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What is scalping trading and what you need to know

What is scalping trading is a question that many investors still wonder about today. This is a term for short-term trading investors. Scalping forex or “surfing” trading both have the same meaning. To learn more specifically and in detail about this trading method, let’s find out with Forex Trading now!

What is scalping trading? Things to know when trading scalping Forex

Scalping is understood as a “surfing” method to make small and steady profits by entering and exiting many trading orders during the day. This trading method has high profit potential. However, it is quite time-consuming and energy-consuming for traders to constantly monitor the market.

What is scalping trading’s concept?

First, let’s see what scalping is. Traders who use scalping try to move quickly when they see a signal and enter multiple orders multiple times during a trading session. 

What is the concept of Scalping trading?
What is scalping trading’s concept?

The main goal is to make small but regular profits. And you can limit trading losses to a minimum. In a highly liquid market, each scalping trade order can be executed in just a fraction of a second. Scalping does not give you time to do special analysis. 

You must have a stable, reliable, and repeatable trading system. Scalping traders trade on very short-term charts. Typically the time frames M1, M5,…

See more: Be more successful through this technical analysis

Why should you choose the Scalping forex trading method?

With the Scalping forex trading method, investors can trade easily and without too much complexity. Scalp trading only takes place in a short period. Therefore, when there is a loss, the investor’s profit is not affected too much. Investors can completely control them.

Although the profit from Scalping forex is not too high, you can make a profit of 5-10 pips if you use the right opportunity. Therefore, even in bad market conditions, you can still make a profit.

The nature of short-term trading does not affect investors too much due to unfavorable information and events. Therefore, it does not cause large fluctuations in investor transactions.

Which Scalping indicator should you apply when trading forex?

There are many indicators available to traders. But finding an effective indicator is like finding a needle in a haystack. Because if you find the right indicators, you can easily make profits from the market. 

Strategy for using the Ribbon indicator in Forex trading

Using this strategy is to place a combination of moving averages MA5, and MA8 along MA13. Investors will use them on the 2-minute chart to be able to identify stronger trends. Then, buy and short-sell orders will be placed based on market movements.

What is the strategy for using the Ribbon indicator in Scalping Trading?
What is the strategy for using the Ribbon indicator in Scalping Trading?

The 5-8-13 ribbon will be arranged in 3 rows and the price will move around the 2 MA5 or MA8 lines. If the price surpasses MA13, indicating downward momentum, the price will likely enter a sideways or reversal period. The trader will then look at the higher or lower range to determine the market trend.

Sử dụng Scalping indicator Relative Strength Index 

This is a relative strength indicator that varies from 0 to 100. You can also add level 50 as the centerline of the indicator. If the advanced RSI is above this level, a bullish wave could occur and traders could look for buying opportunities. 

Use the Relative Strength Index indicator when trading Scalping
Use the Relative Strength Index indicator when trading Scalping

If the RSI drops below 50, it is a sign of a new low in the market. Consider opening a sell trade now. Like other oscillators, divergence RSI can identify overbought or oversold areas in a currency pair. 

For RSI you need to observe two levels 70 and 30. If the RSI rises above 70, it means the market is in an overbought state and a downward correction is possible. If the RSI drops below 30, the asset is oversold and could recover.

What is combining the Bollinger Bands indicator when trading Scalping trading?

Using the Bollinger Bands indicator when trading Scalping is most effective when the market is in a Sideway trend. The indicator is set by default on the MT4 platform and uses the time frame of the M5 chart. 

What is combining the Bollinger Bands indicator when trading Scalping trading?
What is combining the Bollinger Bands indicator when trading Scalping trading?

Some trading rules investors need to remember are that Bollinger Bands must go Sideway. The price goes down and touches the Bollinger indicator below. If the conditions are met, the investor should place a buy order. The stop loss for this order is 10 pips and profit will be taken when the price touches the Bollinger line above.

What is scalping trading method? Should you trade Scalping gold?

Scalping gold is one of the “surfing” trading methods favored by many investors.

Analyze the setup system when trading Gold Scalping 

To trade Scalping gold, investors should set up a fixed system. Includes two indicators attached to the chart. The time frame should choose short-term frames such as M5, M15, and M30. Below is an example of a suggested order entry signal chart from the system.

Set up a fixed system when trading Scalping gold
Set up a fixed system when trading Scalping gold

Use the RSI indicator to keep investors firmly within the trend channel. The Accurate indicator will assist investors with buy or sell points.

How to trade Scalping gold combining indicators

The first indicator to use when trading Scalping gold is RSI. When you use a strategy in conjunction with the RSI indicator, it is a form of trend trading. They will look for market changes in momentum and provide relevant signals. 

Gold trading "surfing" with the RSI indicator
Gold trading “surfing” with the RSI indicator

The characteristic of RSI is that it tends to accurately track the movement of price action. Bottoms and tops close together at lows and highs are a signal that a price change is making. RSI also has another characteristic which is that it is limited, meaning it is set above a certain range.

This method involves identifying and marking Buy and Sell opportunities. Investors can open a position when the market is in an uptrend. And it is entirely possible to choose the last high as the selling price or vice versa. Investors can also use the MACD indicator with the M5 time frame to trade. This is a fairly fast trading method with a 5-minute time frame.

See more: Discover Exness – The world’s leading Broker

Use the MACD indicator combined with the M5 frame to trade
Use the MACD indicator combined with the M5 frame to trade

The MACD indicator is in the group of lagging indicators like the MA. MACD will help investors capture and track trends in the most standard way. 

Conclude

The above article on Forex Trading has helped you answer the question “What is scalping trading?” The choice of trading method as well as indicator combination will depend on the investor’s profit needs. Regardless of which method they choose, investors should ensure their knowledge when applying it in real combat. Hope this article will be useful to traders.

FAQs

Is it safe to use the Scalping trading method?

What is scalping trading method? Is this method safe? Many people wonder. And investors can rest assured that Scalping transactions are completely safe for investors. They bring little profit but the loss will not be too much.

How to choose the right product when trading Scalping?

The choice of trading product will depend on the needs of each investor. Investors can “surf” currency pairs or “surf” gold transactions.

Does Scalping trading require specialized knowledge?

Any trading method requires expertise to invest. Without knowledge, investors can easily lose money in this market.

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