I think, is understandable. I will pass to the advantages of this strategy and disadvantages.
Advantages of Forex scalping strategies:
- Trading in fundamental analysis. Technical indicators are rather auxiliary in nature due to price noise on small timeframes. Although news trading is not recommended for beginners, from the point of view of the “simulator”, it may seem easier and more interesting than technical analysis. Everything is subjective, but I would attribute it to the benefits of scalping.
- It gives the opportunity to high earnings. Everything is relative but subject to professionalism, high-frequency trading can bring higher returns compared to intraday tactics. In scalping, a trader manages to earn almost every price fluctuation in both directions, while in intraday trading, part of the profit is “eaten up” due to kickbacks and corrections. There is no reference to the trend.
- Scalping allows you to earn in flat.
- No swap costs (position transfer to the next day).
I would call scalping training the biggest advantage. Due to high-frequency trading, the trader learns to better understand the principles of placing orders, the nature of the market and learns to develop intuition. After mastering more complex scalping, intraday and long-term strategies will seem easier.
Disadvantages of Forex scalping strategies:
- Spread No matter how much the position is in the market, the spread will be the same. And he takes most of the profits from scalpers.
- Technical problems: slippage, delay in order execution, terminal failure, etc. In scalping, sometimes the score goes by seconds and the delay is fraught with the fact that a small profit instantly turns into a loss.
- Price noise. Anomalies insignificant for long timeframes at short intervals can close the deal in a stop.
- Limited choice. For Forex scalping trading, only liquid pairs with a moderate level of volatility are suitable. “Exotic” is not suitable.
- The problem of accurate quotes and restrictions of brokers. Some companies are either prohibited from scalping, or there is a restriction on the minimum duration of a transaction.
- Emotional stress, the need for concentration on the little things. The trader must constantly monitor all open positions and be able to quickly make decisions. Sooner or later, the scalper begins to lose its vigilance, consciousness dissipates. Scripts and bots can partially solve the problem.
To make money in scalping, you need to use large leverage, which significantly increases the risks. And yet, despite all the shortcomings, scalping is primarily pleasure and excitement. For which many traders love him.
The best couples for scalping
Basic requirements for the best scalping currency pair:
- As narrow and floating spread as possible. This condition is valid for couples with high liquidity and large volumes of transactions: EUR /USD, GBP /USD. To compare the spread for different pairs of different brokers, you can use the data from the MyFxBook portal.
- Moderate volatility of the pair. Liquidity and volatility have some degree of inverse correlation. It is difficult to sell/buy a pair with high volatility at the desired price. Conversely, pairs with high liquidity are low volatility. The balance is important, which will help the volatility calculator. According to him, again, the ideal pair for scalping is EUR / USD.
For night (flat) scalping, relatively quiet pairs of USD /CAD, AUD / USD are suitable.
I focus on the fact that the concept of the best pairs for scalping is subjective. Price behavior depends on external macroeconomic factors as well as on manipulations by large investors (market makers). And therefore, at different times, any of the main pairs or cross-rates may turn out to be the best. Therefore, there are several tips on how to choose the best currency pair for scalping:
- Trading should be comfortable. Find your trading style and currency pair by spending as much time as you need while training on a demo account.
- Be flexible. Today, productive trading on one pair, tomorrow on the other.
- Do not forget about risk management. In addition to observing the basic rules regarding the volume of open transactions, there is another scalping rule: do not open deals on 2 growing pairs at the same time. Despite the fact that this can double income, it also doubles the risks, since both pairs will also deploy together.
There are no recommendations regarding the best indicators and financial instruments for scalping. Everything is an individual here. Someone is satisfied with the basic indicators of MT4, someone is loading unique authoring tools. The effectiveness of trade depends not so much on the tools as on the ability to use them.
Forex Scalping Strategies – Case Studies
Forex scalping trading is distinguished by the fact that a trader needs constant attention to the market and open transactions. The strategies presented below are based on technical analysis, but technical indicators play a rather secondary role here, yielding to intuition and experience. Therefore, before launching strategies on a real account, bring them to automatism on a demo. And remember that there are no ideal strategies and the proposed ideas are just the base. Do not be afraid to experiment by adding something of your own, create something unique on the basis of this base!
How to set scalping strategy templates in MT4
Each trading system from the ones proposed below is built on combined indicators that are not included in MT4 and other platforms as basic ones. In each review, you will find a link (link) to the archive, which will need to be downloaded and added to MT4. Each archive has two files: indicator (.mq4 or ex4.) And template (.tpl). They are installed as follows: in MT 4, click “Menu – Open Data Catalog”:
- Indicator. We find the MQL4 / Indicators folder, here we copy the file with the corresponding extension.
- Template. We find the “Templates” folder, copy the template here and reboot the platform. Now the template can be added to the chart of the currency pair.
The loaded indicator can be found in the subsection “Custom Indicators”, the loaded template – in the “Charts / Templates”. Depending on the type of operating system, there may be nuances in the name of the folders. If you can’t figure it out and find the answer on the Internet, write in the comments.