Scalping
At some point in your journey as a trader, you will come across the term “scalping”. What does it mean to scalp the market? How is it different from regular trading?
Scalping means taking very small bites out of the market, entering and exiting trades in only seconds or minutes at the most. It is a very precise way to extract profits from the market.
But with such speed and taking small numbers of pips, your trading will be different compared to longer-term traders. For example, spreads will have a higher impact on your profitability. You may be more restricted with the Forex pairs and times of day you choose to trade. You may even need to alter your computer setup to cope with the extra demands of Scalping.
In these lessons, we walk you through the exciting journey of scalping from the basics at the beginning to a complete scalping strategy at the end of the module.
12.1 What Exactly is Scalping?
Let’s begin with the basics and talk about what scalping is, and how the Forex scalper must adjust their trading to the demands of scalping. We want to set you up for success as a trader and that means giving you a strong foundation to your trading.
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12.2 Your Trading Strategy and Scalping
A strategy must begin with a set of rules to enter the market, a set of rules to control the risk on each trade and lastly a place to take profits on trades. These are the three core components that for a complete trading strategy.
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12.3 Spreads and Slippage
Every Forex trader must contend with spreads. It allows the market to function and it’s the cost of doing business in the world’s most liquid financial markets.
However, for some traders, the same spreads have a larger effect on their trading than others. This is particularly true for scalpers because scalpers generally trade more, and the size of the spreads is a higher proportion of their profit targets.
In this lesson we take a deep dive into the major factors that effect spreads from broker selection, the Forex pair you choose to trade, the time of day you choose to trade, and news announcements.
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12.4 Is Your Tech Gear Up to Scratch?
It’s the 21st century and trading today means you must manage technology. What do you need to make sure you can scalp with success? In this lesson, we walk through key pieces of tech gear that effect every scalper. If your tech gear is up to scratch, you will have the confidence knowing your equipment from screens, keyboard, processor, working memory, will all work together to support your quick trading decisions.
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12.5 Forex Scalping Strategy
In this exciting module, we build an entire Forex scalping strategy from the ground up! That’s right, with every rule in place, from entry, stop-loss to take-profit. You can follow along with the lesson and set up the indicators as described on your platform and test the strategy for yourself.
The strategy uses 1-Hour candlesticks and 5-minute candlesticks to identify Forex setups scalping style. Only one type of indicator is required for this strategy: the Exponential Moving Average. Any Forex charting package, such as MetaTrader or cTrader, will have these timeframes and indicators available for you to set this strategy up yourself.
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