What is Forex Scalping

💎 What is Forex Scalping

Forex scalping is a trading technique that takes advantage of small, short-term price movements in currency pairs. It relies heavily on high capital leverage, which may reach levels of up to 1:100. Scalpers execute dozens or even hundreds of Forex trades daily and typically hold positions for less than one minute.

 

What are Forex Scalpers

Forex scalpers are traders who open and close positions in the very short term, profiting from small upward price movements while using high leverage. Their profit targets usually range from 1 to 10 pips. Low spreads and high leverage are essential. Most scalpers seek the low-spread conditions typically offered by ECN or STP Forex brokers.

Scalpers always use stop-loss orders to limit potential losses to acceptable levels. A successful scalper must maintain a high win-to-loss ratio over time.

  • Profit Targets: Aiming for 5–15 pips per trade.

  • Stop-Loss: Setting 3–7 pips beyond entry, or just past recent swing highs/lows.

  • Risk-Reward Ratio: Maintaining at least 1:1.

  • Risking ≤1% per trade (e.g., $10 risk on a $1,000 account).

  • Using trade leverage cautiously (e.g., 10:1) to avoid margin stress.

  • Exiting trades at least 5 minutes before high-impact news (e.g., NFP, CPI) to avoid slippage.

 

 

Currency Pair Selection & Trading Strategy

  • Prioritize major pairs (e.g., EUR/USD, GBP/USD) with spreads ≤1 pip to minimize costs.

  • Avoid exotic or low-liquidity pairs (e.g., USD/TRY) due to wide spreads and slippage risk.

High-Probability Scalping Strategies

  • EMA Scalping: Trade pullbacks to the 5–10 EMA in the direction of the 50–100 EMA trend on the H1 chart.
    Example: Buy EUR/USD when 5 EMA > 10 EMA on M5, and the H1 trend is bullish.

  • Breakout Scalping: Trade breakouts from the Asian session range with volume confirmation. Target 5–10 pips.

 

More About Forex Scalping

Timeframes & Sessions

  • 1–5 minute charts for precise entries and exits

  • Confirming trend direction with the H1 (hourly) chart

  • Focusing on high-liquidity periods, especially the London/New York overlap (8 AM–12 PM EST) for tight spreads and strong volatility.

Indicator Stacking & Confirmation

  • Combine RSI (14) and Stochastic Oscillator for overbought/oversold confirmation.

  • Add Bollinger Bands (20,2) to identify volatility squeezes; enter on expansion.

  • Use candlestick patterns (e.g., pin bars, engulfing) at support/resistance zones to validate entries.

Advanced Scalping Tools

  • Algorithmic Scalping Bots: Use during volatility spikes for latency arbitrage.

  • Order Flow Analysis: Monitor Level II data to detect institutional activity.

  • VPS Hosting: Run platforms on <1ms latency servers for optimal execution speed.

 

Forex Brokers Allowing Scalping and Providing Free VPS Hosting

Scalping is suitable only for professional Forex traders and is often prohibited by brokers in their policies. However, some Forex brokers do allow scalping and also offer free VPS hosting services (VPS enables automated trading without the need to keep your PC turned on).

🔗 Free VPS Forex Brokers: » Find Free-VPS Forex Brokers at ForexAutomatic.com

 

Key Takeaways

  • Backtest and demo your strategy for 1–2 months before going live

  • Profit targets should exceed spread by at least 300% (e.g., 3-pip spread → 9-pip TP)

  • Never scalp against the H1 trend

  • Use tools like MetaTrader 4/5 or TradingView with tick data for proper backtesting

 

🔗 Read More: » What is a Forex Account | » What are Forex Signals | » What is ECN Forex Trading

 

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What is Forex Scalping

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