6 Simple Strategies for Forex Scalping
There are different types of Forex trading styles, and among them are day trading, swing trading, position trading, and scalping are the most common and widespread. Based on the timeframe, these styles are divided. Day trading and scalping are short-term trading styles, while position and swing trading are long-term styles. In day trading, traders have to hold their acquired financial instrument for a few minutes or hours, and a scalper has to keep it either for a few seconds or a few minutes. But the position and swing traders can retain their acquired trades for several weeks or days.
Because of the shorter duration, scalping and day trading is considered quite risky. But scalping is regarded as the riskiest style in the entire Forex industry. Here, we will only focus on the trading style, in which a trader has to make profits or losses based on a few pip movements.
Many beginners want to adopt this trading style to make profits, but because of the high risk, they don’t dare use it. But don’t worry. We will reveal the best techniques and strategies that you can use with this style.
Simple strategies for a new Forex scalper
1. Select currency pairs with lower commissions
While thinking about CFD scalping, don’t focus on making huge returns from the start. Instead, focus on learning to build your foundations. It is not guaranteed that a trader can make profits. Therefore, a possible issue that can arise is the commission rate of the broker. For instance, if an investor chooses a broker with higher commission fees, the net amount will either be a small profit or a big loss. So, the wise decision is to select the currency pairs that have lower commissions. You can also trying taking trades with Saxo as they always offer a tight spread which eventually reduces the trading cost.
2. Choosing the volatile currency pairs
Scalping can be quite challenging during a consolidated market or when there are no fluctuations in the price. Therefore, we advise choosing pairs that are volatile. If volatility exists in the market, the price will frequently fluctuate. As a result, it will be easier for an investor to make decisions. Since the timeframe ranges from a few seconds to a few minutes, choose the currency pairs wisely.
3. Use moving average indicator
This is a useful scalping strategy for new Forex traders. Many experts suggest using a simple or exponential moving average to identify the potential spot for trading. The use of this indicator is too simple because the developers have used the simplest theory to establish the indicator. Beginners can use a 5-day, 100-day, or a 200-day period to establish the simple moving average or exponential moving average in the chart.
4. Bollinger bands
This is another simple strategy the experts suggest. The two bands will indicate the market condition and its fluctuations. A newbie can understand the market condition only by measuring the gap between the two bands. A bigger gap suggests the industry is highly volatile, while a smaller gap indicates that there is no sharp flow in the business.
5. Trading with resistance and support
Resistance and support levels can be used to enter into the trades or to exit them. It is considered one of the simplest business plans on this list. Since this strategy doesn’t have any complicated procedure, it can be a perfect one for beginners. It is advised to combine this method with the moving average to trade more effectively.
6. Manual execution
Don’t forget to use a stop-loss limit while entering a trade because the limit will help you to close the deal. Since scalping is a short-term business style, it can be easier for you to handle the deal manually. Manual execution of trades will save you valuable time.
These are the six simple strategies for Forex scalpers. Use these strategies in your demo account and practice them to enhance your efficacy.