- Learning how to scalp can be profitable if you understand it the right way
- Scalping is done on lower timeframes
- There are many scalping systems
- It is essential not to overtrade
What is Scalping
When it comes to the Forex market, historical buyers and sellers are usually very aligned with now-moment buyers and sellers. If the price bounced off a strong level in history, the chance is that it will also bounce up in the now moment. Join the shark! Be a smart trader and follow smart money. At the end of the day, protect your profits. To join the fray, you need to realise that trend is your friend. Trends are shaped by big sharks that are at the top of the food chain in the market, and you are a small fish following the shark.How Does Scalping Work
First of all, you must have a clearly defined and defined system to work with. Remember, just like launching a piece of software, and you’re going live here. There are no mulligans! Not only do you have to have a system, it has to work. For full time trading, you need a proven track record of at least a year, and more realistically, up to three years. You have to be able to prove beyond a doubt that your trading is profitable over the long run. This is going to get boring, and you want to be bored. You’re here to make money, not experiment! Source: AUD/NZD Milton Markets, M15 timeframeEven Scalpers Follow The Trend
A trend is an overall current direction of the market on a particular time frame (TF), always a series of thrusts and pullbacks. It can exist in every single time frame. In order to successfully follow the trend, you also need to look at a higher time frame than the one you are currently trading. Determine the trend. When the higher TF and your trading TF match, look for a retracement and enter. As a scalper, you want to match the 15m time frame if you execute 5m trades. If you scalp on 1 min time frame, then the best match would be aligning the 1min time frame with 5 min charts. When losses happen during scalping, they tend to happen during the transition period, i.e., when the trend is changing. In order to limit losing trades in times of transition, try to watch out for a price to hit a major area of support & resistance on a higher time frame. When this happens, I look for a potential reversal trade and a trend change. If it doesn't reverse, I look for a retracement to the POC zone and expect a bounce and continuation. If we can’t identify a trend or a pullback, we should move to another pair that clearly shows the trend. Source: USD/JPY Milton Markets, M15 timeframeWhy Is Scalping Important for Forex Traders
- Profiting from quick price movements which usually occurs during periods of high volatility.
- Generally speaking, it can’t hurt to avoid losses if entry and stop-loss are both triggered on the same tick. It is done by placing a stop loss at Break Even (BE)
- High volatility moves make gaps visible in stock trading but in the Forex trading, usually we see no gaps except for the weekend moves.
- Major political events, like the Brexit referendum, US elections and COVID-19 crisis, have been able to create quick price movements and even gaps