leverage and making only a few points at a time can add up. If the scalpers' transactions are profitable and can be repeated multiple times in a day, they will get the best results.



Some of the advantages of scalping trading include less risk-taking (because it does not have time to trade in one position), easier access to moves, and more opportunities to achieve meager profits. As a scalper, you only want to trade the most liquid markets. These markets are usually in the major currency pairs, such as EUR/USD or USD/JPY. Also, depending on the currency pair, certain sessions may be much more liquid than others. Even though the forex markets are trading for 24 hours a day, the volume is not the same at all times of the day.


Scalping Personality

Of course, there is no perfect strategy and scalping is not for everyone. You must have a temper for this adventure. During the trading session, the scalpers need to sit in front of the computer, and they need to enjoy concentration. Try scalp movements, such as 5 points at a time, you cannot take your eyes off the chart. Even if you think you have the temperament of sitting in front of a computer all day, or if you are an insomniac and sitting in front of a computer all night, you must be the kind of person who can react quickly without analyzing your every move. No time to think. Being able to "pull the trigger" is a necessary key quality for scalpers.


Picking the right broker

Many foreign exchange trading platforms prohibit scalping and charge fees for more than ten transactions in a day. Therefore, it is helpful for traders to find out whether this practice is allowed on their specific platform. Scalpers need to ensure that their trades will be executed at the level they expect. Therefore, be sure to understand the trading terms of your broker. Some brokers may limit the duration of their guarantees to periods of poor market development. Others may not provide any form of performance guarantee at all.

Placing an order at a certain level and executing it a few points away from your expected position is called "slippage". As a scalper, you cannot afford slippage except for the spread. Therefore, you must ensure that your order can and will be executed at the order level you requested. Our supported broker, IC Markets is considered one of the best true ECN brokers for scalpers.


Have a strategy

It is important to develop an exit strategy before attempting a turnaround because doing so will only lose a large amount of money to eliminate a whole day of positive profits. Our trading system - NCM Conservative - also has an exit strategy to protect our client's capital: if the market goes against our position, our EA will open more positions to exit the transaction as soon as possible. When this happens, we close when the sum of transactions reaches zero loss. If the situation requires, we may manually override the basic settings.


The foreign exchange market is large and liquid; people believe that technical analysis is a viable strategy for trading in this market. However, it is important to note that forex scalping usually requires a larger deposit to handle the leverage he or she takes to make short and small transactions worthwhile. Scalping is very fast. If you like this operation and you like to pay attention to one-minute charts, you can convert appropriately. If you have the temperament of quick response and are unwilling to suffer quick losses, no more than 2 or 3 points at most, then scalping may be for you.

However, if you want to analyze and think about every decision you make, it may not be suitable for scalp trading.

HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment; do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions. Any data and information is provided 'as is' solely for informational purposes, and is not intended for trading purposes or advice.