In Forex, trading that lasts within an hourly time frame is categorized as short-term. Scalping is a good example of this. If you want to do scalping, it is best to consider the necessary rules. Currency pairs must be one of the main pairs (EUR/USD, GBP/USD, USD/CHF, AUD/USD, NZD/USD and USD/JPY). The trading period must be 1-15 minutes.
WHAT IS FOREX SCALPING
This is considered the fastest way to earn the profit in trading. Scalping is defined as a fast trading approach whose goal is to acquire fast profits and open multiple trades with minimal price changes. This is possible after a trade has been placed and winnings are acquired.
FOREX SCALPING STRATEGIES
- SCALP TRADING WITH THE STOCHASTIC OSZILLATOR – the slow stochastic indicator consists of lower and upper levels. The lower level represents the oversold area, and the upper – the overbought area. If these two lines overlap from bottom to top, this means a long signal. When these lines overlap from top to bottom, a viable short signal is triggered.
- SCALP TRADING WITH THE STOCHASTIC OSZILLATOR AND BOLLINGER BANDS – for a long position, the price should break below the lower Bollinger band and the candle stick must close inside the BB. The stochastic must be less than 10 and overlap from below up to 10. In addition, the price of a short position must break over the higher Bollinger band, and the candlestick must close within the BB. The stochastic indicator should be over 90 and 90 overlap from above.
The exit point must be positioned on the contrary by the Bollinger Band or just after 10-30 pips, in terms of what kind of time frame is used. For stop loss, it should be placed 3-5 pips below the previous low when opening a long position. However, it should be placed 3-5 pips above the previous high when selling trades.
RISKS OF FOREX SCALPING
Similar to other trading systems, Forex Scalping also has its own setbacks. A scalping risk to focus on is the market tendency to go against the position. Just before this happens, it is important for Forex traders to have a way to mediate increasing losses.
Scalping is seen as a trading style prone to big losses. Although this is not always the case, the risk of loss is minimized when scalping is treated as a mechanical process. This means that decisions on entry and exit points, trade size and leverage must be carefully made and analyzed before chart valuation.
AN EXAMPLE OF SCALPING STRATEGY
Forex scalping can be used with the help of MT4 indicators due to delayed trading signals, malfunctions, etc. be a challenging task. Added to this is the efficiency of the application of the scalping system of price movements, which does not use trading signals and indicators.
If you want to start scalping, it is best to have an ECN Forex account. ECN brokers allow scalping for anyone with the possibility of trading with small spreads and low commissions. This allows investors to trade outside their traditional trading account as it also offers greater flexibility. With automated trading systems like this, exponential profits are guaranteed as there are no complicated rules, and the guides are very comprehensive for traders who only start trading forex.