Scalping Forex strategy is no longer strange to new traders. High-frequency trading allows you to close profits quickly and avoid swap fees. Practicing scalping on a demo account helps to better understand the behavior of other traders on the market. Let Forex Trading explore strategies and guide you on effective trading methods.
What is Scalping in Forex?
Scalping is a high-frequency trading method that aims to make profits from opening many orders in a short period. Traders apply the scalping Forex strategy and make multiple trades on the same day.
Scalping Forex strategy is a high-frequency trading method. Focus on buying and selling large amounts of volatile and liquid financial assets to make small profits. This strategy does not involve holding positions overnight and is therefore not subject to swap costs. Scalping traders do not need to use technical analysis. Instead, focus on reading price movements, focusing on every second because prices can change at any time. To do this, they do not have enough time to set and analyze indicators.
See more: Be more successful through this technical analysis
7 Forex scalping strategies
Designed to detect short-term trading opportunities, scalping Forex strategy can be integrated with many different indicators and trading methods. Here are the seven most effective methods of this strategy:
Choose the pairs with the lowest spread
When applying the scalping Forex strategy, the most important thing is to choose the currency pair with the smallest difference. Instead of aiming for big profits from a small number of trades, scalping Forex strategy focus on small profits of 5 to 15 pips. So, large differences in prices from brokers can affect a trader’s profits.
People who make a lot of daily transactions are often more concerned about price differences. Currencies from emerging markets may not be suitable because of low liquidity and high spreads.
Scalping Forex strategy chooses more volatile pairs
When considering currency pairs for scalping Forex strategy, relying solely on price differences is not enough. Currency pairs must have positive fluctuations to meet the requirements of this method. Another important factor is the level of market volatility. Because swing trading needs the market to move quickly to achieve profits.
Less volatile currency pairs are not suitable as they may take longer to move enough to generate a profit. Therefore, pairs like AUD/JPY, GBP/AUD, and GBP/NZD are often favored because of their higher volatility. In addition, the Gold and Silver markets often have greater volatility, providing another option for scalpers.
Scalping Forex avoids brokers with Trading Desks
When discussing trading, choosing a trustworthy broker is undeniable. This becomes even more important for those who apply FX scalping techniques, similar to scalping XAUUSD.
The worst situation for a trader can be when they achieve profits from opened positions. However, it was not possible to close them due to interference from trading desks. This can cause significant losses, especially when important announcements or events occur. Fortunately, today there are many brokers with no dealing desk and conflicts of interest. Offers competitive spreads and uses moving averages.
Scalping Forex strategy uses moving averages
Forex traders often combine scalping strategies with multiple trading indicators. Moving averages, such as SMA or EMA, are often popular and can have different lengths such as 5, 10, 50, or 100 periods. Using signals from EMA or SMA can help achieve short-term profits. However, it should be noted that smaller time frames can reduce the effectiveness of the chart pattern. And technical indicators due to market noise increased. However, indicators are still useful in determining the overall trend of the market. Helps you choose the right scalping trading direction. For example, if the market is rising, you can trade in the upward direction to increase your chances.
Scalping strategy Forex uses Bollinger bands
What is the Bollinger Band’s strategy in scalping? Bollinger Bands serve as a convenient tool for Forex scalping. When the Bollinger Band line is even, the market is stable and suitable for trading in a narrow range. The simple strategy here is to buy currency pairs close to the lower band and sell pairs close to the upper band.
Of course, not every position is successful. However this strategy can help traders gain significant profits.
Forex strategy scalping trading support and resistance
Effective Forex trading methods do not need to be complicated. Combining scalping with the use of trend lines and support/resistance points can improve accuracy. In short, traders can follow technical indicators from Forex news sites. Buy currency pairs near support points and sell near resistance points.
Implement Forex scalping strategy manually
Placing Stop Loss orders is considered very important in Forex tutorials and seminars. However, in scaling, there may be some exceptions. Placing this order often requires agility, especially when trading on the 1-minute chart. However, closing trades manually can save time but carries risks. For example, when new traders do not place Stop Loss orders, they may hope the situation will improve.
The most effective Forex scalping strategies
Here are some possible ways to profit from an effective Forex scalping strategy:
Scalping Forex strategy best Forex scalping in 1 minute?
- The 1:1 minute easily scalable indicator sys v3.0 is an easily scalable tool on the chart with a period of 88 minutes. First, select the first 3 options in the style section and set the 2nd bar to yellow.
- Indicator 2: ADX and Di only test the indicators DI+ and DI- with default settings.
