Forex scalping is a popular trading strategy used by traders to pick small profits in and out of positions in quick succession several times in a day. The traders usually aim for small gains of about 5-10 pips per trade and sometimes less than that.
Scalpers only focus on the minutes 1-5 timeframe charts since their drive to trading is excitement from the sheer adrenaline rush of making money quickly.
An average scalper may open tens and even hundreds of trades within a single day since their positions only last for as little as a few seconds.
Is It A Profitable Strategy?
It’s easy to completely disregard forex scalping strategy as unprofitable. And the truth is, most scalping traders struggle to break even. The market on those extremely short time frames is usually very erratic so scalpers don’t have a chance of filtering the market noise to get great setups.
Since the largest percentage of scalpers is beginners who don’t know how to trade yet, below are some pointers on how to profit scalping Forex before you get a trading strategy.
1: Start with little money
Even better, start by demo trading. Most scalpers don’t really demo trade so start by opening small positions on each trade. It’s very tempting to go all in on a single trade to get the most profits but remember: scalping won’t make you rich.
So, be conservative and open positions with little money to reduce your risk. Sure, the profits will be less, but so will be your risk.
2: Trade only the pairs with the most liquidity
The most traded pairs always have the highest liquidity. Always focus on them since they’ll have the least spreads. The least spread is important so that you’ll be able to gain some profits after you’ve covered the cost of the spread.
3: Trade during the busiest hours of the market
Just like the most traded pairs, trading during the busy market hours is great because the spreads are lower. When the market gets less busy, the spreads widen which can make it expensive for a scalper to get in.
4: Trade with stop loss
This is a rule in trading. But one that has to be followed by scalpers the most. Since you’re dealing with market spikes constantly, the best way to protect your account is by setting a risk amount that you’re okay losing and setting a stop loss to protect yourself.
5: Take time to learn a working strategy
You can earn small profits from scalping. But the risk is always higher than the reward so take time to learn the longer time frames to increase your odds of success.
Can you program scalping strategy on a robot?
It’s very difficult to come to a conclusive answer especially with an EA you have just bought on the internet. Most scalping EAs in the market don’t really work. But taking the time to design your own Expert Advisor may be worth it.
You can program an EA you’ve designed to trade for you, but even with this, it’s best if you first analyze at what times it does best and how many pips it can make for you per day.
Risks of Forex scalping
1: You’ll always need to sit for long hours each day at a computer.
2: Scalping brings more risk than reward since the odds are always against the trader.
3: Trading on those charts demands swiftness and no room for mistakes. You must have high concentration abilities.
4: Most brokers are against scalping and those that aren’t, have a minimum amount of pips you have to win for your trade to be valid.