3 Forex Scalping Strategies Every Trader Must Know

Are you looking for a way to make fast and consistent profits in the forex market? If so, you might want to consider the fundamentals of forex scalping strategies.

Scalping in forex is a trading style that involves opening and closing trades within minutes, sometimes even seconds, to capture small price movements.

So, let’s read further to explore more.

What is scalping in forex?

Scalping is a form of short-term forex trading. It aims to exploit minor fluctuations in currency prices. Scalpers usually trade with high leverage and place multiple orders in a day, sometimes hundreds or even thousands.

The goal of scalping is to accumulate small profits from each trade. The aim is to add up to a substantial amount at the end of the day or week.

What are the requirements for Forex Scalping Strategies?

Scalping requires a lot of concentration, discipline, and patience, as well as a good understanding of the market dynamics and technical analysis.

Scalpers also need to have a reliable and fast trading platform. This trading method also needs a stable internet connection, to execute their trades without delays or slippage.

When is the best time to scalp forex?

The best time to scalp forex is when the market is volatile and liquid. Volatility means that the price moves significantly in a short period of time, creating opportunities for scalpers to profit from.

Liquidity means that there are enough buyers and sellers in the market to fill the orders quickly and at favorable prices.

The most volatile and liquid time in the forex market is during the overlap of the major trading sessions: London and New York.

This is when most of the economic news and events are released, as well as when most of the traders and institutions are active. The overlap occurs between 8:00 AM and 12:00 PM EST (13:00 and 17:00 GMT).

Here’s another good time to scalp forex. It’s during the release of high-impact news or data that can cause sudden spikes or drops in currency prices.

However, this can also be very risky, as the market can react unpredictably and violently, resulting in large losses or slippage.

Therefore, scalpers need to be very careful and use proper risk management techniques when trading during news events.

Some profitable forex scalping strategies

There are many forex scalping strategies that you can use, depending on your preferences, skills, and risk appetite. Here are some of the most popular ones:

The 1-minute scalping strategy:

This strategy involves using a 1-minute chart. Then it applies indicators such as moving averages, stochastic oscillators, and Relative Strength Index (RSI) to identify the trend and entry points.

The idea is to buy or sell when the price crosses above or below the moving averages, while confirming with the other indicators.

The stop loss is usually set at 5-10 pips below or above the entry point. Meanwhile, the take profit is set at 10-15 pips or when the indicators signal an exit.

The Bollinger Bands scalping strategy:

This strategy is all about a 5-minute chart and it applies the Bollinger Bands, which are volatility bands that show the standard deviation of the price movements.

The purpose is to buy or sell when the price touches or breaks out of the lower or upper band, respectively, while expecting a reversal or continuation.

The stop loss is normally set at 10-20 pips below or above the entry point. Meanwhile, the take profit is set at 20-30 pips or when the price reaches the middle band.

The Fibonacci scalping strategy:

This strategy applies a 15-minute chart and uses Fibonacci Retracement levels. This is where the ratios show how much of a previous move has been retraced.

The idea is to buy or sell when the price retraces to one of the Fibonacci levels (23.6%, 38.2%, 50%, 61.8%, or 76.4%), while expecting a bounce or a break.

The stop loss is usually set at 10-20 pips below or above the entry point, while the take profit is set at 20-30 pips or when the price reaches another Fibonacci level.

For more information about forex scalping techniques, click here.