Scalping Forex

Scalping forex has become one of the most popular strategies in foreign exchange. The principle behind scalping forex is to quickly open and close trading positions to make a small profit. The dealers will only leave their positions open a few minutes or even seconds with the aim of seeing a 1 – 5 pip change so as to extract a short-term gain from the movement in currencies. Longer term trends or currency flows aren’t observed by dealers using this strategy as they only need to make a quick profit. As the position is open for such a short period, the risk of large moves is reduced so mitigates against big losses.
Would Scalping Forex work for every trader?
The dealer needs to adopt certain behaviours if they are to be scalping forex successfully: Be diligent and patient. Profits are made by picking off small gains but done many times so that the overall effect is to increase profit. The natural design of this strategy appeals to the more cautious trader as their position is only briefly exposed to the market movements. So patience is needed to allow the small profit from each to accumulate into a larger sum. This tactic will frustrate the dealer who wants big wins immediately. The devil is in the detail.

Scalping forex needs close attention

As scalping forex will usually mean opening and closing hundreds of positions in a day, dealers can’t afford to take their eye away from a deal in case they miss the opportunity to open or close a position.

Scalping forex needs practice time

For those using scalping forex as a second income, a lot of time is needed and to do it well would take up almost a full working day. Trading robots have been developed to reduce the time needed to practice scalping forex as they can automate stop-loss and take-profit activities leaving the dealer to focus purely on analysis. So scalping forex won’t be for everyone, especially those who want quick, easy profits without wanting to pay close attention to their trades.

The Scalping forex Currency Pairs

Broadly there are three groups of currency pairs that are involved in scalping forex.

Major Currency Pairs

As the name suggests, this group contains the major global currencies such as EUR/USD, GBP/USD, USD/CHF etc. Even in the face of significant economic changes, this group will react slowly and is a stable group due to the frequency at which high volumes are traded. The benefit of trading these currencies is the predictability of movement so larger gains are made if these moves are leveraged.

Carry Currency Pairs

More volatile than the major currency pairs but still liquid, this group is traded to generate income from interest by buying high interest currencies and selling low interest currencies.  Examples are USD/JPY and EUR/JPY. The Japanese Yen will react strongly to market news so often carries a larger spread. It also has a high rate of interest so investors use it for risky assets. Scalping forex using this group can have a larger risk of loss that even a stop-loss cannot prevent and would not be advisable for novice traders.

Exotic Currency Pairs

Also known as cross pairs, this group has the currencies of developing and small nations that aren’t traded frequently. Scalping forex with this group is generally less successful and has pairings such as BRL / USD (Russian ruble) and NOK / USD (Norwegian Krone). Again this would not be a suitable starting point for less experienced scalping forex traders. When setting up in scalping forex, the general advice is to pick the currency pairs carefully and conservatively.

Is there a best time for scalping forex?

This can be a personal choice but the time period chosen will affect the strategy used for scalping forex. Using New York Eastern Standard Time we can briefly look at the various times: 7:00-8:00 am. This is a rough time for the European markets as the traders anticipate New York opening at 8 am. A good time for scalping forex dealers to practice their skills. 8:00-1:00 pm. The most liquid and volatile trading time as London, New York and Frankfurt are open. This is the time where scalping forex strategies must make the most of the market movements to make profits. 3:00-5:00 pm. Scalping forex tactics that work when there is a degree of market volatility can be applied here as some banks are still open in the U.S. 5:00-7:00 pm. This time favours the dealer who uses strategies that work on a quieter market where smaller and non-directional movements occur.
In summary, scalping forex can work for any trader if used sensibly and with the right strategy in the right market conditions.

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Best scalping robot (Best Scalping EA)

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