This strategy has been tested by several blog users and shows profits in a short time. Although there is a risk of constantly changing the color of the main bar. But there have been users testing it on the demo and getting positive results. This strategy is tested on a one-minute chart and seems very powerful.
For a valid buy setup, it is necessary to ensure that +DI crosses -DI from the bottom up. And the previous candle along with the moving average of the 1-minute indicator are both green. The signal is tested when a new candle begins to form. On the contrary, to sell, the above conditions must be reversed.
To evaluate the performance of this strategy, testing on a demo account is necessary before trading on a real account. The risk-reward ratio is set at 1:1.5, with take profit 1.5 times higher than stop loss. The method for setting a stop loss is to find recent swing levels and place them slightly below (for buy orders) or above (for sell orders).
Scalping strategy Forex scalping Triple EMA 1 minute
This is a simple yet powerful trading system. What are the three scalping indicators:
- Indicator 1: 6-period moving average, green.
- Indicator 2: 22-period moving average, yellow.
- Indicator 3: 300-period exponential moving average, red.
The goal of this strategy is to discern the long-term trend. By combining two moving averages and one exponential moving average. When the price crosses the 300 period moving average. And the 6-period moving average crosses above the 22-period moving average, we buy.
The stop loss is set at the nearest swing low and the profit target is determined from 1:2 to 1:5. Depending on the comfort and experience of the trader. This helps us optimize profits while limiting risks. Scalping Forex strategy can also be customized with any trend strength indicator. To ensure the trend is strong enough and avoid false signals.
See more: Optimize trading with IC Markets Exchange
What is a stochastic divergence strategy with double EMA scalping?
What are the scalping numbers in the divergence strategy that you need to pay attention to:
- Indicator 1: Exponential moving average (period: 6, green)
- Indicator 2: Exponential moving average (period: 22, color: yellow)
- Indicator 3: Stochastic Oscillator (5,5,5 settings for all periods)
Stochastic Oscillator, a popular technical tool. The special thing is that it can be applied to all asset types and trading time frames.
The basic idea is that when the price is below the bottom but the stochastic is higher, that is the buy point. A buy signal is identified when there is a gap and the two EMAs intersect in a bullish pattern (6-EMA crosses 22-EMA from the bottom up). Set stop loss at the recent swing level and profit target is at least 1:1.
Parabolic SAR (Psar) and Larry Williams Major Trading Indicators
- Indicator 1: Parabolic SAR (default setting)
- Indicator 2: Larry Williams Large Trade Index (LWTI)
Larry Williams Trade Index (LWTI), developed by Larry Williams. And introduced in the book “Trading Stocks and Commodities with Insiders: Secrets of the COT Report”, which mentions the use of a simple indicator: monitor the color of the line.
We only pay attention to early signals after LWTI changes color, avoiding entering Psar signals afterward. To eliminate unwanted transactions and avoid falling into a situation of reversal transactions.
Bollinger Bands (BBands) simple Forex scalping strategy
- Indicator: Bollinger Bands (default setting)
Bollinger Bands is a technical market tool loved by traders. It consists of two bands, separated from the middle moving average by a user-defined distance. This is a popular tool and we will discuss how to use BBands to trade effectively. Scalping strategy is very simple and easy to implement because there is no need for complicated indicators. Similar to Stochastic, BBands is integrated into most trading platforms. And can be applied to all times and asset types.
In the first example (blue circle on the chart), the price touched above the band. And then turn to close below the midline. This creates an ideal selling opportunity when both conditions are met. In the second case, the price cannot close above the middle line, which is not a chance of success. For the third case, the price touches the lower band and then closes above the middle line, confirming a buy signal.
Conclude
The scalping forex strategy is suitable for both major currency pairs and other asset types. Many traders can scalp in markets with sideways rising or falling trends. Although it offers high-profit opportunities, scalping also comes with high risks. If you have any questions, don’t hesitate to leave them in the comments section of Forex Trading. Wishing you successful trading and please share with us about your strategy!
Frequently asked questions
What is scalping and how to do it?
Scalping Forex strategy is a short-term trading strategy. The goal is to profit from small price fluctuations. Scalpers will open and close positions in a short period.
Which currency pairs are suitable for a forex scalping strategy?
Major and popular currency pairs such as EUR/USD, GBP/USD, USD/JPY. Often used for forex scalping because they have high liquidity and low volatility.
Is it necessary to use any tools and indicators for forex scalping?
Tools and indicators like Moving Averages, Bollinger Bands, and Stochastic Oscillator. It can be useful for forex scalping to determine entry and exit points into the market.
