Scalping Forex and forex technical analysis are becoming two prominent concepts in the Forex trading community. In this article, we will explore questions related to short-term trading strategies and how to analyze scalping strategies. Don’t wait any longer, join Forex Trading to capture the financial market in a snap.
General assessment about Scalping Forex?
Scalping Forex is a short-term trading strategy in which traders open and close positions within a short period of time, usually from a few seconds to a few minutes. The goal of a scalping strategy is to take advantage of small price fluctuations to achieve quick profits.
What is Scalping Forex?
Scalping forex is a short-term trading strategy. Traders need to focus on buying and selling quickly to take advantage of small fluctuations in price. Below, Forex Trading will help you understand this method:
Resistance – support
Look for support and resistance zones on small time frames. For example, 5 minutes, 10 minutes are an important part of the trading strategy. Waiting for the price to break through these price zones with a strong candle range like Marubozu can help determine direct Buy/Sell entry points, . At the same time, follow the breaking price trend.
Moving average MA
To surf, use the MA20 and MA50 moving average intersection:
- When MA20 crosses above MA50: Open a buy position when the price returns to the area between MA20 and MA50.
- When MA20 cuts below MA50: Open a sell position when the price returns to the area between MA20 and MA50.
This can help take advantage of MA crossover signals to determine entry points in scalping.
Scalping with RSI indicator
RSI is an indicator that measures market momentum, reflecting overbought and oversold price states. When RSI falls below 70, the market is considered overbought. And when it falls below 30, the market is considered oversold. Traders use this property to conduct scalping transactions when the market returns to a stable state.
See more: Be more successful through this technical analysis
Analyze the pros and cons of Forex trading scalping method
Besides the advantages that this scalping strategy method brings, traders should also prevent some potential risks. The ultimate goal is to optimize your investment process:
Advantages of scalping technique
- Trading time is very short in scalping: Even just a few minutes. And never hold a position overnight. This helps scalp traders minimize risks from market fluctuations.
- Rules and strategies: The method of implementing Scalping Forex is usually quite simple. This makes it easy for even new traders to get acquainted.
- High Profits: This makes it an attractive trading method for many traders.
Disadvantages of scalping technique
- Frequency of placing orders continuously: This often requires players to spend a lot of time during the day trading.
- Big risk: In trading, if there are many successful transactions, profits can increase significantly. However, if you encounter many unsuccessful transactions, it can lead to a large loss of investment capital. This creates a huge challenge for traders. At the same time, they are required to be careful and control risks to minimize losses.
Scalping strategy “super profitable” that you must not ignore
Here are some ways to use Scalping Forex most effectively:
Scalping Forex strategy with moving averages
In this forex scalping strategy, traders only use one technical indicator, the SMA moving average, to get trading signals. The goal is to find good trading signals based on the correlation between 3 MA lines (MA5, MA8, MA13) on the M5 or M15 time frame.
Buy order: Enter a BUY order when the price is above the MA13 line (confirming the uptrend) or when the price pullback touches the MA13 line.
- Entry point: When the pullback price touches the MA13 line.
- Stop loss: Place stop loss below the MA13 line or below the nearest bottom. But do not exceed 10-15 pips.
- Take profit: Take profit when reaching 10-15 pips.
Sell order: Enter a SELL order when the price touches the MA13 line and bounces back.
- Entry point: When the price touches the MA13 line and bounces back.
- Stop loss: Set stop loss above MA13 or the nearest peak.
- Take profit: Take profit when reaching 10-15 pips.
This helps take advantage of short-term trading signals and control risk during short trading periods.
Trade forex scalping with the RSI indicator
TheScalping Forex strategy with RSI can be applied in all market states, including trends or sideways. How to trade as follows:
In an uptrend, when the MA200 line is below the price line, traders will open a BUY order when the price pulls back down and contacts the MA200 line, provided that the RSI is in the oversold area (< 30) or near 40.
In a downtrend, when the MA200 line is above the price line, traders will open a SELL order when the price pulls back up and contacts the MA200 line, provided that the RSI is within the overbought threshold (> 70).
In a sideway market, traders will buy when the RSI is oversold (RSI < 30) or sell when the RSI is overbought (RSI > 70).
Stop loss is placed 10-15 pips away from the entry point or a few pips away from the nearest high/low. Take a Profit target of 10-20 pips or can increase profit if there is a reliable signal.
Forex trading scalping strategy applies Keltner and SMA lines
The Keltner price channel is a technical tool that shows the range of price fluctuations. Furthermore, it is also important to recognize market waves in short time frames. By combining the Keltner price channel and the SMA moving average, you can determine your entry and exit points.
