A Guide to Becoming an Effective Scalper

This article is a conclusion on how you can use scalping procedures for trading forex.
You must know that not every trader is going to be successful with scalping. However, a lot of the traders can learn all the skills required for winning at this trading strategy through practice. Just like any other activity, make sure that you start your training from the basic level and keep building on what you learn to move towards perfection.
As a starter, the first challenge that needs to be overcome is to control one’s emotions. There are going to be routine aggressive swings that need to be dealt with. But, if you avoid some of the time periods and make relative adjustments to the stop-loss order, you would find that there is no big hazard when it comes to scalping.
However is a list of the principles that you need to adhere to as a dedicated scalper before you are able to make regular profits.
1. Discipline
You can be a scalper only if you are disciplined. A scalper increases his chances of making profits when he works in a systematic manner. And, when automation is required, you shouldn’t delay acquiring the necessary systems. When it comes to building mental discipline, it can require both time and effort, and it is also going to help you in others spheres of your life. When you put your trading business in proper order, there is only something to be gained, and nothing to be lost.
So, when a trade needs to be closed, make sure that it is closed. And, if you must take some losses, they need to be taken. When scalping, you wouldn’t find any time for indecision or worrying or complaining. All you have to do is know what the reality is and make the decisions accordingly, and success is always waiting for you after a few steps.
2. Patience
If you are egotistical or impatient, then scalping is clearly not your business. There are lots of individuals who have made fortunes in trading. However, it has come through sheer grit and perseverance. And, the magnitude of these qualities increase further, when you are scalping. In scalping, tiny gains are likely to combine and form huge profits.
3. Calmness
As a scalper, you would have to maintain your calmness when the market is highly volatile. And, this holds even truer for those who are interested in trading drifting markets. If you don’t have control over your emotions, you would confuse the trading options, and this is something that you cannot afford if you want to be successful. You must get accustomed to mistakes and losses, and correcting all the errors that you make. And, then things would go fine.
4. Maintain Trade Sizing
Maintain regular trading sizes without getting taken away for more profits. This is an integral part of a winning strategy in trading and even more important when it comes to scalping. You must not double your trading size, just because there is a chance that the market would move in a favorable direction.
You shouldn’t enter orders in an arbitrary manner. Maintain your discipline and make sure that all your trades are evaluable by regulating the size of your orders.
5. Focus
Since scalping can prove to be a concentrated activity, you need to be able to focus or concentrate without any distraction on your task to make profits. As a scalper, it is your duty to ensure that your work area and work timings are calm and still. Your family shouldn’t interfere with your work and there shouldn’t be any other distraction when you scalp the forex market.

Scalping Forex Trading tips for April 19

In this one hour report you will get best tips for scalping tomorrow.
I made :
SELL order AUD/USD, stop loss 1,045, limit 1,026
I wait for confomration to make GBP/USD SELL order and I wait 1,292 to make EUR/CAD SELL order.
For EUR/USD I am still bearish.

See Scalping Forex Trading tips from dailyfx expert :

Forex Scalping – A complete guide on how to be a successful scalper

Forex Scalping method involves quick opening of positions and then quick liquidation too. There is no one value for “quick” here but usually it means time of up to 3 to 5 minutes in this case. However, most of the scalpers will maintain this time to just one minute.

This method of Forex Scalping gained popularity as trading style because of its apparent safety. There is a dispute from many traders who say that when scalpers keep their positions for a very short time as compared to normal traders, scalper time for market exposure is much lesser than it is for trend followers and/or day traders. As a result, the risk of getting affected greatly by strong market changes is reduced.

Should you use Forex Scalping

Please note that not every trader can work effectively using forex scalping. The profits that scalper made by every opened position is nominal. However, if profits from all such small opened positions are accumulated it’s a great amount. There is lesser risk taking in scalping which is safe but it also means that scalpers will be missing some great opportunities of profit; they will just rely on small frequent safe gains.

Thus, patience and devotion is a requirement for scalpers. A scalper must work with full devotion and wait to get profits from his small trades. Moreover, traders who are too much excited to get huge profits as soon as possible and think of making more profits for every trader will just get disappointment and frustration in this method.

