Forex Scalp Trading Strategy

What is Scalp Trading?

With Forex scalping strategies, you want to be in and out of the market within minutes rather than to wait for the trade to develop.

Essentially, you’re going for the “easiest” part of the move rather than the “best” part. That means that you should avoid quiet and slow markets, and focus all your energy and concentration on highly volatile and highly trending periods in the market. You should also have a clear strategy for your trades, because with Forex scalping in particular there is no room for any kind of deviation or deliberation whatsoever. This style of trading is extremely fast paced, and your concentration and discipline will be stretched to the limit.

To help you to have the best chance of success, here are my best Forex scalping strategies and tips.

Best Markets And Times For Forex Scalping Strategies

Forex scalping strategies work best in highly volatile and highly active periods in markets that have high levels of liquidity. If you were to ask most traders which markets they would prefer to scalp in, most of them would tell you that they scalp the EUR/USD. However, I would personally recommend the GBP/USD instead, simply because it’s much more volatile and there is a very clear time of day when you will have the best chance of success with Forex scalping strategies. This time of day is known in Forex circles as the London Open, when all the European traders pile on their trades into the GBP/USD and creates a huge spike of movement one way or the other. You can apply this time of day strategy with the EUR/USD as well, but since the GBP/USD moves are quicker and larger, it will translate to more profits for your scalping efforts.

Video Explaining a Forex Scalp Trade:

My Personal Forex Scalping Strategies And Tips

Now that you know the best time and market to apply Forex scalping strategies, here are some of my personal strategies and tips to help you get started. First of all, when you are scalping, you need to adopt the mindset that you are not going to capture the bulk of the move. That’s not your goal as a scalper, so leave the beginnings and the ends of the move to the trend followers. Instead, you should be looking for a strong existing move to jump on, ride for a few bars, and then get out quickly. You simply do not want to be hanging around to try to increase your profits further. Personally, I use a 5 minute timeframe with a candlestick display, which gives me the best picture of what is going on in the market and when is the right opportunity to enter my trades.

While indicators are helpful, and you can certainly use indicators like the ADX and MACD to show you when the trend is forming and accelerating, I prefer to focus on the price action alone. As the London Open breakout is a consistent pattern that develops the same way almost every single day, within a few bars it becomes quite obvious which way the price is going. If the opening few bars are solid upwards movements, then I will place my entry stop at the high of the current active bar and wait for it to trigger a long position with an exit stop at the low of the bar, and vice versa for downwards movements. If the price executes your entry and then comes back and stops you out, then there’s a significant risk of a reversal so do not try and enter the position again. It’s best to wait two or three bars to execute this entry for the best results.

The Final Word On Forex Scalping Strategies

In summary, as a scalper you shouldn’t be trying to predict where the market is going, and nor should you stay in trades that are going against you significantly. Your job is to react to what the market is telling you through the price action, follow the plan and avoid “hanging in there” to try to rescue the trade or squeeze more profits out of it.