Forex scalping strategy: Two Easy Scalping Trading Strategies: 5-Minute Scalping and Gold-Scalping

Stochastic will identify the probability of the channel’s borders breakout. Internal levels are built based on Fibonacci levels. Moving averages in the indicator are constructed by summing 3 LWMAs with periods of 30, 50, and 100, weighted by the closing price. A Forex scalper does not necessarily need to follow the original source at the moment of publication, though it’s advisable. He or she can simply check professional traders’ behavior. The highest volatility is usually observed in the first five minutes following the market news publication.

First of all, most of them have strict entry and exit rules, money management requirements, trading instruments, and timeframes. Therefore, if the strategy is tested and a trader follows the algorithm accurately, they has a high chance to succeed. Second, scalping helps to get quick results within a short period. If a trader feels they lacks patience for trading on higher timeframes, scalping is their thing. Third, scalping helps to minimize overnight risks since all trades should be closed within a day.

As price action slows or becomes exhausted, a reversal occurring becomes more probable. Examples of this variety of scalping indicators are the Stochastic oscillator and the Relative Strength Index . In fact, you’ll find that your greatest profits during the trading day come when scalps align with support and resistance levels on the 15-minute, 60-minute, or daily charts. If you answered “yes” to more than two points, you are a true scalper! As for those who answered “yes” just once – you are probably considering this approach for now. Nevertheless, the forex trading strategies we will explain below are accessible and understandable.

Forex scalping

Floating spread starting with 0.0 points in ECN trading accounts. Remember to track activity within a day and operate large-volume periods of trading sessions. As a rule, without automation one should trade within a day no more than three most common, most liquid and complex instruments — currencies. Both the price and the stochastic must be above the red line for no longer than ten candlesticks. The channel border breakout may be an inertial price movement, and there may not start a new trend; the price may go back to the channel after a short movement.

While anyone can attempt scalping, it is a trading strategy that requires a specific skill set, discipline, and experience. Successful scalpers will use specialized trading tools and often employ algorithms to identify and automate trades. As such, it is not recommended for beginners, as the fast-paced nature of scalping can lead to significant losses for those who lack the necessary knowledge and emotional control. Additionally, scalping demands constant attention to the market and may not suit traders with limited time or those who prefer a more passive approach. Finally, since scalping involves many intraday trades, it can rack up trading fees and taxable events.

In addition to general risk management rules about the volume of open positions, there is one more rule concerning scalping. You should not enter trades for the two rising currency pairs at the same time. Although it can double your profit, it also doubles your potential risks, as both pairs may reverse at the same time. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

What is the Best Time Frame to Scalp Forex?

Ultimately, it’s up to the individual to decide if scalping is a suitable way to trade the forex. Trading with high frequencies on a short-term time frame requires the trader to act with precision. Thus, the scalper needs to have a robust trading platform at their disposal.

There are no recommendations regarding the best Forex scalping indicators and technical tools for scalping. Someone is satisfied with the MT4 standard Forex scalping indicators, and someone installs unique author’s tools. Your trading style performance depends not so much on the tools as on the ability to use them. Today you achieve positive results when trading one currency pair. Tomorrow, you may take profits from scalping another currency pair.

Legions of forex day traders and swing traders focus on trading reversals. Also, many trading systems are designed to engage the same market conditions, only with much smaller risk and reward parameters. In most cases, scalping is allowed in foreign exchange and Forex markets in general. For example, there are some categories of professional traders that aren’t allowed to scalp trade in the US in order to reduce high risks and avoid losing trades.

Beginner Forex book

While this example uses stochastics, a range of other technical indicators such as Fibonacci retracements, MACD and RSI may also help. You can learn more in the Technical analysis course. In a scalp trade, many positions of this type would be exited after just a couple of minutes, or even less than a minute, depending on the pips gained in the trade.

There must be no restrictions by the broker for employing strategies. There must be no restrictions in the offer concerning the number of trades open and the minimum holding time. It’s highly liquid volatile financial instruments that are scalped most often. Remember, though, that there are no easy get-rich-quick schemes in trading. In our AUD/CAD chart, for example, we can use two EMAs to identify an impending upward trend, which may contain mini moves suitable for scalping.

Trade popular currency pairs and CFDs with Enhanced Execution and no restrictions on stop and limit orders. Scalping is a trading strategy that attempts to profit from multiple small price changes. Swing trading is an attempt to capture gains in an asset over a few days to several weeks. Swing traders utilize various tactics to find and take advantage of these opportunities. Better yet, superimpose the additional bands over your current chart so that you get a broader variety of signals. Scalpers can meet the challenge of this era with three technical indicators that are custom-tuned for short-term opportunities.

However, reversal scalping strategies do not aim to project highs and lows; they search for short-term pullbacks in price. In this way, scalpers can execute counter trend trades with limited risk exposure. Legions of forex traders choose the scalping trading strategy as their primary means of conducting business. In this article, we will address the strategy and take a deep dive into how successful forex scalpers make a living in the world’s currency marketplace.

Forex scalping tips

Our next chart shows the Bollinger bands indicator using the 20-period, 2-standard deviation settings on the day the European session commenced. The upper and lower blue lines are the Bollinger bands, and the orange line that runs in the middle is a simple moving average that, by default, forms part of the indicator. The top three forex scalping strategies are the breakout, reversal and reversion methodologies. If implemented consistently, each can produce positive returns over the long-run.

For a “buy” scenario, we need to see an uptrend. To confirm this trend, 8-period EMA should be above 21-period EMA. Moving averages should not cross with each other. Warner or Monitoring Spread are indicators that show how spread bets increase and decrease online.

What we need to know about scalping

These will involve effective stop placement, meaning if the price goes too far in the wrong direction, your trade will automatically be closed. We’ll cover these in more detail in the Risk management course. Forex scalping can potentially be profitable, like any timeframe of trading. While a position trade may last several months or even years, and a swing trade several days up to a few weeks, a scalp trade’s duration is mere minutes, or even seconds. BlackBull Markets is a reliable and well-respected trading platform that provides its customers with high-quality access to a wide range of asset groups.

In the first case, you can and should earn when a flat movement ends, but the second example points to an uncertain market in which you’d better not open a trade. There started a directed trend movement in point 1, so opening a trade yielded a profit. You can see examples where the intertwinement of MAs was a false signal on the screenshot below. Open a trade on a candlestick that observes both conditions.