You must stay attentive in this method

Yes, this method involves much more attention as compared to other trading methods like trend following and swing trading. In scalping, a trader may open positions and close them several times. This number can go up to hundreds of times. And as each of these small trades cannot result in huge loss scalpers may not be careful for each individual trader. Thus, scalper can choose which positions to care more for and which to care less for.

Scalping may seem difficult method in start but it can be attractive and even fun when trader knows well about it and gets comfortable in its usage. But it is really a necessity that scalpers must pay attention and concentrate in order to be successful.

Automated Trading Systems

Scalping can be tough for part-time traders as they cannot give full attention and time to this method. Most of the traders keep trading as second income source and are not willing to spend too much time on it daily. To solve this problem, the concept of automated trading systems has emerged which are available for usage on many online websites. It is advisable not to rely on these systems as they really would not work well for you and in end you will just realize not to trust words of others after losing your money.

On the other hand, there is a safe solution in this which is to design your automated system for yourself. This will require a good guidance from somebody who has experience and some devotion and practice from you. However, the result will help you save time you have to spend on trading and still use the scalping method. You can design your automated system to be semi automatic, designing to carry out systematic tasks (e.g. stop-loss, take –profit orders) and carry analytical tasks yourself.

Some Useful Information about trade sizes in Forex scalping

Scalpers should try to keep consistency in their chosen trade sizes in their preferred method. In scalping, it is very easy to lose money if you start trading in random trader sizes. This is because this increases the chances that one such randomly chosen trade size may end up in big loss annulling the previous small profits. The worse can be losing all money you earned in a day or days. Therefore, scalper must use a good strategy and give his devotion, patience and choose constant trade sizes. This is the beginning of the scalping but yes, if the beginning proves to be good potential profits will increase and potential losses will decrease.

Making Money using Forex Scalping

This article is a continuation of a complete guide on usage of scalping strategies in Forex trade. Its highly recommended that you must have read previous articles to fully understand this article.

As already mentioned, forex scalping is a method which involves small frequent profits for a long time to end resulting in greater sum of profits. However, scalping is not that easy that trader just enters in market and start trading relying on his luck only. Actually, a scalper must follow a systematic approach for decision-taking and market understanding in order to be successful. He must dedicate himself fully to use various strategies in order to make profits in his trading moves. He must also understand market needs and adapt himself to take full use of market changes for his interest. Scalping involves understanding and manipulating many basic things of currency market too like basic structure and inside movements of the currency market. This strategy is different from ones used in trend following or swing trading methods which involve just major market elements.

Exploit quick price movements

There are many scalpers who concentrate on quick movements in currency market rates which occur frequently. In current scenario the target is to take use of sudden variations in market liquidity to get small profits later. This scalping involves volatility in market rather than studying nature and trending or ranging of market. The main purpose is finding the points of temporary low liquidity which is creating imbalance which in result, offers attractive opportunities.

Let’s take example of traders of EURUSD currency pair. There are tight spread in most of the cases however high liquidity of market makes sure there are frequent bid-ask spreads. But if market liquidity goes down because of any reason like news shock and there is a clear bid-ask gap the quote will split in two main parts of data. Let’s say that the bid is 1.4010 and ask is 1.4050. In a short time, there will be narrow bid-ask period and price will drop towards one side. Scalpers manipulate these sharp changes to make fast profits.

When price moves up to let’s say 1.4030, there is normal bid-ask lever. A scalper may sell at this point or wait for price to go down to let’s say 1.4020 and choose to open a long position and close the short one.

Choosing Right Leverage

In scalping, there are small frequent profits which end in earning big sum of profits. However, sometimes even combined returns of trades over a week or month even seem insufficient to the trader’s devotion and hard-work in studying and manipulating the currency market changes. The solution to this problem is to involve certain leverage while using scalping method in forex market trading.

