Very often the newcomers to the Forex market open live accounts with an amount of $ 300-400. In order to begin the full-time trading on all time frames on the Forex market this is not enough, two or three losses in a row and you are out of the market because of the lack of funds. For the novice trader the short term trading style called Forex scalping can be useful. Forex scalping is a short term trading, however allows to ensure small, but guaranteed profit, which is psychologically important for the novice trader. The Forex scalping systems are very simple and clear, they don’t require extensive knowledge or fundamental and technical analysis of the currency market, the trades last for minutes or even seconds, the probability of risks and losses is limited.
There are lots of Forex scalping methods, but here we can look on three examples, which work pretty nice.
1. The method of engulfing. In order to trade this Forex scalping system you should open M15 chart and look for bearish or bullish engulfing patterns. For this you should set up the MetaTrader4 (MT4) for Japanese candlesticks.
More detailed information about the scalping techniques:
A bullish engulfing is when the white body of the current candle completely covers the body of the previous black candle (shades are not taken into account) and as soon as the present candle begins to exceed the maximum of the previous black candle you must immediately enter the market and buy at the market price. The market will start to go in your favor; you should win back the spread then take one or two pips and quickly exit the market.
Bearish engulfing is vice versa, the black body of the current candle completely covers the previous next located white candle and begins to go below its minimum, at that moment you should sell at current market price, and again winning the spread and taking one or two pips exit the market. By using this trading method, try not to trade longer than for one or two minutes. You can search the mentioned trading conditions for all pairs and collect the pips, but for successful trading keep in mind if you meet the loosing position, close position immediately as market starts to reverse with a couple of pips loss. By using this scalping system it‘s important to understand that you have entered the market without a good technical market analysis, and that’s why the desire to earn more money and delay the exit from the market is not allowed – two points or two minutes maximum both for profitable and for unprofitable positions.
2. The method of reversal of the Forex market at 10 am New York time. At this time the possibility of trend reversal on the Forex market is the highest. You can trade on all currency pairs associated with dollar. Let’s wait until the first M15 bar closes and then let’s check how the candle has been closed – more to intraday low or high, if the close of the candle is closer to the intraday minimum, then enter the market and buy, if closer to the intraday maximum, then sell. After winning the spread, take one or two pips and exit the market. Let’s try to trade no longer than for one or two minutes. Sometimes it’s difficult to find out is the close of the candle more to intraday minimum or maximum, if you have doubts that the turn of the market could happen, then simply do not trade, watch the market move and you will have a chance some other day.
3. The method of reversal of the Forex market at 3 pm New York time. At this time the closing of the American bond market is happening, and as a consequence the reversal of the trend is possible like at 10 am mentioned before. The trading system is similar like previous.
Finally, please note that for the methods of market reversal the winning probability is less than for the engulfing methods.
Many can criticize these scalping trading systems because the gain is very small, but please note that the engulfing method situations can be found 5-6 times during the trading day, when searching the various currency pairs, preferably only the spread should be reasonably small. Second, you will start to collect the profits, which is very important psychologically; you will start to like the Forex trading and study it deeper. And this is more important than the small profit you collected. Happy trading!