Engaging in a successful Forex scalping strategy require that you meet certain challenges and your approach should be bold enough to get good results while remaining nimble enough to take advantage of opportunities when they present themselves.
When you engage in Forex scalping strategy, you must understand the value of the “pip” and how to maximize your advantages. For example, if you are trying to take more than 100 pips out of the market and your spread is only 2 pips, the cost of the trade is merely 2% of the total.
But if you are scalping for 10 to 15 pips with a 2 pip spread, the cost can be as high as 20%.
Therefore, your Forex scalping strategy had better be sharp and direct; otherwise you may lose far more than you might gain. Your competition consists of hundreds of very professional traders who will gladly run you down to get the better deal, so you do have to be careful and know exactly what you are doing. For the pros, they see you as fresh meat and can easily make money off you, even if you lose.
Building you knowledge base is the key to understanding not only how to take advantage when you are doing a Forex scalping strategy, but understanding who your competition is and what they will do. By gaining the proper knowledge, you can turn the tables on those who seek to chew you up, spit you out, and never be taken advantage of again.
The first method in effective Forex scalping strategy is to make your trades during the “off” times to take advantage of what are generally known as “choppy” markets. These market conditions usually occur both before normal trading hours begin and after they close down. These “choppy” markets have much lower activity and therefore you can take advantage of any news or developments that can affect the market.
Between 5pm to 7pm is when US banks are closing down or closed entirely and the Asian-Pacific banks have yet to open, which means even lower trading is occurring. This is prime time to take advantage of changing conditions, as your competition is fewer. Now, looking at the currency pairings, you will, generally speaking, want to “go short” when the currencies are at their peak and “go long” when they reach their lowest point.
Before the US banks open is another time to engage in Forax scalping strategy as many news events are generally announced during this time and you can check iExposure Indicator MT4 to see how market reacts to the changes. This allows you to either “go short” or “go long” depending on how you believe the news will affect the market. Sound Forex scalping strategy combined with experience and growing intuition will allow you to make more hits than misses.
Forex scalping strategy – Conclusion
Another sound Forex scalping strategy is to trade during the opening hour of when banks open in the US, in Europe, and in the Asian-Pacific. Generally, a lot of movement happens during those times as banks react to world news event, this can allow you to take advantage and potentially make a great deal of money.