The appropriate leverage to use in scalping is still under debate amongst the scalpers. But, one thing that they all agree to is that all beginner scalpers should set their leverage value as low as they can till they learn the conditions and strategies well. Ideally they should follow this for first three months of their trading. Taking risks is not advisable unless you know well which strategy you will be using in your trading decisions. As scalper must use predetermined stop-loss value and keep it consistent also have to make fast trades as there is not much time to spend on each individual trade so he must choose an appropriate leverage ratio which suits his quick trading. For example, traders with long term positions of up to several weeks may take longer time to give up their position even in the worse scenarios where market is making him lose his money. However, scalper will close his position immediately when stop-loss level is fulfilled and mostly this is an automated process.

Basics of Scalping Strategies

Scalping strategies will be fully discussed in later topics, but one basic thing that you need to understand now is that efficient scalping requires good strategies and analytical techniques. As one single high-value trade can annul all the gains of that day or maybe weeks, the scalper must understand and manipulate market very well and must maintain discipline while carrying out his strategies.

Fundamental analysis usually plays a very little role in overall scalping process. Scalpers prefer the market times in which there are quick and sharp movements in prices and this is almost impossible to judge the result of releasing a GDP during one-minute time frame. Moreover, there are several other events and not just events relating to major releases in market for each day. There are several scheduled as well as unscheduled events which provide activity in market constantly. Furthermore, several short-term movements also make a great impact if there is some big reason behind these movements.

How to choose the best forex brokers for Scalpers

Choose a forex broker
This article is one of the articles which are written in series to provide you complete guidance on scalping. You must read the previous articles to understand this one better.

It is very important for scalpers to focus more on their individual behavior like his preferences and attitude and then pay attention to other key concepts like spreads and leverage. Moreover, the most important factor in getting efficient and profitable scalping is the broker which will be determining factor in deciding whether scalping strategies of scalper will work well or not. A scalper can control factors like profit orders, stop loss, scalping strategies, trading time frame but he cannot control the factors like spreads, server stability and broker’s attitude towards scalping.

There are numerous brokers working in the forex market these days. Each of them is designed to provide certain business model and capabilities which suit certain traders. These small differences have little or no difference on long-term traders. However, scalpers and day traders have to keep care of these factors as they decide the success of your trade.

Low Spreads are beneficial

Traders who are not involve in day-trading or scalping positions will just open positions and close positions at most once or twice a day. Even though the spread cost is a key variable, an active and devoted trading style also makes some profits. However, conditions are very different for scalping traders. As the scalpers open positions and close them quickly, his cost of trades will have bigger difference on his own balance sheet.

For example, a certain scalper opens and closes 30 positions in EURUSD currency pair market in a day with spread of 3 pips. Let’s also assume that he performed trading in constant trade sizes and his average profitable trader ratio is 2/3 with average 5 pips profit for each trade. Also assume that his loss was average 3 pips for each trade. You can calculate the net loss/gain without the spread cost included by the following equation:

Net loss/profit = (Black positions) – (Red positions)
= (5 * 20) – (3*10)
= 70 pips

70 pips is considered a good gain amount. Now you can also calculate the net loss/gain including the effect of spread cost using following equation

Net loss/profit = (Black positions) – (Red positions + Spread Cost)
= (5 * 20) – (3*10 + 3*30)
= 20 pips

The theoretical traders will be astonished with the changes in their account. The profitable trade ratio is double than loosing trade number and the average gain was double than average loss. Even with such tremendous record, the scalping activity still resulted in net loss. To get to break-even point, he must get net profit of 9 pips for each trade with all other conditions being the same.

Let’s use the same methodology of calculations with another broker where spread cost is just 1 pip for the EURUSD currency pair market. There are average 5 and 3 pips for each win and loss respectively. Now, using the same approach:

Net Profit/Loss= (20*5)-(10*3+30*1) = 60 pips

60 pips is a good amount of profit. Let’s discuss now why there is such huge difference in results of both brokers. This is because of one simple reason i.e. we have to pay our broker for each opened position whether it is a win or loss.

Importance of the Scalping Policy

It is very important to know what is meant by scalping policy. Even though many old and well-organized brokers will allow their members to choose scalping techniques with freedom, some other brokers will just refuse to allow this for their members. Several others make client orders process very slow resulting in unprofitable scalping. Let’s see the reason behind this.

