If you are a trader in the foreign exchange market via the Internet, then you have certainly heard a lot about the scalping strategy, called scalping. Talking about it throughout the lines of this article, where we will discuss professional strategy methods, as you will learn them step by step, in addition to scalping and the best strategies.
Explanation of the Scalping Strategy: What Is It?
Scalping is a trading strategy in which traders profit from small changes in currency trading prices. The scalping strategy is based on technical analysis, such as candlestick charts and MACD.
Scalping is a trading method based on real-time technical analysis. When it comes to trading foreign currencies in the forex market, this technique, generally and in short, refers to making many trading deals each of which yields minimal profits. and not holding contracts for several hours, days or weeks; in scalping the primary goal of trading is to make a profit in less than minutes, earning a few pips at a time.
Since the currency trading market is the largest, most liquid and most volatile, traders in the currency trading market known as forex try to exploit every possible opportunity to get a profit from these very small fluctuations that occur in currency rates by opening and closing the largest number of trades with a small profit of pips. A scalping strategy in currency trading is simply based on taking advantage of small changes in the price of a currency pair, usually made over a very short period of time.
How Many Pips Do I Need to Close a Scalping Trade?
This method is very popular among traders. Many traders are looking for scalping, as it is a strategy that provides a lot of trading opportunities during the day, in addition to the popularity of the scalping trading method because in most different trading strategies, we may find a lot of daily trading opportunities Through which we do not get a profit of more than 10 points, or 5 points, for each deal, it is a method that does not depend on building a medium or long-term plan, but a daily plan.
How to Speculate Scalping in Forex
For the gains of ten points to add to your account a large cumulative value or a large profit, trading contracts are usually executed in large sizes by the use of financial leverage, the value of which in most licensed forex companies is 1:400, and this means that many traders In the currency trading market they tend not to follow the common 2% risk management rule, but instead trade much larger volumes during their trading sessions through a scalping strategy. Through the compatibility between technical analysis and capital management, they can benefit from consistent and consistent profits with the scalping trading method. There are two different ways of scalping trading:
- Manual Method: A trader needs to sit in front of their trading screen for a long time so that they can monitor the market movements in order to open and close their positions.
- Automated System: A trader can create a program to follow a specific strategy. The software will then execute the trades on behalf of the trader.
The Most Powerful Scalping Strategies: Is It The Right Style For You?
Before delving into the details of the strategy, what it is and how it is built, etc., we must make sure of your scientific and psychological qualifications for trading with the Forex scalping strategy, or you should ask yourself first before you decide to be a scalping trader, is it a suitable method for you?
Determining whether a scalping style is right for you depends on the amount of time you are willing to devote to trading the forex market online.
In addition, trading in the currency exchange market requires constant analysis and placement of multiple orders, which can eventually become as demanding as a full-time job. In addition, there are only a few hours in the day when you can trade currency pairs.
After you have taken the time to trade with a scalping strategy, the next most important thing will be to be able to think financially and make trading decisions very quickly.
For a scalping strategy in currency or forex trading to be profitable, you must quickly predict where the trading market will go and then open and close positions within seconds to a few minutes. And repeat the process dozens of times during one trading day. When these expectations are met, you must remember that herd psychology is an integral part of market movements.
It should also be understood that apart from anticipating the direction of the currency trading market, traders interested in executing a scalping strategy on currency trading pairs must be able to understand and accept losses, as this is especially important when trading using leverage, which may be in addition to the possibility of inflating the profits, it can have the same effect on the client’s losses in the trading account.
Knowing that the main task is to create more profitable positions than to lose them, you should also know how to exit trades that do not bring a quick profit.
Scalping Strategy: Scalping on the 1-Minute Time Frame
Now that you understand how scalping trading works, let’s take a closer look at the application of the process step by step. Most investors multiply currency pairs using a time frame between one minute and fifteen minutes.
Although there is no better time frame for scalping and trading, the fifteen-minute time frame tends to be the least popular for forex scalping strategies. Both the 1-minute and 5-minute timeframes are the most popular.
Your acceptable profit or loss for each trade will depend on your use time. With a one-minute scalping, you are looking for a profit of around five pips per trade, while a five-minute trade might give you a realistic target of ten pips per trade.
Furthermore, we must pay attention when choosing currency pairs for our scalping strategy. It is essential to choose currency pairs that are volatile and fast so that we are more likely to see a large number of movements in the near future.
