Have you seen a situation where a trader decides to open over two trades and closes it immediately or after some minutes? What do you think the trader was doing? Your first impression will be that he isn’t serious. However, the trader is scalping the market to accumulate smaller profits within seconds or minutes. The intention is to generate small profits as price makes little movements. This is possible if you have a very accurate scalping indicator to predict price movement.
Scalping is not an easy task to do especially if you are new to trading. If you think you can cope with the stress and emotion involved, then you need to first master the art. The best way is to begin with a long-term trading pattern and profit consistently in this. The reason being that scalping requires you to make swift decisions, fast-reflexes, and the ability to stay in a trade. To avoid these, most traders tend to use a very accurate scalping indicator to balance things.
What is Scalping in Forex Trading?
In trading, we have different trading styles such as scalping, intraday trading, swing, and position trading. Each of these has its own features and pattern of trading. Additionally, the timeframe traders use for these trading styles is totally different. However, scalping tends to be different from them all because it involves a fast-paced and short-term trading style where trades are held within a few minutes. Scalpers use shorter timeframes such as 1 and 5 minutes to take a trade but with the risks involved a very accurate scalping indicator is essential.
Traders that are attracted to scalping are impulsive traders, who don’t have the patience to wait for days for a trade to play out according to their analysis. Regrettably, new traders are mostly these impulsive traders, who haven’t developed the necessary skill required for trading the market successfully. With a very accurate scalping indicator, scalpers can make huge profits daily.
Furthermore, they are not aware of the immense risk associated with scalping. To be a successful scalper, you must be an experienced trader. Nevertheless, not many have the patience involved in trading as a scalper. These traders look for a very accurate scalping indicator to help their scalping trading style.
Simple Scalping Trading Strategy
The strategy for a minute scalping technic will require:
- Stochastic Oscillator Indicator
- 50 and 100 EMA (1 minute)
- The timeframe of your choice (1 or 5 minutes)
- Take profit maximum of 12 pips for 1 minute and 30 pips for 5 minutes
- Stop-loss maximum of 3 pips for 1minute and 20 pips for 5 minutes
Note: If you are using 5 minutes, then use 100 EMA and 200 EMA with the respective take profit and stop loss put in place.
Buying condition for 1 minute
- The 50 EMA must be above the 100 EMA for a valid trade
- When the price gets close to the two EMA and your stochastic is below 20, then you enter a buy option.
The 50 EMA must be below the 100 EMA for a valid trade
- When the price gets close to the two EMA and your stochastic is above 80, then you enter a sell trade.
Advantages and Disadvantages of Scalping Trading
Scalping comes with inevitable risks due to the short-term timeframes used. The trading costs for scalpers tend to be higher when compared to long-term traders. Furthermore, news releases and market noise can easily make your winning trade become a losing trade or eventually hit your stop loss. Despite this, scalping is still profitable if you adhere to the principles behind it when using a very accurate scalping indicator. The following are a few pros and cons of scalping.
Advantages of Scalping
- A high number of trades opening
- Fast-paced environment
- Short holding time
- Less risk exposure
- Applicable on all timeframe
- Market noise
- Requires discipline and focus
- High trading cost over time
Scalping – Simple ways of being profitable
There is a popular saying in the forex market about scalping “You can scalp but scalping will eventually scalp you.” For beginners, it seems like a fun adventure when you are winning. However, once losing starts, it becomes a pain. Scalping even with a very accurate scalping indicator is not recommended for beginners. The painful part of it is that you end up losing your capital before you release it is a huge mistake.
It is natural for human beings to find ways of outsmarting the market. Regrettably, the market doesn’t adjust itself to favor you – it is the market. Remove the mindset of “beating the market.” Notwithstanding, this doesn’t mean you can’t scalp. To do that, you have to follow certain rules especially if you are not using a very accurate scalping indicator.
- Trade with a small lot if you are new to a trader and cannot do without scalping. It is tempting to trade big to make “quick” money but this can ruin your trading. If you must trade, use small lot sizes and get out of trades if it is not going your way. Remember scalping requires discipline and swift decision.
- Trading without a stop loss is the biggest mistake any trader will make. In as much as swing, long-term, and position trades can go wrong, scalping is even worse because the market is volatile. Therefore, to avoid such a high risk, it is important to ascertain your risk to reward carefully and place a stop loss on each trade. If your stop-loss gets hit, you move on.
- Scalping isn’t the best way of trading. The best option is to learn how to trade like a professional. This could be a combination of various methods and strategies. Harness your trading skill and you will appreciate why scalping isn’t the perfect way of trading.
Conclusion Very accurate Scalping Indicator
It is not enough to use a very accurate scalping indicator to implement a scalping trading style. You must understand that you need to be disciplined because scalping is a fast-paced trading strategy. Scalping can be quite difficult but when properly implemented can be profitable.
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