To understand the reason, it’s important to discuss first the way brokers leave their positions prior to passing on to banks. Let’s suppose that majority of clients of the broker are losing money in their trading, what would be the result if these losses reached a large size at a time and caused margin calls which could not be fulfilled. As forex brokers are accountable for liquidity-provider banks for loss/profit of their members, they may face time-to-time liquidity crises and worse, bankruptcy. The brokers net-out their member’s positions by playing against them in order to avoid these situations. In other words broker will open short position if member takes a long position and vice versa. As the both orders results are in opposite directions the overall market exposure is nil, liquidity problem is solver and firm is unaffected by loss/profit in member’s account.

Strong technical tools are very important

Technical trading is very important in scalping. The basics do not affect profitability in trade in a very short time period. And when they have an effect, reaction from market is very unpredictable. A good scalper must have professional technical tools and knowledge in order to perform well and gain profits.

Timely execution, No misquotes, No slippage leads to profits

As already mentioned, scalper should always find a capable, well-known, modern broker so that he can successfully execute his trades according to his trading style, habits and preferences to make more and more profits. However, keeping precise quotes and executing trades in timely manner are also very important to have good profits in scalping method.

Reference:
http://www.forex.in.rs/how-to-choose-a-forex-broker-in-17-practical-steps-2/

Choosing the best currency pairs for scalping in forex trading

This article is the continuation of series of our guide on usage of scalping techniques for forex trading. We recommend you to complete previous readings before continuing this article.

Scalping involves high levels of dedication and suitable fundamental and technical setups to achieve the full profitable results. In our previous article we saw some of the necessary things to check of broker and now in the following line, you will see the best currency pairs for scalping strategies.

Generally, scalping is suited for currency pairs which are not easily affected by sudden market movements or these movements occur less frequently. The best currency pairs to perform scalping are discussed in following lines. Among them, EURUSD currency pair is least volatile and most liquid.

Majors

The major group includes currency pairs like EURUSD, USDCHF GBPUSD and several others. These are the most dominant and influential economic world powers. Although we can also include JPY currency pair in this list too however, they show slightly different behavior so it will be discussed in Carry group of currency pairs.

The one key property is liquidity amongst this group. Another property is that they are less affected by sharp changes in market. For example, a market shock which can cause a movement of up to 100 pips for AUDJPY pair will usually cause just 30 pips movement in EURUSD pair. These major currencies are traded in banks all over the world as they are reserve currencies. They are the big market leaders in currency pairs with huge trade volume and usually move very slowly.

Scalpers who are interested in trade ranges or exploiting the slow markets and small movements of currency pairs for small profits can trade in these major currencies using their strategies.

Carry Pairs

Carry Pairs have high liquidity and they are volatile too. These include currency pairs like USDJPY and EURJPY which are traded worldwide. Their trading activities are hectic but they are volatile because of highly risky invest and borrow activities in Japanese currency (JPY). Because of this, whenever there is a sharp change in market these pairs react in a very unpredictable way and makes it impossible for trader to manipulate his trading decisions and more especially for scalpers as they have to take decision in short time periods.

This group of currency pairs is mostly traded for the purpose of interest income. Even though these pairs can be used for scalping but are not advisable because at some time market changes can cause great loss to trader and not even his stop-loss order will help. It is common that spreads widen in carry pairs but opposite to EURUSD pair, carry pairs will have this more frequently, for longer time and deeper.

It is not advisable for beginners to start scalping using carry pairs. Even the experiences scalpers will need good knowledge and skills of trend-following strategies to get good profits from sharp market movements.

Exotic Currencies

Exotic is a common term used in options market but here we will use this term for lesser popular and lesser liquid currency pairs which should not be used for scalping. This group has currency pairs which are volatile including Russian ruble, BLRUSD (BRL=Brazilian Real) and NOKUSD (NOK=Norwegian Krone) and several others which are lesser known amongst traders.

Scalping should not be performed for this group of pairs as there are frequent price gaps and difficult money management strategies if you want to earn in short term time. Beginners should especially avoid these pairs in order to avoid big losses for scalpers.

The Best Times to perform Forex Scalping

This article is amongst the series of articles written about scalping methods. For complete guidance, you must read the previous articles in forex scalping techniques guidance series.

To get successful scalping results, you must perform your activities in a preferred time period according to your strategy. Some scalpers choose directionless and uneven markets using their strategies while others prefer for highly volatile and liquid markets with clear direction. Choice of market is only the trader’s own will and preference but there are clear difference amongst the market environments and successful strategies for both types. In the following lines, vital time periods for performing scalping trades will be discussed which can yield good profits.

Moreover, a scalper also has full control of leaving a trade position if he thinks he is no longer in chance of getting profits by holding it. There must be good money management, risk avoidance and good trading style in order to gain profitable results. Generally, scalpers leave their positions in quick time period for good consistency; there is still no restriction in changing this style and merging it with other trading styles.

Generally, holding positions in volatile periods of market is more beneficial for the scalper. So, if you are a scalper and you want to hold positions for a longer time during volatile changes in market, there is no rule that will restrict you from doing so as scalper.

In the following lines, times are given according to New York time (EST).

7:00am-8:00am

In this time period, there are variable conditions in European market as traders are getting ready to market openings at 8:00 am of New York Market. As there are new releases and option expires from this market in this duration and as statistical releases in the European session have already been released before at 4 am are all absorbed by 8:00am, many traders will just wait and prepare their trading strategies before players from North America enter the trade. The Frankfurt and London markets have this same opening time but as trading desks lessen liquidity is also reduced.

Scalpers who prefer variable environment find such market conditions excellent for using their skills and improving their techniques in this time period. Since there are sharp changes in market, scalper must use strategies which manipulate small changes in market rates to get successful profits. However, you must remember that in some situations you may not be able to judge price correctly and effects can be much more than the anticipated effects.

This time duration is much more volatile than the time period of last 2 closing hours of North American market which closes at 7:00am.Another thing to keep in mind is that in some cases, the pre-news release can make the market more volatile and you can assume a significant price change in time period of 1.5 hours after release at 8:30.

8:00am-10:00am

All New York, Frankfurt and London markets are opened in this time period and there are many key news releases with also option expires taking place. This can be taken as most liquid time period with high volatility as compared to rest of the day time. Using correct strategies can lead to good profits in this time for scalpers.

Micro-trends are very active in this time which means there are quick and sharp changes as there are many market stirs as frequent news and events occur frequently in this time. In order to take full advantage of these changes, scalper must use a good technical approach through which he can best use the situations and exploit the market conditions. The details of technical knowledge of trend scalping will be discussed later; it should be kept in mind that it is very important to create positions and improving profits for this trending market.

In scalping, there are rapid openings of positions and closings. However, the rapid changes in market may cause big loosing situations in which loosing amount may erase the entire winning amount gained from winning situations. So scalper must give special attention to the trades and if you are trading when there are sharp changes in market you must take full advantage of it.

3:00pm-7:00pm

There are two time periods in this phase. In time frame 3:00pm-5:00pm several U.S. banks are still open. However, they are moving towards the closing phase in this time. And the time frame 5:00pm-7:00pm, there is complete silence in the trading activities. All markets get closed at this time and trading activity is very slow. This time is best for scalper who prefers quite and slow moving market with lowest risk level and he can effectively make good profits from directionless and small changes in market. During this time frame, scalping strategies can used both manually or through automated systems.

