forex scalping strategies pdf
Forex scalping is a popular method involving the quick opening and liquidation of positions. The term “quick”
is imprecise, but it is generally meant to define a timeframe of about 3-5 minutes at most, while most scalpers
will maintain their positions for as little as one minute.
The popularity of scalping is born of its perceived safety as a trading style. Many traders argue that
since scalpers maintain their positions for a brief time period in comparison to regular traders, market
exposure of a scalper is much shorter than that of a trend follower, or even a day trader, and consequently, the
risk of large losses resulting from strong market moves is smaller. Indeed, it is possible to claim that the
typical scalper cares only about the bid-ask spread, while concepts like trend, or range are not very significant
to him. Although scalpers need ignore these market phenomena, they are under no obligation to trade them,
because they concern themselves only with the brief periods of volatility created by them.
Forex scalping is not a suitable strategy for every type of trader.
The returns generated in each position opened by the scalper is usually small; but great profits are
made as gains from each closed small position are combined. Scalpers do not like to take large risks, which
means that they are willing to forgo great profit opportunities in return for the safety of small, but frequent
gains. Consequently, the scalper needs to be a patient, diligent individual who is willing to wait as the fruits of
his labors translate to great profits over time. An impulsive, excited character who seeks instant gratification
and aims to “make it big” with each consecutive trade is unlikely to achieve anything but frustration while
using this strategy.
Scalping also demands a lot more attention from the trader in comparison to other styles such as
swing-trading, or trend following. A typical scalper will open and close tens, and in some cases, more than a
hundred positions in an ordinary trading day, and since none of the positions can be allowed to suffer great
losses (so that we can protect the bottom line), the scalper cannot afford to be careful about some, and
negligent about some of his positions. It may appear to be a formidable task at first sight, but scalping can be
an involving, even fun trading style once the trader is comfortable with his practices and habits. Still, it is clear
that attentiveness and strong concentration skills are necessary for the successful forex scalper. One does not
need to be born equipped with such talents, but practice and commitment to achieve them are indispensable if
a trader has any serious intention of becoming a real scalper.
Scalping can be demanding, and time-consuming for those who are not full-time traders. Many of us
pursue trading merely as an additional income source, and would not like to dedicate five six hours every day
to the practice. In order to deal with this problem, automated trading systems have been developed, and they
are being sold with rather incredible claims all over the web. We do not advise our readers to waste their time
trying to make such strategies work for them; at best you will lose some money while having some lessons
about not trusting anyone’s word so easily. However, if you design your own automated systems for trading
(with some guidance from seasoned experts and self-education through practice) it may be that you shorten
the time which must be dedicated to trading while still being able to use scalping techniques. And an
automated forex scalping technique does not need to be fully automatic; you may hand over the routine and
systematic tasks such as stop-loss and take-profit orders to the automated system, while assuming the
analytical side of the task yourself. This approach, to be sure, is not for everyone, but it is certainly a worthy
Finally, scalpers should always keep the importance of consistency in trade sizes while using their
favored method. Using erratic trade sizes while scalping is the safest way to ensure that you will have a wiped-
out forex account in no time, unless you stop practicing scalping before the inevitable end. . Scalping is based
on the principle that profitable trades will cover the losses of failing ones in due time, but if you pick position
sizes randomly, the rules of probability dictate that sooner or later an oversized, leveraged loss will crash all
the hard work of a whole day, if not longer. Thus, the scalper must make sure that he pursues a predefined
strategy with attention, patience and consistent trade sizes. This is just the beginning, of course, but without a
good beginning we would diminish our odds of success, or at least reduce our profit potential.
Now let’s take a look at the contents of this article where forex scalping is discussed with all its
details, advantages and disadvantages. Our suggestion is that you peruse all of this article and absorb all the
information that can benefit you. But if you think that you’re already familiar with some of the material, to
shorten your route, we present the table of contents of this article.