Even if you're a complete beginner when it comes to trading, you've probably already come across the term "scalping". Beside what you may think, it has nothing to do with cowboys or the Wild West.
So what does it mean, exactly?
Scalping in the foreign exchange market is a method of trading certain currencies based on real-time technical analysis. The main goal of scalping is to make a profit through purchasing or selling currencies by holding a position for a very short period of time and closing it for a small profit.
Without further ado, let's dive right in and see what one of the most popular Forex scalping strategies—a 1-minute Forex scalping strategy—has to offer.
A 1-minute scalping strategy is a good starting point for Forex beginners. However, you should be aware that this strategy will demand a certain amount of time and concentration from you. If you aren't able or willing to put in effort for at least a few hours a day, FX 1-minute scalping probably isn't the best strategy for you.
FX 1-minute scalping is a day trading strategy, as it involves opening a certain position, gaining a few pips and then closing the position. It is one of the most basic and resourceful trading strategies.
The main aspect of Forex scalping is quantity. It is not unusual for traders to place more than 100 trades a day. For this reason, it is important to pick a broker with the smallest spreads, as well as the smallest commissions.
Talking about the strategy itself, let's look at the strategy validity, necessary timeframe, indicators and sessions.
We suggest you take a look at entry points and necessary stop-loss levels on your trading terminal.
If you have the time to try out the Forex 1-minute scalping strategy, you should absolutely give it a go. The perfect environment to do so is with a risk-free demo account.
Firstly, it is important to broaden your understanding of the market. By trying something new, you can see your strategies in a new perspective and gain valuable insight into the inner mechanics of trading.
Secondly, even if it doesn't work out for you, the risks are so low. You shouldn't suffer major consequences. The entire nature of this strategy is that you can't make high gains or high losses on trades you make.
The first EMA (50) must be positioned above the second EMA (100). When this has occurred, it is essential to wait until the price comes back to the EMAs. In turn, Stochastic Oscillator is exploited to cross above the 20 level from below. The moment you observe all three items arranged in a proper way, it is completely safe to open a long (buy) order.
In order to stay safe, stop-losses are vital. Stop-losses are arranged around 2-3 pips just below the last low point of a particular swing. As our 1-minute Forex scalping strategy is a short term one, it is anticipated to gain 8-12 pips on a trade. Hence the take-profits are best to be within 8-12 pips from the entry price.
The first EMA (50) should be positioned below the second EMA (100). As with the buy entry points, we wait until the price returns to the EMAs. Additionally, the Stochastic Oscillator is utilised to cross over the 80 level from above.
As soon as all the items are in place, you may open a short or sell order without any hesitation. Identical things happen here. Stop-losses are positioned near 2-3 pips below the last low point of the swing accordingly, and take-profits should be within 8-12 pips from the entry price.
In order to determine whether Forex scalping and Forex 1-minute scalping may prove useful for your type of trading, we are going to look more deeply into the pros and cons of scalping
Let's start with the pros.
Now, these pros may sound quite tempting, but it is important to look at the disadvantages as well. And what are these disadvantages?
You have to see for yourself whether the cons outweigh the pros or vice-versa.
To expedite your order placement, with Admiral Markets, you can access an enhanced version of the 1 click trading terminal via MetaTrader 4 Supreme Edition.
Of course, if you're interested in Forex trading strategies, you could check out our handy Strategy infographic - you may find another technique you'd like to try out.
Scalping can be an extremely effective strategy—even for those who use it as a purely supplementary strategy. The same goes for Forex 1-minute scalping.
However, it is important to understand that scalping is hard work. Scalpers are rewarded for quantitative work—the more Forex scalping they perform, the bigger the profit they make. In the end, the strategy has to match not only your personality but also your trading style and abilities.
You might be interested in watching an hour long full explanatory video on Forex Scalping for beginners: