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Scalping is a short-term trading strategy used to profit from small currency exchange fluctuations on a short time horizon. Scalpers need to react very quickly to the changing market conditions and have a convincing strategy, in order to open and close lots of trades in a session.
Scalping must be suitable for your personality, and be able to react and scan the price action quickly to find opportunities. If you are not a scalper, there are other types of traders.
Traders are defined by their trading plans. The entry and exit levels are crucial when scalping as getting these right can make the difference between losing and winning. In shorter time frames the price exhibits some very natural properties, like moving more during a particular time of the day, like market openings, and planned news events.
For experienced technical traders, scalping can be an excellent strategy to make money from the Forex market.
In order to be successful with scalping, pay attention to these four cornerstones of strategy.
The size of the spread impacts profit, so any increase in the spread can damage your performance.
Avoid scalping the market during the news announcement and focus scalping post-news releases, looking for price follow-through in the direction of the initial market reaction. Or, if the price is fading be ready to change your view and take the other side.
Focus your trading on the major currency pairs with the most significant liquidity (EUR/USD, USD/JPY, GBP/USD, AUD/USD).
A less liquid currency pair will affect your ability to scalp, as the price usually will be more erratic and the size of the spread will be more significant. You can scalp the market anytime; however, there are times of the day when the market is more active, and the price is more predictable.
Scalp when the major trading sessions open:
An advanced scalping strategy seeks to capture the market flow. The Forex intraday market is mainly driven by institutional money and central banks. The real institutional money needs to transact big money, and that has the potential to dislocate the price. The real money tends to flow at particular times of the day when orders come in and get executed.
You can capture that by looking for instances at the London open, New York open and Tokyo open. The price symptoms that show up during the major trading session openings can be very predictable, which means you will be able to capture those momentum moves — one of the simplest ways of scalping the market is by trading the London open and then wait for a break in the Asia range.
Typically, the first thing you have to do is to define the Asia range. Do this by drawing one resistance line at the highest price, and one support line at the lowest price reached during the Asia session. Once you have established the Asia range, be patient and wait for the London open to start trading in the direction of the breakout.
In the above example, the EUR/USD broke to the downside, so we’re only going to look for selling opportunities. The best scalping strategy, in this case, is to sell with each red candle and take profits at the close of the 5-minute candle. Stop selling when you see green candles and only repeat the process with each new bearish candlestick.
Not all Forex brokers allow scalping, so find a broker that allows scalping if you are going to make this strategy central to your trading plan.
Scalping is trading over a short period capturing small price fluctuations. Scalping is best for disciplined traders to stick to their trading rules. There are some basic strategies for scalping, as well as more advanced techniques, and find a broker that caters to scalpers with precise execution and no slippage to ensure your success.
Compare the best Forex brokers in the Malaysia and find the one that suits your trading style and budget.
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Head of Content
Head of Content at FxScouts since 2019, Chris Cammack ensures all content meets our high standards of quality and clarity, shaping editorial guidelines and overseeing broker reviews. Chris brought 10 years of experience in research, editorial, and design for political and financial publications, and has a deep knowledge of international financial markets and geo-politics. He co-hosts the "Let's Talk Forex" podcast with Alison and writes for the news section on a regular basis.
Senior Financial Writer
Alison joined the team as a writer in 2021. She is the Senior Financial Writer for FxScouts. She has a medical degree with a focus on physiotherapy and a bachelor's in psychology. However, her interest in forex trading and her love for writing led her to switch careers. She has a passion for Forex trading and over a decade of editorial experience researching Forex and the financial services industry, producing high-quality content. She hosts a weekly podcast, "Let's Talk Forex", alongside Chris and has produced over 100 Forex educational videos for the FxScouts YouTube channel. She also writes weekly technical analyses and has tested and reviewed over 100 Forex brokers.
Financial Writer
Ida is a financial writer with a degree in Digital Marketing and a strong background in content writing and SEO. Her expertise extends beyond marketing and writing, with a keen interest in cryptocurrencies and blockchain networks. Ida's passion for crypto trading sparked a deeper fascination with Forex technical analysis and price movement. She is continually expanding her knowledge in Forex trading, staying informed about the latest trends and identifying the best trading environments for new traders.
Financial Writer
