Best forex scalping strategy 2023

Daily forex trading requires dedicated market research, an understanding of how and why market movement occurs, as well as having nerves of steel. Traders who look to scalp the market will need to take their knowledge up a notch and hope their nerves can hold out as they move their trading activity to the lively one-minute or tick charts, as opposed to the five-minute charts and onwards.

As a day trader, you will open and close a position within the same trading session. Never leave a position open overnight or into your next session. During your trading session, you may look to trade GBPUSD or trade USDJPY, but very rarely would you open more than two or three trade positions a day. On the other hand, Scalping is a much more active way to trade, opening and closing a variety of positions across various markets or potentially within the same market, at various times of the day.

As aforementioned, those looking to scalp the markets will need to have a healthy knowledge of how, what and why market movement occurs. Some scalpers will rely on breaking news stories and economic events to better predict a chart’s movement. For example, the election of a new Prime Minister or parliamentary discussion surrounding the EU could swing the GBP pairings in a particular direction.

An unwritten rule when forex scalping is the use of five and ten pip closes. By this, we mean scalpers look to profit between five and ten pips per trade before closing a position, repeating this throughout the day.

More experienced scalpers will be familiar with using high leverage to better their chances of a healthier return. Naturally, this also comes with a greater risk, cementing the importance of following your trades carefully or placing stop-losses with all your orders.

Generally, scalping the market is a technique better suited to an experienced trader. A trader who is able to utilise their knowledge across particular currency pairings and understand the knock-on effect breaking news stories and economic events will have on the currency pairings. Before we take a look at the best forex scalping strategy, we want to offer you our top tips to get your scalping career up and running.

• Picking the right broker

As a trader, it is imperative you select the right broker for your trading habits and requirements. As a scalper, not only will you want the safest and most secure platform, you will also need to understand how your broker operates in terms of margin requirements and, in particular, the site’s use of margin calls. Some brokers will automatically close all active positions if your account falls into a negative balance unless you are signed up to their pro accounts. Our friendly customer service agents are always on standby to help with any queries you may have, or you can check out our FAQs and terms and conditions at a time that suits you!

• Understand your platform

If you are looking to take forex scalping trading seriously, we would expect you to be trading from a dedicated desktop or laptop. However, if you are ever caught on the go and needing to access your account, are you familiar enough with the app-based platform to be successful? Does the app offer the same usability, instruments or charting tools? Can you buy/sell with ease?

A simple way to combat any of these questions is to open up your nextmarkets demo account, access via the app or web-based platform, to uncover exactly what tools and functions are helpful on your scalping journey.

• Understanding your markets & preparing your charts

Our next top tip links in nicely with understanding your platform – prepare your charts before getting started! Most top-end platforms will allow for numerous charts to be open at the same time, allowing users to flick through their desired markets with ease.

A nice trick is to open one chart across two or three time periods, giving you a bigger picture of the current price movement. For example, if you are looking to trade EURUSD, trade GBPUSD, or trade USDJPY we would advise setting up the thirty or ten-minute chart, as well as your tick or one-minute chart, to better understand the current trends.

• Check for market slippage

Your forex scalping strategy relies on five-ten pip profits that are made off of precise market movements. In addition to the spread, slippage will cause an unnecessary uphill struggle to bank any profits and needs to be limited where possible.

• Personality
  

As we keep mentioning, scalping for forex trading takes a certain level of knowledge and temperament. The perfect balance between risk-taker and market analysis could see users reap great rewards. However, this style of trading is draining. Sitting in front of your screen, constantly analysing, plotting, on-edge waiting to place your trade at the perfect opportune moment. The intricacies of timing are going to be pivotal when collecting your pips, and being indecisive will cost you in the long run.

Our penultimate section looks to bolster your knowledge of forex scalping strategies, offering three of our favourite techniques on how best to scalp the markets, including a brief overview of each. We advise giving each strategy a try using your nextmarkets demo account, using real-time markets under test conditions to help establish your most profitable and reliable method. First off, we’ll look at the EMA technique.

Continuing with the theme of trends, our next scalping strategy focuses on the stochastics indicator and trend line. For this strategy to work to full effect, you will need to be following a chart that has an uptrend or downtrend. If you are following pairings within a ranging market, this strategy can still be used but will be harder to utilise.

When planning your entry points, you will first need to plot a trend-line on your chosen chart, looking for where the trend line is met or crossed over. These are your points to buy/sell. Next, you will need to look for an overbought or underbought condition within the trend, view the stochastics and use your findings to either enter or exit on the price pullbacks. A handy note to consider when reviewing the stochastics – if it is above 80, it is oversold, and below 20 is underbought.

As we come to the end of our forex scalping strategy guide, we hope you have enjoyed learning about some of the different methodologies used to increase your success in the market. To conclude, we wish to leave you with some key considerations before logging in to your nextmarkets account and getting your charts ready!

Firstly, we suggest getting yourself ready to trade by reviewing our top 5 tips for scalping success – particularly, getting to know your markets and preparing charts. Now you are logged into your account; it is worth reviewing the currency pairings you wish to work with and understanding any daily, hourly or 10-minute trends before opening your one-minute chart.

As we mentioned earlier, time is of the essence, so once you have selected your preferred scalping strategy, we would also recommend plotting your dynamic and static support and resistance points to give you a second level of confirmation before placing your buy or sell orders.

Finally, we want you to remember that scalping the market is a method often used by experienced traders. If you are new to the trading world, or forex scalping, in particular, we advise getting accustomed to our demo account to sharpen your skills before risking any capital.