When to Scalp — and When Not To Remember, scalping is high speed trading and therefore requires lots of liquidity to ensure quick execution of trades. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. And whereas a day trader may trade off the five-minute and the minute charts, scalpers will often trade off of tick charts and one-minute charts.
Many traders argue that since scalpers maintain their positions for a brief time period in comparison to regular traders, market exposure of a scalper is much shorter than that of a trend follower, or even a day trader, and consequently, the risk of large losses resulting from strong market moves is smaller.
Indeed, it is possible to claim that the typical scalper cares only about the bid-ask spread, while concepts like trend, or range are not very significant to him.
Although scalpers need ignore these market phenomena, they are under no obligation to trade them, because they concern themselves only with the brief periods of volatility created by them. Forex scalping is not a suitable strategy for every type of trader. The returns generated in each position opened by the scalper is usually small; but great profits are made as gains from each closed small position are combined.
Scalpers do not like to take large risks, which means that they are willing to forgo great profit opportunities in return for the safety of small, but frequent gains.
Consequently, the scalper needs to be a patient, diligent individual who is willing to wait as the fruits of his labors translate to great profits over time. Scalping also demands a lot more attention from the trader in comparison to other styles such as swing-trading, or trend following.
A typical scalper will open and close tens, and in some cases, more than a hundred positions in an ordinary trading day, and since none of the positions can be allowed to suffer great losses so that we can protect the bottom line , the scalper cannot afford to be careful about some, and negligent about some of his positions.
It may appear to be a formidable task at first sight, but scalping can be an involving, even fun trading style once the trader is comfortable with his practices and habits. Still, it is clear that attentiveness and strong concentration skills are necessary for the successful forex scalper. One does not need to be born equipped with such talents, but practice and commitment to achieve them are indispensable if a trader has any serious intention of becoming a real scalper. Scalping can be demanding, and time-consuming for those who are not full-time traders.
Many of us pursue trading merely as an additional income source, and would not like to dedicate five six hours every day to the practice. In order to deal with this problem, automated trading systems have been developed, and they are being sold with rather incredible claims all over the web. However, if you design your own automated systems for trading with some guidance from seasoned experts and self-education through practice it may be that you shorten the time which must be dedicated to trading while still being able to use scalping techniques.
And an automated forex scalping technique does not need to be fully automatic; you may hand over the routine and systematic tasks such as stop-loss and take-profit orders to the automated system, while assuming the analytical side of the task yourself. This approach, to be sure, is not for everyone, but it is certainly a worthy option.
Finally, scalpers should always keep the importance of consistency in trade sizes while using their favored method. Using erratic trade sizes while scalping is the safest way to ensure that you will have a wiped-out forex account in no time, unless you stop practicing scalping before the inevitable end. Scalping is based on the principle that profitable trades will cover the losses of failing ones in due time, but if you pick position sizes randomly, the rules of probability dictate that sooner or later an oversized, leveraged loss will crash all the hard work of a whole day, if not longer.
Thus, the scalper must make sure that he pursues a predefined strategy with attention, patience and consistent trade sizes. This is just the beginning, of course, but without a good beginning we would diminish our odds of success, or at least reduce our profit potential. Our suggestion is that you peruse all of this article and absorb all the information that can benefit you. How scalpers make money: Such a strategy seems to be best used with these majors: It works really well in predicting when a strong flag formation might end too.
We categorize this as an advanced forex scalping strategy because it requires chart reading skills and a lot more discretion than the other strategies. It uses a modified version of the normal breakout pullback strategy utilizing the full power of the momentum indicators of the TFA Sniper and the predictive nature of the advanced fibonacci waves to pick really accurate pullback trades.
We categorize this as an advanced forex scalping strategy because it requires chart reading along with monitoring the TFA Sniper and advanced fibonacci waves. A good reading would also be understanding how support and resistance levels are found with out new TFA Fractal Support and Resistance Radar. This is not just some bogus nonsense, in fact, I would classify this as even more important than any trading strategy mentioned above. The interesting thing is that every part of our human body is designed to be bad at trading and investing, especially scalping.
It is also heavily recommended to take a look at this amazing and free e-book and go through it — this is one of the strongest pieces of advice I have for you. When it comes to scalping, not every forex broker is a good choice. This is because scalping requires a broker to have really low and stable spreads especially during times of high volatility. There are essentially 3 kinds of forex brokers:. Each of these forex brokers have their own benefits and are catered to different kinds of trading systems.
There is always this debate on the best time to scalp forex and I will finally settle this debate once and for all. Quite frankly, this can happen at just about any time of the day. It is also fairly present during the London — Tokyo overlap and Sydney — Tokyo overlap. So, if you wish to simply allocate a couple of hours a day to trading everyday, I would recommend:. How cool is that? It tests you the basic fundamentals, to proper trading psychology and lastly to the different trading strategies of The Forex Army.
The next thing to do is to practice these forex scalping strategies. Personally, I prefer to practice with a live account with micro lots so that I get the best of both worlds: When you practice with a demo account, you only get half the intensity. Nonetheless, we allow all users to begin with at least a demo account when starting out with the TFA Sniper. Simply get a demo account with ATC Brokers and fill in the demo request form below:. Due to the huge popularity of the TFA Sniper, registrations are now full.
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We advise you to carefully consider whether trading is appropriate for you in light of your personal circumstances. You may lose more than you invest. Information on this website is general in nature. We recommend that you seek independent financial advice and ensure you fully understand the risks involved before trading.