Forex Scalping Strategy Used Successfully
A forex scalping strategy is a short-term-based approach, which has become popular as access to the forex market has improved. Technological advancements across the African continent, coupled with low transaction costs have made it possible for anyone to trade forex, especially using their mobile devices. Technology provides many benefits to forex trading today.
Forex trading has become an increasingly popular option in recent months due to the Covid-19 pandemic. The lockdown has caused people to seek alternative ways to secure an income. One of the most common strategies used by experienced forex traders is scalping.
We explain what the Forex scalping strategy is and how it is used successfully to make a profit in forex trading.
What is a Forex Scalping Strategy?
Forex scalping is a term used to describe the skimming of small profits on a regular basis by going in and out of forex positions several times per day. Forex scalpers look for a large number of trades throughout the trading day using a system that is usually based on signals derived from technical analysis charting tools.
The forex market offers many opportunities for forex scalping as forex currencies are always traded in pairs and there is a lot of price movement due to the high volatility in the forex market. Profits are made by buying or selling forex currencies and holding the position for a very short time before closing it for a small profit. Forex scalping is different from other types of trading as forex scalpers need to have very good knowledge about technical analysis and forex market indicators.
Speed is also important for forex scalping as traders need to be able to make quick decisions in order to take advantage of small price movements. Forex scalping can be extremely profitable, but it takes a lot of skill, discipline and dedication to be successful.
The technique is used by combining elements of technical analysis with the focus on price action. Trading decisions are formed by observing candlestick charts, using support and resistance levels and trendlines. Scalping traders usually look at charts on a timeframe between 1 and 15 minutes, with a higher time frame perspective on the 30 minutes to one hourly.
When applying the forex scalping method, large profits are not the goal. The method typically aims for most trades to close positions after gaining 5 to 20 pips. Once the currency pair to trade has been decided on, the scalper must act on the right signals, keeping a close ear to the ground for economic news or data that could impact the instrument.
Not only do scalpers enter and exit trades at a high rate, but many hold onto one position whilst still attempting to profit from another entry, often opposing their initial order on the same instrument. This allows scalpers to hold their original bias, but still potentially be profiting from pivot points moving towards their target – buying, selling, buying, selling is the image you can draw up in your mind when understanding a scalper’s perspective.
The forex scalping strategy does not appeal to all traders as price swings can be erratic in volatile market conditions requiring the trader to exercise equanimity and patience. Risk management is a crucial component to be consistent with this trading style.
Forex Scalping in the online trading world?
A forex trader who adopts the scalping style is known as a forex scalper. Scalpers place many small trades through the market session, focusing on small price movements with the effort of making a small profit. By placing a high frequency of trades, the scalper hopes to make small profits throughout the day that all add up when combined.
A forex scalping strategy comes with considerable risks and is reserved for traders who have a great deal of knowledge and skill, which takes time to acquire and perfect.
Forex scalping can be demanding on a trader as they must remain focused and exercise concentration to find the best possible entry and exit points. Decisions can be made within a matter of seconds or minutes depending on the time frame traded on.
The personality of the Forex Scalping
In order to scalp effectively, forex traders need to be able to react quickly and without hesitation. This requires a high level of concentration and focus, as well as the ability to cut losses quickly. While scalping can be profitable, it is not for everybody. Forex traders need to have the right temperament and skillset to succeed at scalping.
Forex scalping must be dealt with careful consideration when deciding on a broker to trade with. The broker’s platform is crucial to the foundations of the scalping strategy. The MetaTrader 5 platform is by far the most popular and accommodating trading platform for forex scalping. A scalping strategy must be 100% proficient with the platform to negate the probability of making a mistake.
When it comes to forex scalping, it’s important to choose an approved over the counter derivative provider (ODP) . This ensures that you’re getting the best possible service and that your trades are being executed correctly. ODP’s are regulated by the financial authorities and must adhere to strict standards. This means that you can trade with confidence, knowing that your provider is reputable and trustworthy. Choose an approved ODP for peace of mind and to maximise your chances of success with forex scalping.
Looking to get started with forex trading? Look no further than Khwezi. An authorised FSP and approved ODP. We provide a secure and reliable platform for trading the world’s currencies, and our experienced team is here to help you every step of the way. With Khwezi, you can rest assured that your trades are in good hands.
Best time for scalping forex
The best time to scalp forex is generally considered to be during the first few hours of the New York trading session, when the USD has the highest trading volume. Some scalpers also prefer to trade in the early hours of the morning when the market is most volatile, though this technique is advised for professional investors only, as the risks could create great losses for amateurs. Forex scalping is a high-speed trading strategy that can be quite profitable if executed correctly. However, it is important to remember that forex scalping is a risky investment strategy and should only be undertaken by experienced traders.
As a scalper, ensure you choose to trade the markets that are the most liquid. Liquidity is important as it guarantees volume in the market which allows the scalper to enter and exit trades at will. This can be when major forex market sessions overlap. Major currency pairs are usually the most liquid markets, such as GBP/USD and EUR/USD.
If the forex scalping strategy is something you are interested in, bear in mind the difference in time frames when drawing conclusions. What might seem like a strong trend in the higher time frame, might give a false impression of price action in the smaller time frames.
For example, what you see on the 15-minute chart is merely a few candlesticks, giving the trader the impression of high volume in their direction. On a higher time frame, it could paint a different picture. Four strong bullish candlesticks on the 15-minute window are equalled to one candlestick close on the 1 hourly chart.
Scalping needs to be approached with complete and absolute caution due to highly volatile conditions. Extreme price movement has the potential to hit your stop loss within seconds. You may not even have time to go to the bathroom!
False motives, unrealistic goals, greed, lack of effort, and insufficient knowledge are the main reasons why some are left disappointed and empty-handed when forex scalping. Before you do anything, acquire the skills and information needed to equip yourself for a career in forex scalping and trading the forex market.