Best Forex Scalping Method

If you want to start scalping on Forex, you need to rethink your whole infrastructure.

Step 1. Pick a Broker

Scalping is different from casual day trading and tends to cause a lot of problems for brokers due to a high amount of orders. Some brokers dont allow scalping outright; others raise the spreads until it becomes unprofitable.

Most brokers do not advertise that they do not support scalpers, so you need to ask their support or scout their websites looking for favorable conditions. Heres what you need to check for:

· Tight spreads. Some brokers offer Premium accounts with 0 spreads for an additional fee, look out for those.

· Leverage. If you are confident in your scalping skills, leverage is a great way to increase your profits. Just learn about the brokers margin call protocols; sometimes they are not suitable for scalping.

· Trading platform. You should know your trading platform as the back of your hand. Also, it should allow for quick order management, ideally — in a single click.

· Response speed. Slow broker systems may lead to slippage and sudden losses of otherwise profitable positions. Always check out how responsive your brokers system is.

· Reliable support. Sometimes things go wrong, and you need a fast way to reach out to your broker. Having a number to call or an open chat window allows to salvage the most out of a bad situation — as long as the support is competent.

If you dont want to waste time looking for options, JustForex has pretty decent ECN Zero accounts. The commission from each trade is not ideal but the spreads are absurdly tight, and the response speed is stellar. They are also using MetaTrader 4 without any modifications while their support is proactive and easy-to-reach.

Step 2. Pick a Market

You want to trade on the markets that have the most liquidity — which pretty much locks you into the major currency pairs. The best of the bunch are:

· EUR/USD and GDP/USD. The Brexit conundrum reigns supreme over the British and European currencies. Almost every day brings more and more news that sway the market.

· USD/JPY. The disturbances in the American politics resonate well with this currency pair — even if Japan is going through a period of relative calmness.

Although, you can trade on any other currency pair too. The only problem would be the low number of situations you can take advantage of — however, this might be less stressful and ultimately beneficial for newcomers.

Step 3. Establish Your Workplace

With most strategies, you can take a moment to read the news, have a drink or watch a cartoon. Scalping, however, is a never-ending chain of deals that demand your constant attention.

If you want to be a successful scalper, you need to create an environment where you wont be distracted by the outside world. If you work from home, consider creating a separate room only for work.

1. Find the least-trafficked room. Otherwise, either your roommates will distract you, or you will have to intrude on their lives. If you live alone, ignore this point.

2. Remove all distractions nearby.While you might want to read a book on your lunch break, you should do it in a different room. Without distractions, you will be able to concentrate on your work and wont be tempted to look away from the charts. You can make a case for a fidget cube or a hand grip, but everything else has to go.

3. Get comfortable. You are going to spend at least 8 hours a day in this room, so get a soft chair and a table that fits your height. A large screen, an ergonomic keyboard, and a vertical mouse will be a plus.

4. Declutter often. Remove the unnecessary stuff from both your real and virtual workplaces. All those paper piles, dirty coffee mugs, and other knick-knacks have to go away before you begin trading. Same goes for the unused desktop icons, browser toolbars, and other distractions.

Finally, dont forget to take the eye-breaks every half-an-hour — just closing them for a minute or two will help.

Step 4. Begin Scalping

There are many theories behind scalping but if you want to make money here and now — the easiest one is a so-called “calm river” strategy. Its not as profitable as the full-on scalping but allows for some leniency and will serve as a great introduction.

You are going to need:

· A 5-minute timeframe on a currency pair with high liquidity;

· Two exponential moving averages — 50 and 20 MA.

Wait until the current price of the quote enters the area between 20 and 50 MA. If it stays there for three candlesticks or more — false alarm, go back to waiting.

But if the price attempts to go out of those bounds — immediately open two orders in the direction of the price movement.

· Close both by StopLoss if the price reverts behind the local extremum;

· Close the first one by TakeProfit when it reaches the StopLoss value;

· Close the second one manually when the trend starts to reverse.

Dual orders allow you to cover your expenses with the first one while chasing the wild profit with the second one. Even if you lose the second order, you will remain in the green.

If you need more details, heres a checklist:

Open a long position when:

· The price is above both 20 and 50 MA;

· The 20 MA is higher than the 50 MA.

· Both MAs have an upward trend;

· There is some space between the MAs;

· The price attempts to leave the area between the MAs with less than three candlesticks closed between them;

· The last candle that opened in-between the MAs closes above the 20 MA.

Open ashort position when:

· The price is below both 20 and 50 MA;

· The 20 MA is lower than the 50 MA.

· Both MAs have a downward trend;

· There is some space between the MAs;

· The price attempts to leave the area between the MAs with less than three candlesticks closed between them;

· The last candle that opened in-between the MAs closes below the 20 MA.

Just remember to try this strategy on a practice account first. Sometimes it needs slight adjustments to different markets.

Conclusion

Scalping is a risky but profitable method of making money on Forex. Its not for everyone and demands a lot from its followers — but it also offers unmatched profits.

There are no guarantees that you can handle scalping and it will be profitable for you — but it is worth a try on a practice account. And once you are ready to trade with real money, make sure that your broker treats the scalpers fairly.

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