Few Final Tips For Successful Scalping.

Here are some tips for scalpers that they should remember while scalping to gain maximum profit.

1. Discipline: Scalping is for disciplined traders. A methodical, even mechanical approach to trading will increase the potential profits of any scalper, and if automation is necessary, there is no logic in delaying it. Acquiring mental discipline may require time and effort, but its beneficial in every aspect of life, and nothing will be lost as you put your trading career in order. If a trade must be closed, it must be closed. If losses need to be taken, they must be. Scalping doesn’t allow the trader much time for vacillation or worry, and whining and complaining have no place in this style. Face the realities and act in accordance: success is just around the corner.

2. Patience: Impatient, or arrogant traders don’t have a stellar future in scalping. Many people have attained great profitability in trading, but only through persistence and determination. It is even more so in scalping, where minuscule profits are expected to combine into sizable gains.

3. Calm: Scalpers need to remain calm in the face of market turmoil, especially those who want to trade directional, trending markets. Without emotional restraint, trading choices will be confused and arbitrary, and that is the least of what can be afforded by a committed scalper. Get used to losses and mistakes. Accustom yourself to mending the errors. And all should be well.

4. Regular Trade Sizes: This is always a necessity in trading, but even more so in scalping. Don’t make the mistake of doubling your trade sizes in response to a chance streak of wins. Don’t blur your vision by entering orders arbitrarily. Be disciplined, and ensure that your trades can be analyzed easily by standardizing your order sizes.

5.Concentration: Scalping can be an intense activity, and a good scalper needs to have a mind which can concentrate effectively on the task at hand for profit. If you’re scalper, make sure that the place and time period during which you’re active in the market is as peaceful and calm as possible. Have the kids sleep or play, let your spouse tend to her own duties. Ensure that you’re not distracted while scalping the forex market.

HAPPY SCALPING!

How To Choose Right Currency For Scalping.

After discussing about the right time for forex scalping the next most important thing is to determine right currency for scalping, in this article we are going to discuss about this thing. In general, the best currency pairs for scalping are those that are not prone to very sharp movements, or if they are, such movements are less frequent. In that sense, the best group for scalping is the group of major pairs discussed below, and among them, the most liquid and least volatile one is the EURUSD pair.

A. Majors
This group includes pairs such as the EURUSD, the GBPUSD, the USDCHF, and others which are formed by currencies of the most powerful and dominant economic powers in the world. Although the JPY (Japanese Yen) pairs can also be examined in this group, they behave differently and we’ll examine them under the heading of carry pairs.

The main property of the majors pairs is liquidity. Their second characteristic is relatively subdued responsiveness to market shocks. An event which can cause a 100 pip movement in the AUDJPY pair will move the EURUSD by 30 points usually, sometimes less. The major pairs are traded all over the world, by almost all banks and important institutions (since they are often reserve currencies). They are the bulky giants of currency market in terms of trade volume, and move slowly.

Scalpers who prefer to trade ranges, or to exploit slow, and small movements in currency pairs for conservative profits can concentrate their activities in the major pairs.

B. Carry pairs
Carry pairs are liquid, but volatile. Pairs such as the EURJPY or USDJPY are traded all over the world, and trading is activity is hectic, but they are also very volatile, because many financial actors use the Japanese currency to borrow and invest in various risky assets. As a result, when there is a market shock these pairs react in an excessive fashion which is difficult to interpret for trading decisions, especially so in the short time frame favored by scalpers.

The carry pairs are traded mostly for interest income. Although it is possible to scalp them as well, it is not a great idea because at times spreads widen so rapidly that even a stop-loss order cannot protect our account from a significant loss. The sudden widening of spreads is not unique to carry pairs, but while in the EURUSD pair it is often seen after the non-farm payrolls release, or major interest rate decisions, in carry pairs it is more frequent, deeper and longer lasting. Its not advisable for beginners to scalp with carry pairs.

C. Exotic Currencies
Exotic is a term used in the options market, but we’ll use the term to discuss the comparatively rare, less liquid, and less well-known forex pairs which are mostly unsuitable to scalping. This group includes such volatile pairs like NOKUSD (NOK being the Norwegian Krone), the Russian ruble, the BRLUSD pair (with the Brazilian Real), and many other lesser known ones.

This group is not suitable to scalping because unpredictable price gaps are frequent, and it is difficult to use money management strategies in the short term. Especially beginners should avoid them to avoid getting scalped while trying to scalp the market.

Suitable Timings For Scalping.

In scalping time plays a crucial role, so we cant neglect its importance. Some scalpers prefer choppy, directionless markets when utilizing this style, while others prefer to trade strongly directional, highly liquid and volatile markets. This choice is mostly a matter of personal preference, but the two kinds of markets do offer different environments where different strategies will bear greater profit. In this post we will not discuss the methods, but will consider the time periods when a particular approach is likely to bear the best results.

7:00-8:00 am

This is the time period when European markets often experience choppy conditions as traders prepare for the opening of the New York market at 8 am. Since there are option expiries and news releases in this time period, and statistical releases of the European session (which are released around 4 am) have already been absorbed, most traders choose to sit back and reconsider their strategies before North American players enter the forex game. The London and Frankfurt markets are both open at this time, but liquidity lessens as trading desks reduce gear.

This period is a more volatile version of the last two hours before the North American market close around 7 am. Let’s also note that sometimes the pre-news release volatility in the market can assume a directional character as prices rise or fall significantly but slowly over the one and a half hours preceding the 8:30 release. In spite of the directionality, the slow nature of the price movement can make scalping a favorable option over a buy-and-hold strategy in the period leading to the release. Triangles are common, and it is possible to scalp them by remaining in side the range implied by the triangle.

8:00-10:00 am

The best time of the day to apply Scalping strategy in Forex is the opening of London session. Starting at 8:00am GMT and till 9:00am GMT Forex market appears to be more predictable, there are less whipsaws, price movements are more defined.

The two major European currency pairs - EUR/USD and GBP/USD are the perfect target for morning Forex scalping.

The opening of the London trading session is always busy, it brings a lot of participants to the market. During the first trading hour a prevailing trend is established. Quite often it is a continuation of the initial trend before 8 am.

3:00-7:00 pm

This period can itself be divided into two separate phases. Between 3pm and 5pm, many banks in the U.S. are still open, but they are closing gradually as the day progresses. The period between 5 pm and 7 pm is the quietest part of the trading day. Almost all major markets are closed, and while trading is still continuing, activity is subdued significantly. This is the golden sixth of the scalper who prefers calm, and slow markets where small, directionless oscillations can be exploited with great effectiveness. During this one sixth of the trading day, scalping strategies can be employed both manually, and through automation by traders who seek rapid and low risk profits.

The first part between 3-5 pm is more suitable to scalpers who prefer some volatility in the markets in order to realize more sizable profits. On the other hand, since many banks in the U.S. are still open during this period, volatility and risk are somewhat higher than the following period. Between 5-7 pm, on the other hand, almost all major banks in the developed world are closed, and extremely choppy, quiet conditions prevail.

P.S: Throughout this post, all times are ET (New York time).

Criticism Of Forex Scalping.

Now we'll talk about some disadvantages involved in scalping. Scalping is popular, and profitable for some traders, but it is not without its risks. In this section we’ll analyze the scalping strategy and discuss some of its disadvantages so that you can trade with calmer, more reasonable expectations while employing it.

Is it a good idea to scalp in strongly trending markets?

Many traders favor scalping in strongly trending markets. This approach is defended on the basis of the notion that scalpers thrive in volatility, and that trends cause a great deal of volatility creating many trading opportunities. But is this idea justified on the basis of facts and analysis?

Let’s first remember that while scalping, one misplaced, carelessly created trade can wipe out the gains of tens of successful trades in a short time. A scalper needs consistency above everything else. Discipline in trade sizes, take profit, and stop-loss orders, and a degree of skepticism towards arising opportunities are important components of a successful trading strategy. Let’s ask ourselves, then, which kind of markets offer the best conditions for the implementations of these principles? Would scalpers thrive in strongly trending and volatile markets, or quiet, calm markets where activity is subdued and volatility is low? Naturally, the best conditions will be found in the latter. Calmer markets allow us to exploit small fluctuations over a long time with little risk and good profits. Trending markets move rapidly, with widening and contracting spreads, where exiting a position before it reaches its full potential can be dangerous, and maintaining a calm and composed attitude is an additional problem.

We read online that scalping is best in strongly trending, liquid, volatile markets, and some of us wonder why so many people subscribe to these beliefs. This attitude is present either because the traders who write the articles don’t have that many experiences in scalping or because they use scalping strategies on a trend following scheme. The latter approach is not very useful to beginners, however, because they mostly choose the scalping style to make quick profits without worrying much about analysis or strategy.

