8 Steps to Scalp the Forex Market

Submitted by Share Trading on 10 March, 2010 - 17:00

A talented forex scapler immediately exits their trading position if the market does not go their way.

A talented forex scapler immediately exits their trading position if the market does not go their way. The scalper would make quite a number of trades a day from 10 to a couple of hundred trades - not holding on to losing positions or praying and hoping that their losing position will turn around.

The main goal of a forex scalper is to buy long (or short sell) the chosen currency pait at the bid (or ask) price then immediately sell them (or buy them back) for a few pips higher (or lower if a short position) for a quick and tidy trading profit. Using this forex trading strategy, small profits can easily compound into large gains if a set of strict trading rules are followed with discipline. These trading rules would have a set of exit strategy rules to prevent accumulating large losses from their scaping activities.

Many forex scalpers use 1 minute, 5 mintues or hourly charts to scalp for small profits in the foreign exchange market. The great forex scalpers would choose a forex dealer which provides a reliable trading platform with a dependable track record which includes instant execution of orders - the timing which is important in scalping profits from the market.

Here are 8 steps to scalp the forex market:

  1. Go to a reliable economic calendar source which details data release dates and times
  2. Record the previous day OHLC (Open, High, Low, Close) for all the 4 major currency in your diary.
  3. Identify candlestick studies(i will reveal more next time) on the daily charts
  4. Identify major trendlines, support and resistance on the daily charts
  5. Determine the market sentiments (Bullish or Bearish?) for the day.
  6. Go to hourly charts and determine the support and resistance
  7. Lookout for candlestick formations on hourly basis.
  8. Adjust your risk to entry level when you are 10pips in the money.

Generally, your Scalping risk reward ratio could be as simple as: Risk: 10 pips and with Target Profit: 20 pips.

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