How to Use Scalping in Forex

forex scalping

Quick money profits in forex attract many investors who want to grow their money.  Here, one can buy and sell foreign currencies and can earn profits in a very short period of time. 

When you are in the business of trading with foreign currencies, you might have heard about a word called ‘Scalping.’ So, when you are buying and selling foreign currencies, you need to use scalping in forex.  

Before you go for forex trading you need to have knowledge about various strategies of forex scalping. You should know how to use scalping in forex trading and know various techniques for successful forex scalping. 

 

What Is Forex Scalping?

When you are investing in forex, you often have come across a specific term called ‘Forex Scalping.’ The word ‘Scalping’ is nothing but is scanning the forex trade for small profits on a regular basis. 

These profits go up and down many times each day. So, you need to know when to purchase a forex currency pair when its price goes low and when to sell when its price goes high. You should know that forex scalping should be done in a matter of a few minutes since trading with currencies depends upon real-time analysis.  

Forex trade is done by using technical analysis charting tools. This charting tool is created with the assembly of signals, which helps you decide when to buy and when to sell with the help of signals. These are also known as a computerized program to follow a strategy to buy and sell forex trades on the behalf of a trader. 

 

How to Use Scalping in Forex?

Commonly, most of the forex trader scalp the currencies within a time frame of 1 and 10 minutes, or sometimes up to 15 minutes. Though always the 1- 15 minutes’ time frames do not work for all. 

The best forex scalping strategy is that which happens within a 1- and 5-minutes time frame. The most common and best time frame for forex trading is 1- 5- minute time frame. 

The most common things to see while using successful scalping in forex are: 

 Suitable Time Frame

The most suitable time frame for making a profit or incur losses depends upon the time period chosen by you. If you go for the 1-minute scalping, an average of 5 pips per trade can be earned. 

Whereas you can even earn a target of 10 pips per trade if your forex scalp is for 5 minutes. Ideally, Forex 1- minute’ is the best time frame to choose for scalping in forex as proposed by some successful scalpers. 

 

Choosing Volatile Currency Pairs

One of the best strategies to follow while scalping in forex is by choosing those currency duos, which are less volatile. This should be your most important move because you may witness a higher growth of moves. In a single day, if you go for low volatile currency pairs, then you might end up making huge profits after waiting for just minutes for price change. 

 

Selecting Cheap Volatile Currency Pairs

While you scalp in forex, you must select those currency pairs for trading, which are cheap. As a scalper, you need to know that the spread is 10% to 30% of your income. Moreover, when you chose cheap currency pairs, the risk is low. 

 

Developing Technical Indicators for Good Scalping in Forex

Apart from choosing a cheap and volatile currency pairs, you need to understand trading conditions which are favorable for you. Whenever there is a signal for entry into the trade, you must go for the trade. Moreover, you must also exit from it and close your trade after earning a good amount of profit. 

 

Wise Management of Stop- Loss (SL) and Take- Profit (TP) 

When you are involved in forex scalping to earn maximum profits in trading, it is advisable to manage the use of Stop- Loss (SL) and Take- Profit (TP). Every seconds and minute are valuable in forex trading, and you cannot simply waste time while performing forex trading. So, the wise management of Stop- Loss (SL) and Take- Profit (TP) is important to earn profits without losing your valuable time. 

Most of the traders manually scalp forex trading, and also manually close trades after hitting optimum profits or facing maximum tolerable losses. But then again, if you use the strategies of Stop- Loss (SL) and Take- Profit (TP) management, you are not required to scalp and close manually. You can do it by rather setting computerized Stop Loss or Take Profit levels without losing your valuable time. 

 

Choosing an Appropriate Execution Plan

A forex scalper always remains a success and scale new heights of profits if he or she chooses an unsurpassed and the right execution plan. In the forex trading, the term ‘Execution’ denotes the rate of speed at which you enter a trade opened on a live foreign exchange market. 

You need to implement your plan after seeing the right time. This aspect is very important since, in this volatile market, prices change instantly. You might have determined to open trading at your desired price. 

Then the speed of quick price change might be opened to a specific price, which may not be your original choice. Thus, you need to make sure of choosing the appropriate execution plan if you want to make profits by smart scalping in forex trading. 

 

Choose Experienced STP & ECN Forex Broker

While being in the business of forex trading, another method to use scalping is by hiring or choosing a forex broker. It is also vital that these brokers should offer to execute Straight Through Processing (STP) or Electronic Communication Network (ECN). 

Taking help from STP or ECN forex broker, or a hybrid of both is very useful, especially when you try to enter a market at perfect timing. In addition to this, you must take note that these brokers should be controlled or regulated by recognized financial establishments like the Financial Conduct Authority (FCA). 

Mostly, it happens that you might have found a good entry in the market, but your order is canceled or refused by the broker. This happens when there is a dealing counter associated with trading. This condition is even worse when you try to close your trade after earning few profits, and the broker declines to close your trade. Moreover, your trading account will also be put at risk. Thus, to put up with successful scalping and better forex trading with best currency pairs, always hire forex brokers that offer STP or ECN execution. 

 

Is Forex Scalping Your Cup of Tea?

Forex scalping is not everyone’s cup of tea, especially who have a full-time job apart from being in forex trading throughout all day. The traditional manner of scalping in forex trade is to constantly analyze and scan, along with placing numerous forex trade orders. 

So, for many people who are having a fixed 9-hour job shift, then definitely forex scalping on their own is not their everyday cup of tea.

Actually, forex scalping requires full-time attention with few hours of time a day. Thus, there are professional forex brokers who can help you with your forex trading and scalping on your behalf since they are skilled in analyzing financial markets flawlessly.  Scalping in forex tradition is also determined to be hot jobs nowadays. 

 

When to Avoid Scalping in Forex?

Traditional scalping needs volatility and adequate price movement.  There are certain aspects where need to stop scalping at any cost. However, it depends upon which scalping strategy you are relying upon.  

The following are the time and situations under which you should avoid scalping in forex at any cost. These are:

False Trading Breakouts

In case of trading false escape or breakouts, you need to avoid scalping in forex, especially in countries like the United States of America and the United Kingdom. However, this is not harmful in Asian countries since it works out fine with Asian forex trading. This is because there are an increase and a decrease in the price of Asian forex trading. 

Any Health & Emotion Related Issues

A sound and focused mind keep the forex scalpers quite good and attentive throughout the trading day. However, if they are facing any sign of weariness, sickness, mental tiredness, or any sort of disruption or emotional outburst, they should immediately stop trading to avoid further losses. Moreover, they should immediately take a break and start afresh once again. 

 

Endnotes

The skills of scalping in the forex trading market requires active trading style and risk management. A good scalper must also determine the right time frame to enter the market and start trading. 

Moreover, they should also be able to finally close trading with profits. These are some of the skills which you need to use scalping in forex. Moreover, you should always know that the scalping strategy of ‘Forex 1- minute’ is very fruitful and rewarding. 

Professional scalping services offered by forex brokers are quite helpful when their help rewards you with good profits. Therefore, you must also know that scalping in forex is not based upon one’s personality, but due to their capability, analysis, and good forex trading style. 

Want to get some practical knowledge without risking your money? Open a demo account at IC Markets or eToro!