Approach is the Key to Succeed in Scalping

This article would shed light on how scalping methods can be used for trading forex.
2 Ways to Scalping
Scalping can be seen from two perspectives. In the first perspective, the trader would be focusing only on the gradual fluctuations in price that take place in a fixed period of time and relies on technical methods for trading. In the second perspective, the scalper can take the form of a trend follower or even a swing trader. However, in this case he would be using extremely small and instant trades.
In the second approach, the trader would be exploiting fast and sharp movements in the price and at the same time maintain a keen eye over the market’s overall direction so as to keep the risks down. On the other hand, in the case of the first approach, a trader makes profits from the slower and minor movements in the price that don’t go in any direction. Even when the price keeps moving gradually in both directions, it would usually get back to from where it began, and in this case, the trader is not taking big risks.
Relation Between Psychology and Scalping
Prior to moving on and elaborating on this topic, it is important to understand the relation between psychology and scalping. You must understand that scalping is basically an intense activity that require the trader to maintain calm nerves while facing different types of unforeseen events. It must be clear to you that conquering different problems and sustaining a constant and regular approach for trading is a prerequisite for attaining any level of gains in the forex market. Therefore, how is the trader going to maintain this essential level of emotional control and calmness?
It is a natural point that people maintain their calm and composure in an environment with which they are familiar. For example, most people would be alarmed when a car turns suddenly, but at the same time an airplane making a huge sound would be taken as normal. Simply speaking, the emotional response of a person towards a risk-prone activity is not mainly based upon the nature of the experience but upon the perception.
Reducing Unnecessary Risk
If you want to become a successful scalper, you must become familiar with the conditions of the market in a way that you expect and accept the profits and losses given by the markets. It is required that you convince yourself that there is basically no threat so that you are able to trade confidently. However, you must also be rational to understand that if the market has some real reasons to fear, then it is a good sign.
In case you are taking more risks than you should, using extremely high leverage or if you don’t know where your actions are taking you, you would certainly start feeling nervous and unsafe with your decisions. So, you should begin by making sure that there are no needless risks. Money invested with scare is less likely to make your profits and in scalping, the chances are even lesser. Thus, it is necessary that you eradicate the main reasons behind the fear.
Begin by Investing Small
Even when you have eliminated the causes that make you feel anxious about your scaling activities, then you are to take extra steps in the direction of dealing with the reasons of your unfounded sensitivity. The steps you take should automate your methods. Scalpers are recommended to start with this learning phase using extremely small amount of money that can be increased as your experience enables better returns.
During the beginning phase, the goal shouldn’t be to make profits, but to gain experience. Therefore, you should scalp with smaller accounts having lowest leverage. You don’t have any reason to worry about a minor loss, as it would be helping you gain critical lessons regarding how you should trade and not trade in the markets. When you become familiar with the various market conditions that come with scalping, you would be preparing yourself or the biggest challenge, which is to trade larger amounts in the forex markets. Remember that you cannot reach a mountaintop without climbing rocks.

Is FXCM Forex Borker Good For Forex Scalping?

fxcmFXCM is a retail online-based foreign exchange broker service. It provides it service through both its own platform as well as third party platform. It was started his journey in the year of 1999 from New York. The main advantage with FXCM is it is an automatic process; they do not have any dealing desk like other brokers. With this option, traders are able to do their trades directly on rates provided by the bank. The main purpose of FXCM is to allowing his clients to trade on Forex market with advantage. It is a very useful material works for senior traders as well as beginners. FXCM provides a very 24/7 customer support including weekends. It has self-Multilingual speaking employee who can speak over 20 languages and available at all time. It is gaining his popularity day by day. Some times its seems crazy that they generally offer around a 2 pipe spread.

IC Market:
IC market broadly known as International Capital Market was founded in 2007 in Sydney, Australia. It has a very good reputation as a pioneer in the CFD Market among banks, brokers, private and farms. Do not think it as a STP broker. It is in fact an ECN. They provide web basis trading platform that is much faster than other common web IRESS platform. IC market follows three principles such as around the clock access to global market, better trading technology and very dedicated customer support. They are very much committed to reach margins and spreads to achieve their customer faith.

GO Markets:
Go market was originated from Melbourne in Australia. They introduced their clients with the very fast award winning technology entitled metatrader4. They provided a wide range of information including tradable prices, news, charts and market analysis tools. The market deals very clearly with no dealing desk execution. That is an automatic process which execute automatically all the market price. This feature will give you best performance with speeds and prices. They offer you to exposure above than 160 various country pair as well as straight cut forward transaction with low margin prices more or less 1%. You can experience here with tightest Forex spreads that are depend on various factors. Meta Trader 4 is able to place 5 decimal places which meaning spreads can show fractional value also. For instant, you can get spreads of 1.7 pipes instead of with other brokers. The leverage ratio is 1:100 and proposed their customers of opening standard, mini or micro account.

You can choose any of these brokers for trading that is best for you. In addition, they all have great customer service with better platform for instant execution. You can choose IC Market is if you are planning to sell and buy over the numbers as you are guaranteed with tight spreads and deeply liquidity over the numbers.