top of page

A winning strategy, scalping explained

Before you continue, this scalping strategy is intended for traders seeking quick profits while acknowledging the associated risks. When engaging in scalping, the following scenarios unfold:

Unrestrained exhilaration as we indulge in our cherished guilty pleasure of swiftly earning money.

Alternatively, a chilling sensation of unease that creeps into the depths of our stomach, leaving us plagued by the persistent fear of succumbing to unconsciousness when trades turn unfavourable.

Rockstar playing his drum kit, no top clothes on

We are often asked which strategy is the best or most profitable and we answer, it depends.

There isn't a single forex strategy that can be considered universally "most successful" as success in forex trading depends on various factors, including individual trading styles, risk tolerance, market conditions, and personal preferences. However, we can provide you with information on one commonly used forex trading strategy that works for us: Scalping combined with fundamental analysis.

  1. Trend following combined with scalping: This strategy involves identifying and trading in the direction of the dominant market trend. Traders aim to enter positions when a trend is established and ride it until signs of a reversal appear (Scalp).

  2. Fundamental Analysis: This approach involves analysing economic data, news events, and macroeconomic factors that influence currency values. Traders using fundamental analysis attempt to predict long-term currency movements based on economic indicators, central bank policies, and geopolitical events.

It's essential to note that no strategy guarantees success in forex trading. Traders often combine different strategies, employ risk management techniques, and continuously adapt their approaches to changing market conditions. Developing a trading plan, gaining experience, and practicing disciplined execution are key factors in achieving success in forex trading. Scalping is a trading strategy commonly used in the forex market. It involves making quick trades to take advantage of small price movements in currency pairs. The goal of scalping is to accumulate small profits over numerous trades, often within a short period of time. Here are some key features of the scalping strategy in forex:

  1. Trade Frequency: Scalpers aim to execute a large number of trades during a trading session. They target small price movements and hold positions for a very short duration, ranging from seconds to a few minutes.

  2. Short-Term Profits: Scalpers focus on capturing small price differentials, known as "pips." By multiplying the small gains from each trade, they aim to generate consistent profits over time.

  3. Tight Stop Loss and Take Profit Levels: Scalpers set tight stop loss and take profit levels to limit potential losses and lock in profits quickly. This approach helps protect against adverse market movements.

  4. High Trading Volume: Due to the frequency of trades, scalpers require high liquidity in the market to quickly enter and exit positions. They typically trade in highly liquid currency pairs with tight spreads.

  5. Technical Analysis: Scalpers rely heavily on technical analysis, using indicators, chart patterns, and short-term price fluctuations to identify entry and exit points. They often use fast-paced charts, such as one-minute or five-minute timeframes.

  6. Rapid Execution: Scalpers need fast and reliable trade execution to capitalize on short-lived opportunities. They often use direct market access (DMA) or electronic communication networks (ECNs) to ensure quick order placement and minimize slippage.

  7. Discipline and Focus: Scalping requires strict discipline and focus, as traders need to make quick decisions and closely monitor their trades. Emotional control and the ability to act swiftly are crucial for successful scalping.

It's important to note that scalping can be a challenging strategy for inexperienced traders. It requires advanced trading skills, a deep understanding of market dynamics, and the ability to manage risk effectively. Additionally, scalping involves frequent transaction costs, including spreads and commissions, which can impact profitability. Before engaging in scalping or any trading strategy, it's advisable to thoroughly educate yourself, practice on a demo account, and consider seeking guidance from experienced traders or professionals.

This is a good example of a scalping trend that was lucrative.

Following a data release in the US (fundamental analysis) it was clear the USD (dollar ) was falling and Gold was gaining.

Using a 1 minute candle, we entered each trade when the price was at the bottom of the Bollinger band and closed when it hit the middle band , and repeated this until the upward trend was over.

Here's a simplified explanation of this strategy:

  1. Set up Bollinger Bands: Bollinger Bands are a technical indicator that consists of three lines. The middle line is a simple moving average (SMA), and the upper and lower bands are calculated based on the standard deviation of price movements. The bands expand and contract based on market volatility.

  2. Identify the market conditions: Start by observing the price chart and looking for a sideways or ranging market. This means the price is moving within a relatively tight range without a clear trend.

  3. Wait for the price to touch the outer band: When the price reaches the upper or lower Bollinger Band, it suggests that the market may be overbought or oversold, respectively. This could indicate a potential reversal or a short-term price correction.

  4. Confirm with other indicators: It's a good idea to use additional indicators, such as oscillators or momentum indicators, to validate the potential trade. These indicators can provide further insights into whether the market is likely to reverse or continue in the same direction.

  5. Enter the trade: Once you have confirmation, enter a trade in the opposite direction of the price movement. For example, if the price touches the upper band and shows signs of reversal, you can enter a short (sell) trade. Conversely, if the price touches the lower band and suggests a potential bounce, you can enter a long (buy) trade.

  6. Set stop-loss and take-profit levels: To manage risk, place a stop-loss order a few pips away from your entry point. This order will automatically exit the trade if the price moves against you. Additionally, set a take-profit level to lock in your desired profit, based on your risk-reward ratio.

  7. Monitor the trade: Keep a close eye on the trade as it progresses. Since this strategy focuses on short-term price movements, you'll typically aim to close the trade within a few minutes or when your profit target is reached.

Remember that this strategy requires quick decision-making and disciplined execution. It's important to practice risk management, use proper position sizing, and adapt the strategy to your personal trading style.

We recommend high leverage and brokers who allow this strategy.

Disclaimer: Trading and investing involves significant level of risk and is not suitable and/or appropriate for all clients. Please make sure you carefully consider your investment objectives, level of experience and risk appetite before buying or selling. Buying or selling entails financial risks and could result in a partial or complete loss of your funds, therefore, you should not invest funds you cannot afford to lose. You should be aware of and fully understand all the risks associated with trading and investing, and seek advice from an independent financial advisor if you have any doubts.


Los comentarios se han desactivado.
bottom of page