Forex Scalping is a method of trading where you are looking to make fast pips something like 25-50 pips in a matter of minutes. Forex Scalping requires entering and exiting the market quickly every time by making pips. You will need to scalp several times a day if you are using it as your primary trading strategy.
Now the most important question about forex scalping: is it the best method of trading? As a trader, you must first determine your trading style. Now your trading style and your personality should match if you want a successful career as a trader. There are five styles of trading:
1] Guerrilla trade
3] Day Trading
4] Swing Trading
5] Position trading
Guerrilla trading requires an extremely sharp entry and exit to make a profit of a few pips, around 10 to 20 pips per trade. Only professional forex traders can do Guerrilla Trading, so if you are a beginner you should forget about it. Not until you have more experience. However, scalping can be a viable trading strategy for a new trader. More information on other styles of trading in my next posts!
As a forex scalper, you should use a 10 minute chart to follow the market, a 1 hour chart to determine the long term trend, and the 5 minute chart to time your entry and exit for each trade. . You should be able to see the general market trend to assess whether you are trading with the trend or against the trend. Forex scalping is best done when the market is volatile or is moving sideways.
However, there is something else you need to know if you want to be successful with forex scalping. It is the concept of correlations between different currency pairs. Correlations are like the relationships between different currency pairs. It can be positive or negative. Forex scalping combined with correlation trading can be a very powerful strategy that will give you a winner every time.
Jason Fielder is considered to be an authority on forex trading. When he speaks, you are only listening. Recently he gave two very important reports: "The Correlation Code Secret" and "The Correlation Code Cheatsheets". Thousands of traders have downloaded these reports and attended two webinars hosted by Jason on Correlation Trading. You must check out these two reports if you are really interested in combining forex scalping with correlation trading as a day trading strategy.