Scalping in the Forex Markets: A Beginner’s Guide
In the investment world, scalping is a term used to denote the “skimming” of small profits on a regular basis, by going in and out of positions several times per day.
Scalping in the forex market involves trading currencies based on a set of real-time analysis. The purpose of scalping is to make a profit by buying or selling currencies and holding the position for a very short time and closing it for a small profit. Many trades are placed throughout the trading day and the system that is used by these traders is usually based on a set of signals derived from technical analysis charting tools, and is made up of a multitude of signals, that create a buy or sell decision when they point in the same direction. A forex scalper looks for a large number of trades for a small profit each time.
Why Scalp?
Scalping is not unlike day trading in which a trader will open a position and then close it again during the current trading session, never carrying a position into another trading period or holding a position overnight. However, while a day trader may look to take a position once or twice, or even a few times a day, however, are much more frenetic and trade multiple times in a session. And whereas a day trader may trade off the five-minute and the 30-minute charts, scalpers will often trade off of tick charts and one-minute charts. In particular, some scalpers like to try and catch the high-velocity moves that occur around the time of the release of economic data and news, such as the announcement of the employment statistics or GDP figures – whatever is high on the economic agenda.
Scalpers like to try and scalp between five and 10 pips from each trade they make and to repeat this process over and over throughout the day. Using high leverage and making trades with just a few pips profit at a time can add up, especially if your trades are profitable and can be repeated many times over the course of the day. Remember, with one standard lot, the average value of a pip is about $10. So, for every five pips of profit made, the trader can make $50 at a time. Ten times a day, this would equal $500.
Scalping, though, is not for everybody, and one thing is for sure: You have to have the temperament. Scalpers need to love sitting in front of their computers for the entire session, and they need to enjoy the intense concentration that it takes to scalp. You cannot take your eye off the ball when you are trying to scalp a small move, such as five pips at a time.
Even if you think you have the temperament to sit in front of the computer all day, or all night if you are an insomniac, you must be the kind of person who can react very quickly without analyzing your every move. There is no time to think. Being able to “pull the trigger” is a necessary key quality for a scalper. This is especially true in order to cut a position if it should move against you by even two or three pips.
Market-Making Versus Scalping
Scalping is somewhat similar to market-making. When a market maker buys a position he is immediately seeking to offset that position and capture the spread. (This is not referring to those bank traders who take proprietary positions for the bank.)
The difference between a market maker and a scalper, though, is very important to understand. A market maker earns the spread, while a scalper pays the spread. So when a scalper buys on the ask and sells on the bid, he has to wait for the market to move enough to cover the spread he has just paid. In the converse, the market maker sells on the ask and buys on the bid, thus immediately gaining a pip or two as profit for making the market.
Although they are both seeking to be in and out of positions very quickly and very often, the risk of a market maker compared with a scalper, is much lower. Market makers love scalpers because they trade often and they pay the spread, which means that the more the scalper trades, the more the market maker will earn the one or two pips from the spread. (Find out how this tool magnifies both gains and losses. Check out “Forex Leverage: A Double-Edged Sword.”)
How to Set up for Scalping
Setting up to be a scalper requires that you have very good, reliable access to the market makers with a platform that allows for very fast buying or selling. Usually the platform will have a buy button and a sell button for each of the currency pairs, so that all the trader has to do is hit the appropriate button to either enter or exit a position. In liquid markets, the execution can take place in a fraction of a second.
Picking a Broker
Remember that the forex market is an international market and is largely unregulated, although efforts are being made by governments and the industry to introduce legislation that would regulate “over the counter” forex trading to a certain degree.
As a trader, it is up to you to research and understand the broker agreement and just what your responsibilities would be and just what responsibilities the broker has. You must pay attention to how much margin is required and what the broker will do if positions go against you, which might even mean an automatic liquidation of your account if you are too highly leveraged. Ask questions to the broker’s representative and make sure you hold onto the agreement documents. Read the small print.