If we choose a currency pair that makes low price volatility during the trading day, we may take a trade order and wait minutes, sometimes hours, for the price to change. However, fast and volatile price action should be one of many things we look for when choosing a currency pair to trade with a scalping strategy since we should also look for a “cheap” pair.
Or, in other words, the pair that can provide you with the lowest possible spreads. When you open a large number of trading orders during the day that exceeds 100 trading orders during the day, the difference between 15% to 35% is of your income. It saves you a lot of money when clearing the price differences, so it is essential to note that the spread should be as low as possible.
In addition, we will also need to develop a trading strategy based on technical indicators and choose a currency pair that offers good price action volatility and suitable trading conditions for our scalping strategy. Then, as soon as you see an entry signal, you have to enter the trade without thinking, and if you see an exit signal or reach an acceptable profit level, you have to close the trade without thinking.
While it is always recommended to use stop-loss and take-profit orders when placing trades, scalping can be an exception to this rule. The reason is simple; You must save time executing your trades because every second counts. You can, of course, set stop-loss and take-profit levels after you open a trade.
However, in addition, many traders still prefer to trade manually scalping, which means they will close trades manually when they reach their maximum acceptable loss or desired profit rather than setting a stop. loss or take profit.
Now let’s focus on the spread part of trading. Let’s say the broker has no commission attached to our trading account, but the spread on GBP/USD is two pips on average. When trading one lot of the pound dollar, the pip value is ten US dollars. This means that the spread will be around twenty US dollars when you open a trading position.
Suppose you are looking for a profit of five pips per trade that will equal the value of ($50). In that case, this means that you will have to increase the number of pips of your profit target to seven pips from the first starting price of the trade, which is approximately 50% of the value of the trade.
In addition, it is necessary to choose the best system for executing trading orders to be a successful scalper in Forex trading. What is meant here by the word “execution” is the speed of executing deals. In different words, the speed of executing trade orders allows that as soon as you say you want to enter a trade, the trade is actually opened in the live market. In volatile markets, prices can change quickly, meaning your trade may open at a different price than you planned in the trading contracts.
Determine Your Scalping Goals
What is the goal of your scalping trading strategy? You must answer this question before you trade in your real account, and the answer must be convincing and utterly satisfactory to you as you trade.
At the same time, you are convinced that your average monthly goal achieves everything you want and is convinced of from trading. The goal of trading must be logical and realistic so that you can achieve it and not become frustrated and despair after a short period.
Choosing The Best Broker For Scalping
Indeed, a currency trading broker that allows scalping speculation on its trading platforms must have some characteristics that are commensurate with the terms and rules of this strategy, as some trading brokers do not allow scalping speculation on their trading platforms, and some of them require that it remain The deal is open for a specified period of time before it is closed, otherwise no profits will be calculated from this deal if it is closed before the specified time, so when you choose the best forex broker that allows scalping speculation on its trading platforms, you must make sure that it has the following :
- Licensed and regulated forex broker
- Forex broker offers low spreads
- Forex broker offering high leverage
- A forex broker that offers advanced and easy-to-use trading platforms
- A forex broker with a good reputation in the currency market
- A forex broker that allows scalping on its trading platforms
The best scalping platform is definitely the trading platform with suitable deals for trading its strategy, as it provides very low spreads and is a fast, advanced and easy-to-use trading platform.
The famous trading platform, MT4, is the most popular and used platform for scalping strategy trading, as the most famous trading platform in the world provides many advanced advantages, in that this is a platform with a simple and easy-to-use interface, in addition to the ability to trade in one click.
It also has a high speed In executing trading orders, in addition to the availability of this platform with most forex brokers, which makes training on the platform a more straightforward matter of the trading process when you trade quickly and frequently, you need to carry out things frequently and quickly and when you do that through a trading program that you understand well from It’s hard to make trading mistakes.
Scalping is a fast-paced trading method. The scalping strategy requires a lot of experience, experience and training to master the method of working very professionally and not taking any risks, regardless of the circumstances and temptations.
In addition, it is possible to rely on technical indicators in building a scalping strategy or by relying on analysis technical. Still, it is also important to focus on the side of the trading company that allows scalping speculation on currencies, as it provides low price differences and a direct execution system in the market.