Purchase order:
- Entry point: When a bullish candlestick breaks through the upper line of the Keltner channel and closes there. At the same time, the MA10 line crosses the upper line of the Keltner channel.
- Stop loss: At the midline of the Keltner channel at that time or about 15 pips maximum.
- Take profit: Take profit when reaching 20-25 pips.
Sell Order:
- Entry point: When a bearish candlestick closes below Keltner’s lower line. At the same time, the MA10 line cuts down through the lower line of the Keltner channel.
- Stop loss: At the midline of the Keltner channel at that time or about 15 pips maximum.
- Take profit: Take profit when reaching 20-25 pips.
Each trader will have a unique trading style, based on experience. And especially the lessons they have accumulated from the market. Here, Forex Trading would like to introduce to investors the forex scalping trading method using technical analysis as follows:
Core rules when implementing scalping strategy Forex
- Decisiveness: In Scalping Forex, this is an important key. Because time is very short and every second is precious. Procrastination can cause many opportunities to be lost.
- Flexibility: is the ability to quickly recognize and seize opportunities. This helps optimize profits in each transaction.
- Large-time fund: Because to continuously monitor the market and look for trading opportunities.
- Ability to stay calm: Not only in scalping but also in all trading styles, because the market is always unpredictable.
- Discipline: This is the core factor to achieve success in all trading styles. In scalping, it is extremely important to comply with discipline, not to spare money, and to cut losses.
When is scalping effective?
Not everyone is suited to using the Scalping Forex method when trading gold in the foreign exchange market. But in reality, not everyone is suitable for this method. Scalping is usually only suitable for people who want to make small profits and want to take advantage of daily price fluctuations.
Scalping – short-term trading
Short-term trading in the gold market can last from 1 hour, to 2 hours, one session, one day, or several days. This depends on the trader’s strategy and goals. To achieve the highest efficiency, you need to rely on the fluctuations of the gold market in each trading session. Especially every trading hour, to place the most suitable buy and sell orders.
Short-term trading requires reflecting price fluctuations of the gold market in the past or at the present time. From there, you can determine the short-term trend of gold prices. But place buy and sell orders in the most appropriate way to achieve the highest efficiency in trading.
Scalping Forex is one of the technical analysis strategies. In fundamental analysis, overall factors are considered and are usually only suitable for long-term gold investments. Therefore, if you need to make quick profits and want to invest in the short term, the gold scalping strategy is the right choice.
Scalping – foreign exchange trading
Scalping is also suitable for investors who want to invest in gold waves. Surfing the gold price helps limit great risks for yourself. Additionally, scalping is a flexible method to take advantage of small fluctuations in the gold market.
To invest successfully, it is necessary to perform technical analysis and be able to predict the price of gold in a short time. Because to invest appropriately. The scalping strategy provides a flexible and fast approach. From there, you can take advantage of short-term trading opportunities in the gold market.
With this requirement, scalping fully meets the conditions and requirements of gold surfing investment.
See more: Prestige Broker XTB: Elevate position of invest player
What factors should a good scalper broker have?
Based on information about the characteristics of this scalping strategy, it can be seen that it is suitable for:
- A trader with extensive experience: Because transactions take place in a short period of time, it requires decisiveness and flexibility in making trading decisions.
- Investors have a lot of time: Because they can spend time monitoring every fluctuation of the market. This is not suitable for people who have little time.
- Investors knowledgeable in cryptocurrency trading: This will also make good use of this method, as it requires an understanding of technical analysis and flexibility in making trading decisions.
Conclude
Scalping forex is a very risky trading method because it requires a very high win rate to achieve profits. But forex scalping yields the fastest profits for investors. So if you are an experienced investor and like to “surf”, you cannot ignore this detailed trading guide from Forex Trading.
FAQ
How is Forex Scalping different from other trading strategies in the foreign exchange market?
Scalping strategies focus on buying and selling in the short term. Usually only from a few seconds to a few minutes, to take advantage of small fluctuations in price.
What skills does Forex Scalping require from a trader?
To execute a successful scalping strategy, traders need to react quickly to small fluctuations in price. They also need to have good risk management skills. From there, you can control short-term transactions and avoid big losses.
What factors can affect the effectiveness of Forex scalping?
Scalping strategies are sensitive to spreads (the price difference between the buy and sell price) and other transaction fees. Additionally, factors such as market volatility, economic news, and instability in the market. Therefore, it can also affect the effectiveness of this strategy.