The Broker’s Platform
As a scalper you must become very familiar with the trading platform that your broker is offering. Different brokers may offer different platforms, therefore you should always open a practice account and practice with the platform until you are completely comfortable using it. Since you intend to scalp the markets, there is absolutely no room for error in using your platform.
If you press the “Sell” button by mistake, when you meant to hit the buy button, you could either get lucky if the market immediately goes south so that you profit from your mistake, but if you are not so lucky you will have just entered a position opposite to what you intended. Mistakes like these can be very costly. Platform mistakes and carelessness can and will cause losses. Practice using the platform before you commit real money to the trade. (Learn more about how to set each type of stop and limit when trading currencies in “How to Place Orders With a Forex Broker.”)
Liquidity
As a scalper you only want to trade the most liquid markets. These markets are usually in the major currency pairs, such as EUR/USD or USD/JPY. Also, depending on the currency pair, certain sessions may be much more liquid than others. Even though the forex markets are trading for 24 hours a day, the volume is not the same at all times of the day. Usually, when London opens at around 3 AM EST, volume picks up as London is the major trading center for forex trading. At 8 AM EST, New York opens and adds to the volume being traded. Thus, when two of the major forex centers are trading, this is usually the best time for liquidity. The Sydney and Tokyo markets are the other major volume drivers.
Guaranteed Executions
Scalpers need to be sure that their trades will be executed at the levels they intend. Therefore, be sure to understand the trading terms of your broker. Some brokers might limit their execution guarantees to times when the markets are not moving fast. Others may not provide any form of execution guarantee at all.
Placing an order at a certain level and having it executed a few pips away from where you intended, is called “slippage.” As a scalper you cannot afford slippage in addition to the spread, so you must make sure your order can and will be executed at the order level you request.
Redundancy
Redundancy is the practice of insuring yourself against catastrophe. By redundancy in trading jargon, I mean having the ability to enter and exit trades in more than one way. Be sure your internet connection is as fast as possible. Know what you will do if the internet goes down. Do you have a phone number direct to a dealing desk and how fast can you get through and identify yourself? All these factors become really important when you are in a position and need to get out quickly or make a change.
Choosing a Charting Time Frame
In order to execute trades over and over again, you will need to have a system which you can follow almost automatically. Since scalping doesn’t give you time for in-depth analysis, you must have a system that you can use repeatedly with a fair level of confidence. As a scalper you will need very short-term charts, such as tick charts, or one- or two-minute charts and perhaps a five-minute chart.
Getting Prepared to Scalp
1. Get a Sense of Direction
It is always helpful to trade with the trend, at least if you are a beginner scalper. To discover the trend, set up a weekly and a daily time chart and insert trend lines, Fibonacci levels and moving averages. These are your “lines in the sand,” so to speak, and will represent support and resistance areas. If your charts show the trend to be in an upward bias (the prices are sloping from the bottom left of your chart to the top right), then you will want to buy at all the support levels should they be reached.
On the other hand, if the prices are sloping from the top left down to the bottom right of your chart, then look to sell each time the price gets to a resistance level. Depending on the frequency of your trades, different types of charts and moving averages can be utilized to help you determine direction.
Figure 1: EUR/USD Daily Chart
Source: Wordon Brothers
Figure 2: EUR/USD Weekly Chart
Source: Wordon Brothers
In the example above, the weekly chart shows a strong upward bias of the EUR/USD. The price could be heading back to a target of 1.4280, the previous high on November 4, 2010.
The daily chart shows the price has reached the 127.6 Fibonacci extension, at about 1.3975. Clearly, there is a possibility of a pullback to the trend line somewhere in the vicinity of 1.3850. As a scalper, you can take the short side of this trade as soon as your shorter term charts confirm an entry signal.
2. Prepare Your Trading Charts
A forex scalping system can be either manual, where the trader looks for signals and interprets whether to buy or sell; or automated, where the trader “teaches” the software what signals to look for and how to interpret them. The timely nature of technical analysis makes real-time charts the tool of choice for forex scalpers.
