Camping is a Forex trading strategy that relies on technical analysis. Known as one of the methods that can provide quick profits, it is not surprising that many traders want to learn more about this strategy. Here's the review.
Scalping is one of the techniques or strategies in Forex trading. When you hear the term scalping 2 words must be in your mind, namely "fast" and "short".
This strategy focuses on buying short-term assets in just minutes to hours and allows you to make a profit. In practice, this strategy targets a relatively small number of pips with a shorter tempo.
Forex traders who use this strategy will try to “pick up” small profits but do so in a row. In general, this scalping strategy is used to plan the best entry and exit techniques, so that traders can maximize the potential for profit and limit losses according to risk management settings.
Scalping, which is also one of the most popular Forex trading strategies among Indonesian traders, can produce a very high trading frequency, which is between tens to hundreds in a day, although the average profit per position is relatively small, around 5-15 pips.
In general, in some strategies other than scalping, most Forex traders will leave their positions open for quite a long time, from a few hours to several days, weeks, or even more, than that, the goal is that they can get big profits, between 20 to 1000 pips.
While in scalping trading, you will not find this because scalpers will usually take small profits that they can get in just a matter of minutes, and this is done in a row until they reach the desired daily profit target.
Well, to compensate for the low average profit per position, scalpers will enlarge the lots used to increase their trading frequency.
Therefore, a scalper can open and close trading positions between tens to hundreds of times a day. That is why most scalpers tend to make many transactions in a day.
After knowing to scalp yourself, you can test your knowledge through the Preliminary Test provided by GIC and know your abilities!
Why are scalping strategies widely used?
The reason is that this scalping method is considered one of the most “safe” Forex trading strategies to use. Usually, scalper traders will (open positions on low time-frames and hold these positions in a fairly short period than non-scalper traders.
Therefore, the observation of the overall market conditions is very limited, and the risks arising from market price movements are reduced.
Then, what are the other advantages of this scalping strategy for your trading?
1. With scalping, you can make profits faster
The first advantage of this scalping technique is that you can get maximum trading results in a relatively short period because these scalpers will enter and exit the market in just a matter of minutes.
This means that users of scalping strategies do not have to wait for hours or even days just to profit from Forex. It is enough to trade on small time frames such as M1, M5, and M15, a scalper can already get results.
2. You won't have to worry about the position floating
Another advantage that you can get from a scalping strategy is that you don't have to worry or hesitate because you think about floating positions.
For some traders, this floating position is something that may be quite annoying and often makes us anxious, especially if we do not understand the market conditions and where the price will move.
Because when the position taken is floating, we only have two choices being left alone full of anxiety, or doing a cut-loss.
Meanwhile, scalpers rarely let their transactions oscillate because they are carried away by floating when market movements are no longer as expected.
No wonder if at that time a scalper would leave the market by making a cut-loss because the strategy they use is not to predict market price movements in the long term.
3. Be bolder to trade
A scalper is able and dares to enter the Forex market even with small capital. Not a few of the scalpers who only have a capital of $ 1000 can make a good profit.
If you already know the advantages, do a consultation with GIC about scalping or another trading through the Trader Assessment!
Disadvantages of scalping strategy
Although this scalping strategy has various advantages, there are always drawbacks — and this you must know before you decide to use a scalping strategy in your trading. Here are some of them:
1. Must be ready to lose
Whatever strategy you will use in trading, of course, there will always be losses. But the point of being ready to lose here is because a scalper cannot linger in the market when the analysis does not match the price movements that occurred at that time.
So here there are not a few scalpers who have to get out and are ready to be harmed. In contrast to other techniques that still have the possibility of profit by letting it float first.
2. Inappropriate use of lots
Usually, a scalper rarely pays attention to capital management problems to divide his lot in transactions. Of course, this will be very risky to the resilience of the capital owned because it becomes unbalanced.
However, this is done because scalpers will not rely on the resilience of their capital but they will rely on really precise momentum in a very short time.
3. Scalping isn't for everyone
Why is that? Because to be a scalper, takes a strong mentality, and one must be able to control yourself. A scalper is required to be fast-paced in taking steps.
In addition, becoming a scalper also requires sufficient trading experience and knowledge, and no less important is to have good trading psychology.
So keep in mind, not all traders can use a scalping strategy in Forex trading because they will be required to always make transactions at "high speed", so high concentration is necessary.
In addition, it requires a fast and stable internet connection, to make it possible to execute transactions in seconds.
You will not be able to use this strategy if you feel you don't have enough time or can't concentrate fully on the chart you have.
Including, if you are not physically or psychologically fit because of course it will affect the emotional and psychological condition to avenge previous losses (revenge trading).
So, make sure when you want to use this strategy, you meet the criteria and understand the advantages and disadvantages of this scalping strategy. Don't forget to also fill out an internal survey so that we can also determine what strategy is right to improve our performance.
When is the best time to trade scalping?
Not all scalpers like market conditions with a clear and strong direction of movement and have high volatility because some of them like choppy market conditions without clear directions or random.
Although both styles are equally profitable, the period for each of these market conditions is of course different.
Then, when is the time often used by scalpers when using this scalping technique?
1. End of European session
European markets are choppy as traders prepare to enter the New York market at 8:00 a.m. EST. Although at that time the London and Frankfurt markets were open, the liquidity was much reduced as trading volume began to shrink.
The release of important European economic data is over at this time, and traders are opting out of the market while preparing further strategies for the US session. Scalpers who like choppy conditions will usually enter the market during this time period.
