If you are entirely new to forex trading, you've likely heard of the "scalping" style of trading. Scalping, like other FX strategies, is centered on real-time data analysis, which is also referred to as technical analysis.
The primary objective of scalping is to turn a profit through buying or selling currencies by holding onto a position for only a brief period of time, and closing the trade soon after, all the while locking in some amount of profit.
Although it does require the ability to read charts, this scalping strategy is actually suitable for beginner level forex traders.
Having said that, you should note that this method will require a commitment of your time and focus. If you cannot commit at least a few hours each day to this FX strategy, then you may want to consider using other, less labor-intensive trading strategies.
The internet is overflowing with strategies, but do keep in mind that not all of these will actually be effective.
This scalping strategy is intended to be implemented during day trading, as it consists of opening a trade, waiting for the asset value to climb a few pips, and then closing the trade once that happens.
It truly is among the most straightforward and practical of all trading strategies. The principal element of Forex scalping is simply quantity. When using this method, it is not uncommon for a trader to enter into hundreds of trades during the course of a single day.
This strategy involves the following:
- Asset Type - Currency Pairs
- Time-Frame: 1 Minute
- Indicators: Stochastic 5, 3, 3, and 50 EMA, 100 EMA* (available on MetaTrader 4)
- Trading Sessions: London, New York
EMA (short for Exponential Moving Average) is a popular type of moving average, but isn't widely used as the Simple Moving Average (SMA). Note that the 100 EMA is available on the MetaTrader 4 platform which is offered by EagleFX.
You'll want to test out a variety of entry points when practicing this method and may want to use a free EagleFX to practice using mock trading funds. You'll also need to understand how to set a stop-loss, as you'll want to use this platform function to exit each trade when necessary.
Although the goal is to lock in small amounts of profit, over the course of a day, these small amounts can add up to a significant total. As a final tip, never forget to set a stop-loss. Scalping strategies are often linked to strong emotion, and with good reason.
Fast and furious trading is certainly exciting! Just be sure to keep a level head and remember, this method is about the big picture and therefore there is no reason to become upset over small losses.