Brokers Hate Scalpers

Let’s first state that no forex trader will do himself any good by making real, or imagined enemies of brokers. Regulated brokers are monitored by authorities, and most of the firms in the business are legitimate actors with decent practices. There’s no way of trading the market without brokers (or ECN’s, but they are not used very often, and have their own disadvantages). And there’s no logic or merit in demonizing brokers as crooks or thieves. We, as traders, want to trade the markets, and to do that we need the services of firms which are monitored and regulated by the authorities.

In previous sections we have already discussed how brokers hedge against client losses, and noted that a majority of client positions can be netted out against each other without the broker having to commit any funds. In fact, when such matches can be found, the broker does not even need to pass the buy or sell order client to the bank: all that it must do is matching the order with another customer’s opposing order while pocketing the commission, and assuming zero risk. The problem with scalpers arises because their rapid entry/exit orders make the task of hedging hard for forex brokers with slow servers or outdated software. When they can’t do so, they get nervous, become worried that the scalper is trying to manipulate the system (exploiting latency issues, as they are called), and sooner or later terminate the account of the scalping trader.

There are no statistics on the success ratio of scalpers, but there is no reason to assume to their success rate is any different from that of the overall market. Indeed, scalping is a demanding, and somewhat more sophisticated trading style in comparison to day-trading, or swing trading; there is no reason to expect that beginners will do better in scalping in comparison to their performance in these other trading styles.

Emotional Pressures

Scalping is probably not the best choice for a beginning trader. The style demands constant attention, concentration, and diligent adherence to principles. The fact that trades are small-sized and quick means that there is a need to be very methodical about trade sizes especially, because irregular sizes will make us blind while trying to determine the performance of our account, and prevent the achievement of a smooth, regularly rising trading account.

For a real scalper, fear is not the main emotional issue, unlike the case with many other types of traders. Since risk in each trade is usually very small, and it is possible to stop and exit any position without much trouble, there is little danger of the account being wiped-out or greatly reduced as a result of any single trade. Yet, the major emotional issue faced by scalpers is overtrading and agitation.

The scalper must know where to stop, and yet if he’s nervous, he’ll be unable to stop. Overtrading, based on the belief that the next trade will be the successful one “since one’s luck can’t go wrong so often” may quickly erode the account balance of any trader, and it’s especially dangerous for the scalping strategy. It is on the whole a good idea to suspend scalping activity if you’re feeling that the emotional burden of scalping is too much for you at any time. Do not fight yourself, or the market, but stop trading for a while. It is certainly better than losing your wits trying to profit by battling the market, in other words, trying to improve by worsening your condition.

Illusion

Let’s conclude this part by briefly discussing the dangers posed by faulty interpretation of data. Sadly, many beginning scalpers still evaluate their results on the basis of some ethereal concept termed luck. In a string of wins, good luck is thought to be the causal agent, while a strong of losses makes us think that we have no luck on that day. Since many believe that one cannot have bad luck continuously, there’s a tendency to expect profits soon after a string of losses, and vice versa. Since individual results in short term trading are random, there is no justification for this reasoning, and at least as far as mathematics is concerned, a gain or a loss are equally likely even after a string of ten or twenty gains or profits in a raw.

The other issue which traders must grapple with while evaluating their results is the clustering illusion. In this case, traders will see “order” in a string of random data (such as a list of scalping trade results). After seeing a string of, let’s say, five wins, they will begin to assume that this time their strategy makes wins more likely, and in response they will increase trade sizes, with often disastrous results.

In order to achieve profitability and a degree of safety in scalping it is extremely important that consistency in trade sizes be maintained. If you make small profits with ten 1 lot scalps, and occasionally decide to throw in 3, 2 lot trades where you feel you’re doing well, you’re taking the risk of never going beyond breakeven, in the best case scenario. Make sure that you don’t get deluded by luck, or the clustering illusion to randomize your trade sizes. You can instead use methods like the z-score to see if the win-loss streaks of your scalping strategies are any different from random results.

Some Forex Scalping Tips That Anyone Make Benifit From.

If you pay attention to trading techniques, then you probably have heard of a little thing we like to call Forex scalping .But there are several things that newer Forex scalpers must take into consideration.

