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Forex strategy "Scalping"

Scalping Forex strategy — is a simple trading system that relies on very close targets, extremely low stop-loss and a lot of positions opened and closed during a short period of time. Not all Forex brokers allow scalping and not all who allow are good to scalp with. Scalping may not be suitable for all traders and, personally, I do not recommend scalping to anyone. The most simple scalping Forex trading system is presented here.

Features

  • Nice profits for lucky (intuitive) traders.
  • No need to pay attention to technical, fundamental or any other analysis.
  • Spreads eat a big part of profit.
  • Reward/risk ratio is usually too low.
  • Not all Forex brokers allow scalping.
  • Requires a lot of time for trading and monitoring.

How to Trade?

  1. Currency pairs with a lot of intraday volatility but low spreads are recommended (EUR/JPY, GBP/USD, EUR/USD and USD/JPY are good examples).
  2. M1 timeframe or lower is optimal.
  3. Optimal trading time is during the European/U.S. and U.S./Asian trading sessions' intersection.
  4. Prepare to enter the positions by closely monitoring the market activity for 5–15 minutes.
  5. When you think that you "caught" the current short-term trend, enter a position.
  6. Set stop-loss to about 10 pips.
  7. The general rule for target profit is one or one-and-a-half spreads. Setting take-profit to such low levels (2–5 pips) is almost impossible, so you'll need to monitor the position to see the target profit and close it manually.

Example

No example chart is present for this trading system as there is nothing important to be shown on the chart. Let's view the following examples.

  1. You open Long position on EUR/USD with 10 pips stop-loss and target for 4 pips of profit. After 20 second the position reaches 4 pips of profit and you close it.
  2. You open Short position on GBP/USD with 10 pips stop-loss and target for 4 pips of profit. After 3–4 minutes the trend unexpectedly reverses and the position is closed by stop-loss.
  3. You open Short position on USD/JPY with 10 pips stop-loss and target for 3 pips of profit. After about 1 minute the position reaches 4 pips of profit and you close it.
  4. You open Long position on EUR/JPY with 10 pips stop-loss and target for 5 pips of profit. After 5 seconds the price spikes and the position reaches 12 pips of profit and you close it.
  5. That's 10 pips of profit in less than 6 minutes. Of course, it's purely hypothetical.
 

Trading spot currencies involves substantial risk and there is always the potential for loss. Your trading results may vary. 

 

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