Set up a 10-minute and a one-minute chart. Use the 10-minute chart to get a sense of where the market is trading currently, and use the one-minute chart to actually enter and exit your trades. Be sure to set up your platform so that you can toggle between the time frames.
Trading System
In the system shown here, and there are many other systems you can use to trade profitably, we’ve included a three-period RSI with the plot guides set to 90% and 10%. Only trades on the short side once the RSI crosses over the 90% plot guide, and the long side once the RSI reaches below the 10% plot guide, are entered. To nuance the signal, it’s best to wait for the 2nd crossing into either of the two zones (only take the trade if the RSI goes into the zone – either the 10% for longs or 90% for shorts – on the second consecutive attempt.
Now, before you follow the above system, test it using a practice account and keep a record of all the winning trades you make and of all your losing trades. Most often it is the way that you manage your trades that will make you a profitable trader, rather than mechanically relying on the system itself.
In other words, stop your losses quickly and take your profits when you have your seven to 10 pips. This is a scalping method and is not intended to hold positions through pullbacks. If you find that you can manage the system, and you have the ability to pull the trigger quickly, you may be able to repeat the process many times over in one trading session and earn a decent return.
Remember that too much analysis will cause paralysis. Therefore, practice the methodology until it is automatic for you, and even boring because it becomes so repetitive. You are in the business of scalping to make a profit, not to boost your adrenalin or feel like you are playing in a casino. Professional traders are not gamblers; they are speculators who know how to calculate the risk, wait for the odds to be in their favor and manage their emotions.
When to Scalp – and When Not To
Remember, scalping is high speed trading and therefore requires lots of liquidity to ensure quick execution of trades. Only trade the major currencies where the liquidity is highest, and only when the volume is very high, such as when both London and New York are trading. (The unique aspect of trading forex is that individual investors can compete with large hedge funds and banks – they just need to set up the right account. For more, check out “Forex Basics: Setting up an Account.”)
Do not scalp if you do not feel focused for whatever reason. Late nights, flu symptoms and so on, will often take you off your game. Stop trading if you have a string of losses and give yourself time to regroup. Do not try to get revenge with the market. Scalping can be fun and challenging, but it can also be stressful and tiring. You must be sure that you have the personality to indulge in high-speed trading. You will learn a lot from scalping, and then by slowing down you may find that you can even become a day trader or a swing trader because of the confidence and practice you may get from scalping. Remember though, scalping is not for everyone.
Always keep a log of your trades. Use screen capture to record your trades and then print them out for your journal. It will teach you a great deal about trading and even more about yourself as a trader.
The Bottom Line
The forex market is large and liquid; it is thought that technical analysis is a viable strategy for trading in this market. It can also be assumed that scalping might be a viable strategy for the retail forex trader. It is important to note, however, that the forex scalper usually requires a larger deposit, to be able to handle the amount leverage he or she must take on to make the short and small trades worthwhile.
Scalping is very fast-paced. If you like the action and like to focus on one- or two-minute charts, then scalping may be for you. If you have the temperament to react quickly, and have no compunction in taking very quick losses, not more than two or three pips, then scalping may be for you.
But if you like to analyze and think through each decision you make, perhaps you are not suited to scalp.
How to Start a Forex Scalping Strategy
Steven Hatzakis
Steven Hatzakis is the Global Director of Online Broker Research for ForexBrokers.com. He is a forex industry expert and an active fintech and crypto researcher.
Scalping requires quick decision-making, discipline, and a solid understanding of market dynamics.
Whether you’re diving into forex scalping for the first time or looking to refine your existing scalping strategy, my guide to forex scalping will strengthen your understanding of this strategy’s fundamental principles and introduce you to some advanced strategies and techniques.
Learn more about forex
What is forex scalping?
Forex scalping is a popular trading strategy that involves making multiple trades throughout the day with the goal of capitalizing on on small price movements in the forex market. Scalpers attempt to capture profits on price changes in the forex market via pure arbitrage, statistical arbitrage, or high-frequency trading.