With choppy market conditions and tend to be quiet, scalpers can apply trading strategies by taking advantage of two-way fluctuations that tend to be stable.
The results provided are also quite effective and consistent as long as there is no breaking news or unexpected events that can affect price movements in the Forex market.
Approaching the release of important fundamental news from the United States or Canada (usually at 8:30 a.m. EST), the market is able to move with high volatility in anticipation of the news to be released (pre-news release).
Generally, scalpers will always understand the pattern of price movements (price patterns) which usually form a triangle pattern (triangle), and will trade by opening positions in the price range within the triangle.
Based on the nature of the triangle pattern, the price will break strongly on the news release.
2. Session overlap
This time has a fairly high risk for novice scalpers who are inexperienced. During these hours, the New York, London and Frankfurt markets are active simultaneously and some important economic data is usually released during this time period.
In this time period, the market is very liquid and volatile so you will need a proven scalping strategy to be able to play in tune with market price fluctuations.
At low time-frames (5 minutes or 1 minute), the trend will change quickly and sharply (micro trends). To be able to anticipate changes quickly and accurately, scalpers of course need to master detailed technical analysis with high application capabilities.
Experienced scalpers will usually choose to trade during this time period. In addition to having many opportunities to open positions, the profit generated is also quite adequate.
3. Twilight hours
This period is usually divided into 2 parts, namely between 3:00 to 5:00 p.m. EST when most banks in the United States are still open, and between 5:00 to 7:00 p.m EST or trading times that are quietest. Scalpers will take advantage of market price fluctuations that are directionless with a small range.
At these hours it is suitable to implement trading robots or EAs in addition to manual trading to provide relatively fast trading results with low risk. And after knowing the right time, you can also invite your friends to join to trade or join an IB and get additional income from these activities.
Then, how does this scalping strategy work?
With the aim of making small but frequent profits, there are many techniques that can be applied to maximize scalping strategies including the most common trading rules contained in the following scalping strategies:
Time Frame: In this type of small time frame between 1 minute to 15 minutes.
Profit target: Between 5-10 pips
Type of analysis: Prioritizing technical analysis, because according to scalpers, the effect of fundamentals is almost not visible proportionally.
Trading conditions: Low spreads and tight and accurate price movements
One of the scalping strategies that is quite popular among traders is the 1 minute (M1) scalping strategy. This strategy is a popular scalping strategy and is relatively suitable for use among traders, especially beginners.
However, this does not mean that this method does not require high discipline and concentration because basically this scalping strategy will require you to devote a certain amount of time to trading — at least a few hours a day without distraction or distraction.
Doing dozens of transactions in one day is a common thing in scalping. Therefore, it is not surprising that in this method you will need a broker with low spreads and commissions.
Can be used for all currency pairs that have small spreads
Time-frame: M1 (1-Minute)
Exponential Moving Average (EMA) period 50 and 100
Not only a 1-minute scalping strategy, you also use a 5-minute scalping strategy which is often known as a simple strategy with a 5-minute time-frame (M5).
In this strategy, you can trade in pairs such as GBP/USD and EUR/USD. The following indicators are needed for the 5-minutes scalping strategy:
Exponential Moving Average (EMA) – Period 10
Exponential Moving Average (EMA) – Period 21
Exponential Moving Average (EMA) – Period 50
The EMA 50 indicator has a function as a guide to see which trend is currently strong. While the EMA 10 and EMA 21 indicators function as lines that form support and resistance.
You can use the two EMAs as levels to look for entry signals.
The time that is suitable for trading with this system is when the London market session is open and also when the New York market session is open.
Because in these market sessions, the GBP/USD and EUR/USD pairs usually form a trend where you should not trade during the Asian market because there will be many false signals that will be formed.
Trading tips with scalping strategy
If you are one of the brave traders who want to try a scalping strategy in Forex trading, it is better to choose a major currency pair that has high liquidity and trading activity.
In addition, you can carry out the strategy by choosing the times when there is "overlapping" such as when the Asian, European and London markets are always equally active.
You can try one of the simple scalping techniques that you think is the most promising. Whatever your choice later, be it 1-minutes or 5-minutes scalping, you can apply the following six tips when using a scalping strategy:
Try it on a demo account. Test the scalping strategy on a demo account before you decide to use a real account that uses real capital. You can easily get a demo trading account here.
Minimize risk. Never risk more than your traded amount in one position.
Don't add too many indicators. Follow the rules of the existing strategy. If the trading system that is made only relies on
2 indicators, it is not recommended that you add more technical indicators.
Master a scalping technique that you feel is suitable to use. Applying too many strategies at one time will make the concentration more easily split.
Control the number of trading positions. Scalping does have the meaning of "many open positions equals many profit opportunities". However, this does not mean that traders can freely open an unlimited number of positions. Always take into account the resilience of the funds you have when determining the number of positions you can open. Do not let the number of trades owned exceed the capital capacity and risk tolerance.
Always Focus. Scalping is an aggressive strategy that requires high concentration. For this reason, it is important to avoid things that can distract you when implementing a scalping strategy.
Before opening an entry position, this 5 minute scalping technique only takes or looks for 5-10 pips targets where this 5 minute scalping technique is very simple. You only need to monitor the lines on both EMAs, while the 50 EMA is a trend direction. When the trend is up or in an uptrend, the market will form a zigzag high-low. How, have you started to have an idea regarding this scalping strategy?
Still having trouble understanding the basic Forex trading techniques?
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What are you waiting for? More complete features that fully support you to start investing and trading Forex through GIC. Make transactions simpler, safer and more profitable. Start by creating a demo account and try using a scalping strategy for trading.