To “scalp” the foreign exchange market means to trade currencies quickly by making a series of quick decisions.
Scalping means buying and selling for a short time and then quickly closing for a small profit. This is a common way to trade currencies.
It’s a method based on a collection of signals from technical analysis charting tools used to make many daily trades. When all the signs on the charts point in the same direction, it’s time to buy or sell.
Best pair for scalp forex trading
Scalping is a basic trading strategy in which a currency pair is bought or sold quickly for a small profit. This is because they will be entering and leaving the market often.
And these currencies have the most transactions and the smallest spreads, both of which will reduce their potential losses. When the margin is small, a slight change in the rate is all you need to make money.
Some traders may “scalp” minor and exotic currency pairs because they are more volatile than major currency pairs but also carry more risks.
When is the right time of day to scalp in forex?
The best time to scalp depends on the currency. But the best time to trade any major currency pair is usually during the first few hours of the New York trading session when the USD has the most trading volume.
Some scalpers try to trade during the early morning hours when price changes are the most extreme. But because the results could be wrong, this strategy is best left to experts and should be avoided by novices.
Scalping strategies and tips for foreign exchange
- Scalping traders are more likely to be successful if they focus on only one currency pair or trading account at a time. Multiple-position traders often lose focus on the technical charts because they must keep an eye on many trades simultaneously.
- The best currency pairs to exchange are those with many buyers and sellers. Major currency pairs need high liquidity so traders can get in and out of the market quickly, especially for scalping.
- Scalping is a high-risk trading strategy used by many of the same types of people. To be good at scalping, you need a sharp mind, a good understanding of the situation, and a lot of persistence. Because they can decide quickly, scalpers have a better chance of making money.
Scaling: getting ready
To be successful as a scalper, you need a site that lets you buy and sell quickly and has good connections to the people who set the prices. Usually, the site will show a “buy” and “sell” button for each currency pair that can be traded.
The trader must only click the right button to enter or leave a position. In liquid environments, the time it takes to process a market can be as short as a few milliseconds.
Bottom line
Scalping is a speedy process. Thus, scalping could be a good fit for you if you’re a trader who likes to be in the middle of things and thrives on studying one- or two-minute patterns. Scalping could suit you if you are quick on your feet and can lose only two or three points (a small amount of money) and move on.