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Key principles of forex scalping
Over the last 20 years, the forex markets have become increasingly efficient – making it harder to find (and profit from) scalping or arbitrage-based strategies. That said, because prices can vary across venues, opportunities still do exist. It’s important to note that many brokers prohibit strategies that attempt to profit from server delays or stale prices, also known as lagging prices. And the fast speed of market price updates makes it even more difficult to execute on any arbitrage opportunities that you may find.
High-frequency trading
Scalpers typically execute dozens or even hundreds of trades in a single day. Doing this manually is far more intense and exhausting than trading algorithmically via API or using an automated trading system (i.e. a trading bot). Sometimes scalpers aim to open and close positions within short time frames, (minutes, or even seconds), capturing minimal price movements that can accumulate over time. Check out my guide to the best brokers for high-frequency trading to learn more.
Arbitrage
Arbitrage in forex markets occurs when prices differ across trading venues, and a trader attempts to buy the lagging price and sell the leading price on the basis that the lagging price should correct, resulting in a profit. Of course, these predictions do not always turn out as expected and can result in significant losses.
In some cases, a lagging price may represent a legitimate tradeable price in which prices between different venues differ. In other cases, prices between venues update at different times, creating a latency-driven opportunity.
Short Holding Periods
Scalping positions are usually held for very brief periods, minimizing exposure to market fluctuations. But as a result, in order for returns to be meaningful, the trade sizes can be larger relative to your balance, which can increase the risk proportionally. Thus, proper risk-management is required to turn a net profit, and depending on your win-to-loss ratio or how often you are right on each scalping trade.
Small Profit Targets: Because each scalping trade aims for a small number of pips, scalpers rely on volume to generate profits, both in terms of trade size and frequency of trades.
Time frames and pips
Scalping typically occurs on shorter timeframes, such as 1-minute (M1) or 5-minute (M5) charts. These shorter intervals provide more trading opportunities and help to identify micro-trends. Some brokers provide charts that feature even smaller time frames, including 30-second, 15-second, and even 5-second candle charts (learn more about the different kinds of forex charts by checking out my guide to the best forex charts.
zoom_in Getting granular
If you want the smallest possible granularity, tick charts can also be a helpful tool in your scalping analysis arsenal, as they reveal every single price update as a new “tick.”
A note about pips: Since scalpers target small price movements, even a gain of 5-10 pips per trade can be significant when executed multiple times. For this reason, it’s crucial to size your positions properly when scalping. Learn more about pips in forex and check out my forex pip calculator for a quick, easy way to calculate trade sizes in pips.
Liquidity and volatility
High liquidity ensures that orders can be executed quickly without significant price slippage. Major currency pairs like the EUR/USD, GBP/USD, and USD/JPY tend to be preferred for forex scalping strategies due to their high trading volumes. That said, scalping opportunities can exist across other major pairs, as well as cross-currency pairs and even exotic and emerging market currencies. Scalpers just need to be mindful of trading volumes and how often prices change, as well as the spreads which can be higher on less liquid currency pairs. These higher costs can offset any small gains from a successful scalping trade.
flood Volatility and scalping
Moderate volatility is ideal for scalping. With low volatility comes fewer opportunities, while excessive volatility can increase risk.
Leverage
Leverage allows traders to control larger positions with a smaller amount of capital. While this can amplify profits, it also increases potential losses. Responsible use of leverage is critical. Traders should adhere to strict risk management rules to avoid significant losses. Learn more about leverage in the forex market and check out my guide to the best high leverage forex brokers (or use my leverage calculator to calculate your leveraged forex trades.
Market making in scalping
Market Makers vs. ECN Brokers: Scalpers tend to prefer a variety of execution methods to ensure their strategy is versatile across brokerages, including market-making execution (provided by what’s known as a market maker broker) and agency execution (provided by ECN and STP brokers). Scalping is both execution-sensitive and price-sensitive, so the best brokers for scalping offer a good balance of both good execution and low spreads.
Know your execution method: Generally speaking, it is good practice to know what execution method your broker is using for your specific account type, and the execution methods available to you. Some brokers may change your execution method with or without notice, depending on how they manage their trading desk, regardless of whether they are a market maker or agency broker.
