Scalping vs Swing Trading: What’s the Difference?

Although there are many exchange rate pairs available to trade, below are the major pairs that most traders use in their day-to-day trades. Though it is important to note that forex trading scalping is hard work. In the end, your forex trading strategy has to match your trading style and abilities.

Scalpers often use derivatives like CFDs to trade forex pairs that are rising or falling in value. They’ll open a position to ‘buy’ (go long) if they think the price will rise and open a position to ‘sell’ (go short) if they think the price will fall. Therefore, practice the methodology until it is automatic for you, and even boring because it becomes so repetitive. You are in the business of scalping to make a profit, not to boost your adrenalin or feel like you are playing in a casino. Professional traders are not gamblers; they are speculators who know how to calculate the risk, wait for the odds to be in their favor, and manage their emotions.

While the strategies we have listed are effective, they still might not work for you. If you decide to use one or two of the strategies we have mentioned, don’t think of adding more indicators. To make the most of this strategy follow the 10-pip rule above and below so you don’t get stopped out. This strategy uses the stochastics indicator in conjunction with a trend line. That said, finding confluence is very subjective and depends on what indicators you are using. Environments where there are explosions in price, short pauses, and then more explosions, are the best.

The trader instructs the system what signals to look for and what action to take once a signal has been triggered. Forex scalping is a trading strategy traders use to quickly buy and sell currency pairs to generate small profits on each transaction. Scalping in forex trading is a style that involves opening and closing multiple positions on one or more forex pairs over the course of a day, usually in seconds or minutes. Instead of opening one position at the start of a trend and closing it at the end, scalpers will open and close several positions over a trend’s course. Scalping is a trading strategy geared towards profiting from minor price changes in a stock’s price.

  1. You simply create a broker account with our recommended broker then use the broker’s copy trade system to automatically receive trades on your account.
  2. If you are technically sound and capable of handling the scenarios mentioned above, scalping is definitely for you.
  3. The main goal is to buy or sell a number of shares at the bid—or ask—price and then quickly sell them a few cents higher or lower for a profit.
  4. Once the price has broken above the 50-EMA by 10 pips or more, and if the MACD crosses to positive within the previous 5 bars, then a long position can be opened.
  5. Usually, when London opens at around 3 AM EST, volume picks up as London is the major trading center for forex trading.

Conversely, for a short order, forex scalpers must wait for the 50-EMA to fall below the 100-EMA, with the Stochastic indicator falling below 80. Tick charts, for example, display the number of intraday trades that have been executed, each of which creates a new bar on the chart regardless of how much time has elapsed. Scalping with a Parabolic SAR
For scalper traders, the parabolic Sar is a crucial indication.

Scalp Trade Forex: Meaning, Risks and Special Considerations

Suppose a trader employs scalping to profit off price movements for a stock ABC trading for $10. The trader will buy and sell a massive tranche of ABC shares, say 50,000, and sell them during opportune price movements of small amounts. For example, they might choose to buy and sell in price increments of $0.05, making small profits that add up at the end of the day because they are making the purchase and sale in bulk. In other words, stop your losses quickly and take your profits when you have your seven to 10 pips.

Backtest The Strategy You Plan To Use!

This skill can help identify potential entry and exit points for your scalp trades. Scalping in the forex market involves trading currencies based on a set of real-time analysis. The purpose of scalping is to make a profit by buying or selling currencies and holding the position for a very short time and closing swissquote review it for a small profit. Many trades are placed throughout the trading day using a system that is usually based on a set of signals derived from technical analysis charting tools. The charting is made up of a multitude of signals, that create a buy or sell decision when they point in the same direction.

What Is Forex Scalping

Here are some examples of how a trader can make these work in practice. Basically, any currency pair with a high level of volatility and a tight spread is ideal for scalping. When used in conjunction with other forex scalping indicators, Bollinger Bands can form part of an effective scalping strategy. Scalping requires account equity to be greater than the minimum $25,000 to avoid the pattern day trader (PDT) rule violation. As a scalper, you must become very familiar with the trading platform that your broker is offering. Different brokers may offer different platforms, therefore you should always open a practice account and practice with the platform until you are completely comfortable using it.


Since you intend to scalp the markets, there is absolutely no room for error in using your platform. The difference between a market maker and a scalper, though, is very important to understand. So when a scalper buys on the ask and sells on the bid, they have to wait for the market to move enough to cover the spread they have just paid. In the converse, the market maker sells on the ask and buys on the bid, thus immediately gaining a pip or two as profit for making the market.

You might NOT be a forex scalper if:

Price chart indicators such as moving averages, Bollinger bands, and pivot points are used as reference points for price support and resistance levels. Forex is one of the largest (according to per day trading volume) and most attractive markets, generating maximum returns for you if traded carefully. There are many trading strategies, such as day trading, forex scalping, swing trading strategy, which you can use. The best forex scalping trading strategies are those that meet all your trading demands. This article will cover the forex scalping trading strategies and all the related facts that you require to know before getting started.

Some forex scalpers avoid scalping up to 30 minutes before big news events. This will rely on if you use fundamental or technical analysis or a mix of the two. Scalping is a forex trading method that involves making a number of trades in a short period of time to earn gains.

Day traders will take multiple positions in a single day and never carry a position overnight. Forex scalpers have the same strategy but over much shorter periods of time. In other words, instead of using five or 30-minute charts to execute traders, scalpers will use one-minute charters. These are also known as tick charts as they provide a constant stream of information about upward and downward movements (ticks).

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