Among the various strategies for trading the forex market, scalping is one of the most used strategies among traders. This is because it offers the trader the opportunity to benefit from any significant move in the market within a short time frame. Scalpers make extensive use of candlestick patterns in predicting the market.
Scalping is a simple trading strategy that enables the trader to predict the market direction under a short time frame, say 2 – 45 minutes and take quick profits within these short intervals. Scalpers do not hold any position for long. They take advantage of the volatile nature of some currency pairs and seek the smallest profits possible before the market changes direction. Their targets could be just 10-20 pips profits.
Often, Scalpers prefer to trade volatile pairs and seek to place trades when there is high volatility in the market, especially during the midday hours when the European and American sessions overlap. They similarly take advantage of critical market news releases that often affect the market.
Significantly, scalpers make extensive use of leverage to choose bigger lot sizes while entering a short position. Investors are always cautious about detecting sniper entries for each direction they choose and set their take profit immediately at the minimum of 5 – 10 pips movement. Many often enter multiple positions and close them immediately with the quickest profits made.
What are the best pairs for Scalpers?
Scalpers are generally attracted to the volatile pairs below:
- Commodities: XAUUSD, XAGUSD, USOIL(WTI)
- Forex: EURUSD, GBPJPY, EURJPY, GBPUSD, USDCAD, and USDCHF
- Indices: NAS100, US30, SPX500, AUS200, FRA40, GER30
The significant advantage of scalping is that it offers quick profits and enables the trader to gain from buying and selling within a short while.