A note on low spreads: Low spreads are essential for scalping strategies, as high spreads can eat into any small profits being generated per trade. However, even low-spread accounts (sometimes advertised as “zero spread brokers”) can experience negative slippage, which can, depending on prevailing market conditions, can impact a scalpers ability to generate profits.
For instance, let’s assume you’re scalping the EUR/USD with a price of 1.0866, aiming to capture 5 pips of profit per trade. You’ve identified a small range and are using a Bollinger Band scalping strategy on a 1-minute chart.
- Entry Price: 1.0866 (mid-point of the Bollinger Bands)
- Take-Profit Target: 1.0871 (+5 pips)
- Stop-Loss: 1.0861 (-5 pips)
- Spread: 0.2 pips (very low spread)
If negative slippage of 2 pip occurs during execution, the trade could get filled at 1.0868 instead of your intended 1.0866. In this case, the effective entry price would be higher, making it harder to reach your take-profit target – or could result in a larger loss if the price reverses to your stop-loss level.
Popular forex scalping strategies and indicators
Bollinger Band scalping
Bollinger band indicators are a popular method for scalping on lower time frames, and below is an example of how this indicator can be implemented in a scalping strategy (I’ve also included an example of code that I wrote.
How to use bollinger band indicators:
Overview: Bollinger Bands consist of a moving average and two standard deviations plotted above and below. They help identify volatility and potential price breakouts, including when prices are potentially overbought and oversold.
Entry Points: Buy when the price touches the lower band and sell when it touches the upper band. Traders can scalp using this indicator on small time frames such as a minute chart, for example, either manually or coding it into a trading bot.
Confirmation: Use additional indicators like RSI for confirmation to reduce false signals and noise on smaller time frames.
The code for such a bot in Pine Script would look like the image below. (Note: This image is an example for educational purposes, it’s not meant to be used for real trading):
Moving averages for scalping forex
Moving averages (MAs) smooth out price data to help traders identify trends and potential entry/exit points. The moving average is a basic primitive in technical analysis that shouldn’t be overlooked. Moving averages are particularly useful in scalping because they simplify the price action and help traders follow the market’s momentum in fast-paced environments.
construction A note on moving averages:
It’s important to remember that MAs are common, simple analysis tools widely used by investors, which could limit their effectiveness (depending on your approach and implementation).
How to use moving averages in scalping strategies:
Common types of MAs:
Simple Moving Average (SMA): The SMA calculates the average price over a specified period. For example, a 50-period SMA on a 1-minute chart would calculate the average price over the last 50 minutes. This smoothes out short-term fluctuations and helps identify the general trend.
Exponential Moving Average (EMA): The EMA gives more weight to recent prices, making it more responsive to current price action compared to the SMA. It’s popular for scalping due to its ability to adapt quickly to rapid price changes, providing more timely signals for short-term trades.
How to use MAs for scalping:
Crossover strategy: A buy signal occurs when a shorter-term MA crosses above a longer-term MA; a sell signal occurs when it crosses below. For instance, a bullish event would be a 5-period MA crossing above a longer-term MA, such as a 20-period, resulting in a buy signal. Conversely, a sell signal occurs when the short-term MA crosses below the longer-term MA. This strategy can work on lower time frames (e.g., 1-minute or 5-minute charts) in the context of scalping when you are searching for quicker trends that can change rapidly.
Trend Identification: MAs can also be used to determine the overall trend direction. For example, if the price is consistently above the 50-period EMA, the market is in an uptrend, and traders might be looking more actively for buying opportunities. If the price is below the 50-period EMA, the market is in a downtrend, and selling opportunities are favored. But additional indicators could provide conflicting signals, thus it’s important to use a variety of time-frames for confirmation.
Forex RSI scalping
The Relative Strength Index (RSI) measures the speed and change of price movements, indicating overbought or oversold conditions. Generally speaking, when the RSI moves above 70, it indicates that the asset may be overbought, signaling a potential sell opportunity. Conversely, when the RSI drops below 30, it suggests the asset may be oversold, signaling a potential buy opportunity. The RSI is also used extensively in other forex strategies, such as trend trading (learn more about the trend trading strategy and see my picks for the best brokers for trend trading).