1. Always ask if it's allowed.

This is the first and biggest thing that you need to do when scalping Forex. Many users try this technique and make huge sums of money only to find that their account has been deleted! This is because many brokers tend to look down upon Forex scalping. But why you ask? To know the answer to this question, you need to know a little more about how a brokerage ultimately works. Most brokers trade against their customers. Some of the bigger companies have workers that do nothing except taking positions against their traders. This hedging allows the company to easily triple or quadruple their profits. When a persons scalps Forex, the person on the other side can't take the correct position in time. Along with the fact that many scalpers trade with a 95% accuracy. This severly hampers their profits. So many call it cheating the market. Even though we all know that it is virtually impossible to do so. So always make sure your brokerage allows you to trade with this amazing style! I like to call and talk to a manager or someone important. I have asked people on the chat if scalping forex was allowed, they all said that it was. Then when I traded, I had emails telling me to either slow down or be kicked out. So give them a call, it was well worth it.

2. Scalping in numbers is the secret!

Remember earlier when I told you that scalping a single pair won't make you much money? Have you ever heard of the saying, "There's power in numbers?" Well this is a scientific fact, that has been proven over and over again. When you scalp a pair make sure that you purchase a high amount. This is to maximize your profits. So if your trade makes 2 pips you can make upwards of a couple hundred to a couple thousand dollars.

3. Be careful.

This is probably going to be one of the most important tips ever. Along with the quick profits, you can and most likely will come across a couple big losses on this magical Forex scalping journey! This is why you have to be able to accept these losses. Trading on a small scale can be easier for some. I always suggest that newer traders should really try to scalp on a demo account. Get comfortable with trading on a short term scale. I would advise that you should only scalp on a live account when you feel 100% comfortable with every trade. Imagine the demo account being your money. Imagine taking a huge loss in real life when you make a mistake. When you feel fully comfortable with everything even after a big loss, then you are ready grasshopper.

4. Scalp the Forex market with a plan!

This is the best way to avoid losses during your adventure. Use that demo account that we talked about earlier to find a suitable set of indicators or oscillators or even both! The demo account allows you to trade in a real time setting while trying out different systems. This can greatly increase your odds of making a good profit. Try every single combination of technical indicators. Do this until you find a pair that you like. Once you find one then you will truly be on your Forex scalping journey.

Forex Trend Following VS Forex Scalping.

Let's take a quick view of trading. Trend following has been around for decades. Markets had to be viewed from a much different perspective than we can look at them now.

Because of this there is decades of information about trend following. That is why trend following is so popular. There is a direct relationship to the increase in individuals getting involved in the markets to the increase in the flow of market information to individuals. Hence, most individuals that started trading in markets typically where trend followers. Because of this growth in trend following. Trend following became a self fulfilling prophecy.

Online trading was not very popular until everyone had high speed internet access. Which statistics show was a little as over 5 years ago. This is when high speed internet began to become readily available.

Online trading is now the fastest growing segment of all markets. Because online trading is relatively new, so too is scalp trading. Which means there is mountains of information about trend trading, compare to the amount of available information about scalping.

The reality is that because scalping is still relatively new. Most individuals attempt to learn to trade a trend following technique and try and scale it down to a smaller time frame to trade on an intra-day basis. That concept does not yield consistent profits over time. But it is the direction most people take because there is more information available on trend following than scalping.


A common mistake the self-taught or trial and error trader makes is to co-mingle strategies and techniques. Ultimately becoming what I have labeled the 50/50 trader. Sometimes things work and sometimes they do not.

Which means trading performance was based on more luck than skill. As a scalper you do not use any trend following techniques. This means you have to be careful what type of information you are viewing.

Since 90% of the available information is founded on trend following. Once again that is where most start and why they are not successful attempting to scalp trade.

Scalpers need lots of volatility. Scalpers want the directional bias of the market to be changing constantly. Trend followers steer away from volatility. Trend followers need the directional bias of the market they are trading to be consistent.

Trend followers cannot trade in range-bound conditions. Trend followers typically have more losing trades than winning trades. They need the winner to overcome the losers.

Scalpers love range bound conditions and can trade in either condition (trend or range). Scalpers have more winning trades than losing trades. That keeps the trader in a positive frame of mind.

The forex is the perfect market for scalp trading. The forex is the most volatile market on the planet. This equates to more trading opportunities for the scalper. The forex is range-bound 80% of the time and trending 20% of the time.

To use a trend following technique trading the forex you have to use extremely large stops. Because of the consistent range bound activity that occurs. Because of the large stops (greater risk) trend following requires trading accounts in excess of $25,000 in order to aligned with sound equity management principles.

