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100 accurate forex signals
Let us begin by saying that a scalping forex strategy is not for everyone. This is a trading system for investors who love adrenalin, who simply cannot live with the boredom of checking forex prices once a day, making small adjustments and allowing the market to take its course.
What it involves is trading in a very short time frame, with the smallest possible stop loss. Scalpers often open and close trading positions within a matter of minutes, which is why they usually use one-minute charts to guide their trading decisions. Every trade comes with a built-in cost and commissions in the form of the spread, which can easily eat up a series of small wins. With scalping it is often not viable to set up take-profit levels, since your target price is simply too close to the entry price.
This is where you will often see a lot of action. Monitor the price of your chosen currency pair for minutes and wait for a trend to emerge. To give yourself at least a reasonable chance of success, set the target profit level to not less than 1.
A simple scalping system is to trade on breakouts. One way of determining your entry point is to set it at just below the lowest level of the current candle. Another possibility is to use Bollinger Bands. In this case, set your entry point at point B, where the price breaks out of the band and exit when the target profit has been realised.
At point A, the red period moving average dropped below both the longer-term averages, which would have been a good entry point in this situation.
Once again, the exit level should be as soon as the trader has realised the target profit level. What is clear from the above discussion is that the three systems give a fairly similar reading, at least in this particular example, but this will not always be the case.
Using any one of these systems and waiting for confirmation from a second one might be a prudent option, if time allows. If you have spent any time at all monitoring forex charts , you will undoubtedly be aware of spikes. They are those awful price surges, up or down, that can upset even the most sophisticated of trading systems. You will also have noticed that often, after such a surge, the price gives up much of the former gain and settles at a level very close to where it started.
One way to make use of this behaviour is as follows. Exactly how many pips this should be depends on the particular market. Use the Maximum True Range to guide you in this regard. Scalping only works in markets where the trading cost per transaction is very low. Some currency traders offer spreads as low as one pip per trade. This gives the investor a reasonable chance to succeed. If scalping attracts you, stay away from markets where spreads are wide, which is often the case if you are involved in spread trading on the stock market.
Disclaimer The comment in this blog is the personal opinion of the contributors and not InterTrader. The content does not constitute financial, investment or tax advice. You are advised to discuss your specific requirements with an independent financial adviser prior to entering into any bet. Spread betting and CFD trading carry a high level of risk to your capital and can result in losses that exceed your initial deposit.
They may not be suitable for everyone, so please ensure that you fully understand the risks involved. Breakouts A simple scalping system is to trade on breakouts. EMA Convergence A third option is to use convergence of two or three moving averages. Conclusion What is clear from the above discussion is that the three systems give a fairly similar reading, at least in this particular example, but this will not always be the case.
Summary Scalping only works in markets where the trading cost per transaction is very low. Get all the latest articles from InterTrader.
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