Forex Scalping Strategies – Beginners Guide
Have you ever wondered what the Forex scalping strategy is? Why is scalping trading one of the most popular methods among many traders looking for a way to increase their incomes as much as possible?
Before we get deeper into the variations of the scalping trading strategy in the Forex market, we’d like to introduce you to Forex trading in the first place. The term Forex is an acronym for the foreign exchange market, and trading refers to the process of speculating on currency prices to earn profits.
Before we move onto the beginner’s guide of Forex scalping strategies, let’s see the real reason behind using Forex, shall we?
Why do market participants use Forex?
Market participants are using Forex to hedge against the interest rate risk and international currency. They are also doing it to speculate on geopolitical events and to diversify portfolios.
Forex traders from all over the world are using different types of trading to achieve their goals, whether it be small profits or large ones. Scalping in Forex has become one of the most popular Forex trading strategies that numerous traders use.
We’ll present to you what scalping in Forex means and the best Forex scalping strategies you can use to increase your profits daily.
What does Scalping in Forex mean?
Scalping in Forex stands for the short-term strategy which goal is to make a significant profit out of tiny price movements. The most common and best Forex scalping strategies include leveraged trading.
As you can assume, leverage in Forex represents a technique that enables traders to borrow capital from Forex brokers to gain more spotlight in the Forex market. Of course, only if a small percentage of the entire asset value as a deposit is used.
It’s essential to know that this strategy can magnify profits but losses too if the market doesn’t move in the right direction to the bet. Because of that, during any trading session, Forex scalpers must always check the need to see if there are any changes.
Now, let’s get started with the best Forex Scalping strategies for you!
#1 MagicSteam Strategy – the most profitable one
Perhaps the most crucial Forex scalping strategy is the MagicSteam strategy, mainly because it’s considered to be the most profitable one. It encompasses improving future trends forecasting. The main issue regarding this strategy is that it’s based on stable trends and less common than flat, which involves fluctuating prices.
If you choose this strategy, you can trade in any market, at any time you like. The time frame for the MagicSteam method is M5. It’s very crucial not to perform more than two operations on a paired device.
As a trader using this particular strategy, do not expect a large number of signals since the data of all parameters collide.
#2 Bamboni Scalping Strategy – long and short trades
When speaking of the so-called “Bamboni strategy,” we are talking about one of the most common Forex scalping strategies that involve six indicators at once. These indicators are:
- Paramon Scalp;
- Fisher Yur4ik;
- Signal Bars 6;
- EAtrend using i_trend;
- SMA (100) and SMA (200)
You need to know that indicators are installed on one chart with the M15 timeframe. Trades are opened in two specific directions, bullish or bearish, while the most volatile trading instruments are selected for trading.
The signal for the long position
The signal for opening a “long position” includes the following conditions:
- The price chart crosses the SMA (200);
- The famous SMA line (100) is above the SMA line (200);
- The green line EAtrend strikes the red one;
Short trade conditions
On the other hand, the so-called “short trade” is opened under the particular, opposite conditions:
- The well-known SMA line (100) is below the SMA line (200);
- The price chart crosses the SMA (10 0);
- The red line EAtrend strikes the green one.
#3 Two Sliding – reliable and simple trading system
Two sliding Forex scalping strategy is famous as the reliable and simple trading system with a small set of tools. The basis of this strategy is very original. A position is opened once two MA lines diverge. While trading, traders are using simple moving averages with 20 and 1 periods.
M5 timeframe is where trading is happening, while the main goal is not to hold the open position longer than 1 hour.
Buy order signals
Here are the conditions that serve as a signal for opening the famous “Buy” order:
- The price curve became the 20-period MA and then broke the upper MA 10 line;
- Both diverging lines MA are directed upwards.
Sell order signals
On the other hand, we have the sell order signals:
- The price curve will go to the 20-period MA and then break the lower MA 10 line;
- Both diverging lines MA are directed downward.
In this case, the stop loss and profit are set at 10-15 points from the market entry point. Speaking of the main advantages of the Two sliding strategy, we’d point out the following ones:
- The low number of false signals
#4 The Five-minute Strategy – trades in USD and EUR currency pair
Another straightforward and profitable strategy in Forex is the Five-minute strategy. Trades are conducted in currency pair USD and EUR. All traders must meet the three following conditions before deciding to choose to buy a financial instrument:
- The price has to break the BB line from below and cross half the distance to the blue line
- RSI needs to be above 70
- The stochastic has to be at least 80 and then distributed
How can a trader sell the currency?
If a trader wants to sell a particular currency, he must consider opposite conditions. It means that the RSI has to be below level 30. Also, the stochastic isn’t above level 80. It means that a blue line needs to be crossed with the red one from below.
In conclusion, there’s also the case that the price line could cross the BB line above and lie between yellow and blue stripes.
The Bottom Line
To cut a long story short, it’s good to remember that they are in steady demand among Forex professionals and novice traders regarding Forex Scalping strategies. The potential of these strategies is to allow a person to build up capital on small deposits.
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