How to use the RSI for scalping:
Example: On a 1-minute chart, if the RSI moves above 70, a scalper could sell in anticipation of a small reversal. Conversely, if the RSI falls below 30, a trader might enter a buy position expecting a quick upward rebound.
Important note on divergence: When the price and RSI move in opposite directions, this divergence can signal a potential price reversal.
Example of RSI divergence: If the EUR/USD price makes a new high but the RSI forms a lower high, this divergence can signal a weakening trend, providing a sell opportunity.
Bullish Divergence: When the price makes a lower low, but the RSI forms a higher low, this suggests a potential reversal to the upside, making it a buy signal.
Bearish Divergence: When the price makes a higher high, but the RSI forms a lower high, it suggests a possible reversal to the downside, indicating a sell signal.
1 minute scalping strategy
A 1-minute scalping strategy is designed to take advantage of quick, small price movements on the 1-minute timeframe, offering multiple trading opportunities throughout the day. Like any short time frame, a 1-minute time interval can be ideal for traders who thrive in fast-paced environments and have the ability to make quick decisions.
Scalpers tend to open larger positions relative to their balance, and exit trades quickly, especially when small profit targets are hit, or price starts to reverse. As such, the 1-minute timeframe is highly volatile, so it’s crucial to set tight stop-loss and take-profit levels when scalping. It’s worth noting that this approach can be used on other small time frames, such as a 30-second chart, or 5 minute chart, for scalping, but adjustments may be necessary to suit your scalping needs.
lightbulb_outline Pro tip:
A stop-loss of 5 pips and a take-profit of 8-10 pips is typical for 1-minute scalping strategies, although it can vary depending on your needs and the underlying currency pair and market conditions.
In the example 1-minute chart below from Forex-GPT.ai (a forex trading analytics software powered by AI that I authored), we can observe that the price is below all of the moving averages, indicating a bearish trend, and nearing the lower Bollinger Band and Donchian lower band.
Risk management for scalping
Why scalping isn’t for everyone
While forex scalping can be profitable, it’s not suitable for all traders. It’s a high-risk strategy that can result in substantial losses. Manually executing a scalping strategy requires a lot of experience and the ability to sustain focus and operate under intense pressure while handling potentially large trades.
Profits can be made quickly with this strategy, but losses can be realized just as fast fast when scalping. Take it from someone with decades of experience in the forex market – a single small mistake can be extremely costly. I would not suggest this strategy for beginner forex traders.
Challenges when scalping:
High stress levels: The fast-paced nature of scalping requires constant attention and quick decision-making, which can lead to heightened adrenaline and increased stress levels. This can take a toll on any trader; exhaustion can also lead to poor decision-making, which can be fatal to any trading strategy.
Discipline: Emotions like fear and greed can lead to mistakes. Strict adherence to a trading plan is essential. The best traders know in advance what to do in various scalping scenarios so that they don’t need to make any decisions on the spot.
Technical Demands: Scalping requires a variety of advanced tools. Scalpers require a reliable trading platform, fast internet connection, and VPS (Virtual Private Servers) for automated trading. You may also need to develop a sophisticated strategy and the ability to carry out complex calculations while implementing your scalping methodology.
Broker support: Scalping can create challenges with brokers in certain cases, such as when a trade dispute arises if the broker suspects you are trading on latency-driven opportunities, which may be prohibited depending on your customer agreement (another reason it’s important to read the fine print).
Key risk management techniques:
Effective risk management is crucial for long-term success in scalping. Here are some common risk management techniquest that are a good practice to include in your own forex trading strategies.
- Stop-Loss Orders: Always use stop-loss orders to limit potential losses.
- Position Sizing: Use a consistent percentage of your capital for each trade (commonly 1-2%).
- Risk-Reward Ratio: Aim for a risk-reward ratio that justifies the frequency of trades, even if it’s lower than in longer-term strategies.
