Forex Scalping

What is Forex Scalping?

Forex scalping is a term used to describe a trader that will get in and out of a trade very quickly, usually using higher lots, to maximize profit quickly from the trade. i.e. they may only pick up 5-10 pips but have $100 a lot on so making $500-$1000 in a matter of minutes, sometimes seconds. Scalpers tend to use small time framed charts, 30s, 1min, 5min.

Forex scalping is almost as scary, but definitely comes with a huge adrenaline rush - and possibly, quick profit.

Forex scalpers need to increase their per pip value to extract similar profit from more conservative transactions where the cost per pip was lower, and the risk was lower. In other words, the risk to reward ratio is potentially heavier toward the risks. However, Traders who are primarily scalpers may disagree with this statement.
Scalpers user tight stop loss limits as a strategy to minimize loss should the trade go negatively. Tight stops means little play for a market that moves in an up down motion toward a target. Scalpers therefore may be stopped out of many trades that were going in the direction they anticipated, racking up large losses.

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Forex Scalping - top 5 forex scalping tips

Forex scalping is a trading style that looks to maximise small profits from a large number of trades in a short period of time. Professional forex traders that use this technique may make up to 100 trades in a day. To scalp properly, you need discipline and focus and should target 5 to 15 bips (0.05% to 0.15%) return per position.

There are a number of forex scalping tips that can help improve returns. Some of these include:

1. Stay in touch with any news that is relevant to your currency so that you can move quickly into or out of a position;
2. Follow the candlestick patterns so that you can recognise trends;
3. Record the previous days highs, lows and closing values;
4. Continually move your stop loss position when you are 10 bips ahead from your last position;
5. Do not trade against the trend;

Forex scalping targets of 5-15 bips can be more easily achieved since traders are always operating 'in the moment' and do not have to factor in long term trends. Awareness of the long term movements are essential but it is the short term exposure that makes a forex scalping strategy so effective in making money.

New forex scalpers often fall into one of two traps. Either they start to get addicted to taking high risks from random trades rather than sticking to a strategy, or they become too short term focused by trying to make up yesterdays losses today rather than over a longer trading cycle.

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More Forex Scalping Tips

Looking for ways to improve your forex trading? There are a number of forex scalping strategies that can be adopted to help you improve your performance.

Trade with a tight stop loss so as to avoid blowing up your entire account in a small number of trades. Do not start off adventurous and make your trades work by scalping the forex trades regularly.

If you plan to make your small trading account big in a short space of time then you will need to leverage the account making it ideal for forex scalping. That means starting at 20:1 or so before moving the leverage to 50:1 as you become more skilled at forex scalping.

Watch when you trade. Forex scalping can be carried out at any time the markets are open but there are times that are better than others to execute your forex scalping strategy. As a forex scalper you are looking for volatile and fast moving markets, not ones where currencies are hardly moving. Choose the hours when the main markets in the currencies you are trading are open for business together to make the most of your forex scalping strategy.

Use a number of brokers since each will have a different spread on currencies. Choose the lowest spread for the pair you are looking to scalp so as to improve your performance.

Study the daily range of currency movements for your pair of chosen currencies. The wider the spread, the more opportunity there is to scalp the forex market.