Forex scalping is strategies that utilize quick opening and closing, typically under 5 minutes. Scalping strategies are attractive because they can yield daily pips. Market exposure is also shorter with a scalping strategy. Shorter market exposure may suggest less risk, although this is debatable. The downside to scalping is time. Scalping strategies require the trader’s full attention. Do not be fooled by automated scalping systems, there is no such thing as infinite profit. Successful scalping traders devote their full attention to the market, there are no shortcuts.
FOREX scalping strategies typically depend on pairs with small spreads since the pip profit is going to be small. You are usually going to make 5-10 pips on your entry/exit. A pair with a 5 pip affect your profit. Scalping strategies depend on technical indicators. Understanding technical indicators is a requirement, however, you should also be monitoring news related to the pairs you are trading. Scalping is not a good strategy during news announcements.
Scalping Strategy 1: Moving Averages
- 25-period exponential moving average
- 50-period exponential moving average
- 100-period exponential moving average
Enter when the price moves above all of the moving averages. Exit after 5-10 pip profits or use a stop loss below the last low of the price.
- Same as buy except you sell when the price crosses below the moving averages
- Scalping Strategy 2: Pivot Points
- Use a 1-minute chart.
Wait for the price to touch any of the pivot point lines. Use a stop loss of 3 pips + spread on the other side of the pivot line. Close within one minute.