Scalping in Forex: Small Steps to Profitable Trading Strategies

Forex scalping is a trading strategy defined by a trader that opens and closes an order within minutes in order to profit from small price appreciations when market moves are favourable.

A scalping trader is alerted to these market movements and enters and exits market orders at the right moments. Regardless of the market direction, the currency pair is open to advances, pullbacks and further advance. During these times, the markets are affected by major movements and minor price movements on the MT4 charts. A currency pair may move 100 pips over several hours, a pullback 70 pips over the following hours. Sometimes, the market can advance a further 200 pips. These major moves are suitable for trend traders or medium term traders, but not scalping traders.

Scalpers and scalping robots are more focused on trading where the market moves 15 pips in minutes. If the market oscillates over a few minutes, then it’s ideal conditions for scalping. The scalper makes the right decision based on forex indicators to enter and exit the market and makes scalping profits.

The time frame scalpers focus on is 1 minute, 5 minutes and 15 minutes as the scalping strategy is to enter and exit with profit in minutes using technical analysis and not risking trading for longer.

What are the positives & negatives of Forex scalping?

What are Forex Scalping Benefits?

The main benefit is to make money scalping quickly, entering many successful forex orders. Scalping systems that trade 1 standard lot (round turn) 20 times a day, and target a 3 pip profit on each can generate $600 daily scalping profit. The target is to close profits within minutes and not to expose forex orders to unknown market conditions that ruin the trading strategy. Knowing when to close forex trades is just as important as when to open and this can be judged by using some of the best forex indicators. Risk management is also more controlled in scalping.

What are Forex Scalping Negatives?

Scalping is suitable for experienced forex traders, new comers to forex can find it complicated or risky. New traders often don’t understand fully chart action, news, indicators and technical analysis that are crucial to a successful scalping strategy. As scalping depends on market noise, news releases and breakouts, it can be difficult for a beginner to really understand the impact on fx markets.

Many brokers view scalping as negative, it is critical to check the brokers scalping policy. If the broker is not transparent on the site, then you should be altered, ask support specific questions to ensure your profitable scalping system will be accepted.

As Scalping is very sensitive to market noise and short-term market conditions, traders should avoid trading during news releases and unstable fx markets that can lead to sudden changes in direction.

To read more about scalping, scalping strategies and how to make money scalping, please visit our series of Scalping Forex Articles.