Forex scalping tips
Enhance your scalping strategy with these practical tips I’ve picked up over the last 25 years as an investor, forex trader, and reviewer of forex brokers and trading products.
Best currency pair for forex scalping
Major Pairs: The EUR/USD, GBP/USD, USD/JPY, and USD/CHF all tend to offer high liquidity and tighter spreads, which can be the ideal conditions for forex scalping strategies.
Exotic Pairs: Generally speaking, it’s best to avoid exotic currency pairs when implementing a forex scalping strategy. They tend to have higher spreads and lower liquidity, which make them less suitable for scalping. Learn more about currency pairs in my guide to currency trading.
Best time of day for currency scalping
While the best time of day for scalping may vary depending on the market conditions and your specific goals, it is useful to be aware of the forex market hours and any key economic news events that could cause volatility.
Peak Trading Hours: London and New York sessions (8 AM to 12 PM EST) typically offer higher volatility and liquidity (read my complete guide to the forex market hours to learn more).
News Releases: Be cautious around major economic announcements, which can cause unpredictable price movements. Using a broker’s economic calendar can help you stay up to speed on upcoming news events. Some of the best forex brokers offer integrated economic calendars within their trading platforms and mobile trading apps.
Forex scalping tools and software
Leveraging the right tools can enhance the efficiency of your forex scalping strategy. This can include broker platforms, third-party software, and trading tools. Understanding how these come together can help complement your approach to scalping whether in forex or other derivative and securities markets. Here are some important pieces of the scalper’s toolkit:
Important tools for scalpers
Custom Indicators: Enhance standard indicators to suit your specific needs.
Automated Trading Systems (EAs): Implement algorithmic strategies for consistent execution either through speciality platforms or via broker APIs.
VPS Hosting: Ensures your trading platform runs 24/7 without interruptions and usually at closer proximity to your broker, via co-location.
Trading Platforms for scalping
Many of the best brokers for scalping offer sophisticated proprietary trading platforms with advanced features, alongside popular platforms from third party developers. I’ve tested dozens of trading platforms and reviewed over 60 forex brokers. Below, you’ll find some of the most popular, most powerful trading platforms for scalpers.
MetaTrader: This wildly popular platform suite from MetaQuotes Software offers advanced charting tools and automated trading capabilities for scalpers. Check out my MetaTrader 4 guide or my MetaTrader 5 guide (or compare them side-by-side in my MT4 vs MT5 guide).
cTrader: Known for its advanced charts and VWAP pricing, cTrader can be a suitable choice for scalpers and scalping strategies. Learn more by reading my guide to the best brokers for cTrader.
TradingView: In recent years, TradingView has become immensely popular across asset classes and trading strategies. Perhaps best known for its charts and social features, TradingView also supports automated trading and backtesting using the Pine script language. Check out my guide to the best brokers for TradingView to learn more.
FAQs
What is the best forex scalping strategy?
There isn’t a one-size-fits-all “best forex scalping strategy,” as effectiveness can vary based on individual trading styles and market conditions. However, strategies that incorporate multiple indicators for confirmation – like combining moving averages with RSI – tend to be more reliable than plain guesswork.
In my experience, I’ve found that the key is to use a systematic approach over time that can increase your ability to leverage any statistical significance from indicators in combination with your own risk-management based on your goals and style.
I also recommend backtesting a variety of strategies and find one that aligns with your risk tolerance and trading objectives. Perhaps the hardest part is tweaking your risk-reward ratio based on your gain-to-loss ratio, so that you know how often you can afford to be wrong. (A scalper who is “right” more often can afford to risk more for a given profit target.)
Is forex scalping profitable?
Yes, forex scalping can be profitable if executed with discipline, effective risk management, and a well-tested strategy. The high frequency of trades means that small profits can accumulate over time. However, the potential for significant losses exists, especially if leverage is misused or risk management is neglected. It’s crucial to keep the average loss smaller than the average profit, over time, and depending on your gain to loss ratio.
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