As you probably are aware there are different approaches to trading the global markets. You could be a long term trader i.e a swing trader may be looking at the weekly or monthly chart. You could likewise be an intraday trader where you are looking at perhaps the 4-hour or daily chart. Then you could be a scalper, hoping to make countless trades, taking advantage of the small price movements which are frequent throughout the day. In our forex scalping guide, we’ll cover what scalping is and how to scalp trade forex.
What is Scalping?
Scalping is essentially a strategy that includes the opening and closing of trades in an extremely brief timeframe to get speedy benefits. This trading technique depends on opening trades and closing them with little benefits, at lower time frames. Forex scalpers try to squeeze every possible opportunity out of the fluctuations in foreign exchange quotes.
Scalping resembles those high activity spine chiller films that keep you as eager and anxious as ever. It’s quick-paced, energizing, and psyche shaking at the same time. Scalping is common in the moments after major data releases such as the U.S. employment report and interest rate announcements. This is because these types of high-impact news releases cause notable price moves in a short amount of time.
Scalping conveys likewise certain risks that are inevitable at short-timeframes. Market commotion makes up most of the price movements on the 1-moment or 5-minute timeframes, and scalpers need to use certain technical tools to channel that market clamor and find tradeable prospects.
Leverage, spreads, fees, and slippage are all risks that a scalper needs to control, manage, and account for as much as possible. Note: scalping stops being fun when you start losing.
1-Minute Forex Scalping Strategy:
The 1-minute forex scalping strategy for forex pairs is an absolute stunner because of its unique technique and brilliant combination of indicators that complement each other. As several different indicators are used in this method. It is best suited for traders with at least some experience, who are using a platform such as the Cloudtrade platform provided by Eagle Global Markets.
Although it does require the ability to read charts, this scalping strategy is suitable for beginner level forex traders. You should be using a 1-minute chart with this strategy. You may enter the trade in either of 2 ways, with a long entry or with a short entry. For a forex 1-minute scalping strategy sell (short) entry point it is advisable that when 12 EMA crosses down the 26 EMA and 55 EMA from above, open a sell position, place a protective stop-loss above the most recent swing high, then exit the trade for 9 to 15 pips profit.
For a forex 1-minute scalping strategy buy (long) entry point it is advisable that when 12 EMA crosses up the 26 EMA and 55 EMA from below, open a buy position, place a protective stop-loss below the most recent swing low, then exit the trade for 9 to 15 pips profit. The forex 1-minute scalping strategy is less risky, it involves small movements that are easier to achieve, and even when the market is less volatile, even then traders can book smaller profits. However, the forex 1-minute scalping strategy involves a larger deposit. A trader who trades this strategy should have more information about the markets and should be well equipped with quick reflexes and mathematical skills. Note: The forex 1-minute scalping strategy is time-consuming and sometimes may lead to stress.
5-Minute Forex Scalping Strategy:
This simply means scalping under a 5 minutes timeframe. 5 minutes forex trading strategy aims to identify general and immediate momentum in 5 minutes chart. The 5-minute chart is one of the most popular time frames for day traders. The 5 minute EMA strategy for Forex scalping is simply one of the very best around.
The most fitting time to execute this strategy is during volatile market conditions. This means the best results are obtained during the New York-London session overlap (8:00 AM to 12:00 PM EST). During this time, trading costs are also relatively low, and liquidity is high, which is crucial for the scalpers to take a trade.
For a forex 5-minute scalping strategy, and the sake of this article, we will be using 50 EMA and 200 EMA. The first thing to do is to identify the current trend by changing the time frame to 15-minutes. If a quicker (50-period) EMA crosses over the more slow EMA (200-period), it implies the prices are beginning to rise, and the upturn is bound to be set up. Thus, a cross of faster EMA underneath the more slow EMA demonstrates a drop in the price, and that likewise implies a downtrend is going to form. Always make sure to take trades in the direction of the major trend. The second thing to do is to look for a pullback. By so doing, we can prevent ourselves from entering long or short positions too early.
Other best scalping strategies include:
- Stochastic oscillator strategy.
- Parabolic SAR strategy.
- RSI strategy.
For more information on the strategies above, sign up for our free webinar classes.
In conclusion, any range of profits between 10–30 pips is still scalping. Anything above that isn’t scalping anymore. Scalping enables you as a trader to take mini pips in from the markets. Depending on the broker spread, some brokers charge too high, as a result of that it becomes difficult for any scalping method to work effectively. At Eagle Global Markets, we pride ourselves in our tight competitive spread across various margins.
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- Staff Writer, Eagle Global Markets.
- First published on egmanalytics.com
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