If a currency pair moves 75-100 pips a day. How easy would it be to find one 15 pip move? This would equal a net 10 pip profit on average. How would you like to make $500 in less than 30 minutes, instead of 6-8 hours? Scalpers do that. Trend followers have to hold on to trades for hours, days and weeks.

There is also a higher probability that you will be able to find a net 10 pip move daily than a 100 pip move. This means less stress and anxiety. Technology now makes scalping possible. We are now at a point where telephone access via a landline for the individual is at a decline. Cell phone technology has overtaken old telephone technology. Trend following is a dated style of trading. Scalping is on the leading edge of technology.

Trade 5 lots on one net 10 pip trade and the = $500 in under 60 minutes, instead of hours or days in a trade. There is simply no need to trend follow in the forex market. You can make the same money in less time.

Steps To Create Forex Scaliping System.

In this post, we will go through some of the forex scalping strategies so that you can put them to use for your trading.

When it comes to scalping the market, there are a few factors you have to put in mind.

* You are going to have low risk reward ratio. When you are scalping the market, you are only looking for profit around 15 to 20 pips but it is hard to find entry with low stop loss less than your profit. Therefore you are going to lost more than you can make for every loss trade.

* To compensate for that, you need to have a high winning probability for forex scalping to be feasible for your account.

Here are some forex scalping system that you can use:

* Look for key support and resistance: As price usually are repelled by the key support or resistance level, there are a high chance that you can enter a trade opposite to the current movement trying to make profit from the repulsion.

What are the key support and resistance levels?

* Pivots: pivot trading are used by big dog and it usually provides very strong support or resistance and this is where you can enter your trade.

* Fibonacci Extension: Fibonacci also serve as good level of support and resistance especially the 0.318, 0.5 and 0.618 level. “Keep a LOOKOUT for them”
















* Past Highs and Lows: You need to know that the previous high will now turns into your new support and previous low will now turns into your new resistance.












With the understanding of these important support and resistance levels, you can now setup your own forex scalping system with these levels in mind.

Forex Scalping.

Forex scalping is one of the most profitable techniques in forex trading. To perform forex scalping, you will only have to open and close your trading positions for a very short period of time. If done right, you will be able to generate profits easily. Although you may only earn a small amount, the times you will work here are shorter. So, imagine getting a few dollars for one minute of work. One of the reasons why there are people who try forex scalping is because it is quick in nature. The profits that are gained can build up really fast. In addition, you do not have to risk your money because since it will not cause a huge differential in the prices for buying and selling transactions. Therefore, most people view this as a safe technique.

If you want to do forex scalping, you should know the rules here. You should be able to exit your position speedily especially if the movement of the market does not appear to be in your favor. You will have to make quite a number of forex scalping trading transactions for one day alone. Usually, you can perform ten up to a hundred or even more if you want. You should not pray that the direction of the market will turn around and do not hold on to a position that is clearly losing.

Now that you are well aware of the rules, you will have to focus on your objective, which is to buy or sell a currency pair at the ask or bid price. To profit, you will have to sell them for a little higher pips. Here, you will have to make sure that you have a well devised exit strategy in forex scalping so that you will not accumulate large losses.

Most of those who make use of the forex scalping strategy utilize one minute, five minutes or hourly charts. Also, they have to select a good brokerage company that will provide the best platform so that they can execute their orders effectively. If you want to be a part of forex scalping, you can follow the step by step process here. The first procedure in forex scalping is to visit a reliable website that lets you check the release time for the important data. Next is to take note of the previous day’s open, close, low and high positions. Then, you should be able to make out the candlestick studies, which can be found on the daily charts.

After you have identified the candlestick readings for your forex scalping, you will have to classify the major trend lines including the support and resistance in the charts. From here, you will be able to discover the sentiments of the market for the day, whether it is bullish or bearish. Proceed by going to the hourly charts where you will once again have to find out the support and resistance. On the hourly chart, you will have to watch out for the candlestick formation. Now the last step for forex scalping requires you to regulate your risk to an entry level. This should be done as soon as you are 10 pips in the cash.

Actually, forex scalping is not hard to implement given that you have correctly invested your time in making researches about this particular strategy. You should not venture into this market if you are not prepared. In reality, this is much safer than the other forex methods and this is one of the main causes why this technique is attractive for the traders.