Simple scalping on Forex.
The scalping strategy is known to any trader working in the Forex market; it is this method of trading that allows you to make the most of your deposit and make a tangible profit, even without a sufficient amount of funds. Like any other trading strategy, scalping, or pipsing as it is also called, has a number of advantages and disadvantages.
Therefore, before you start using this trading option, you should first assess whether it is suitable for you and weigh the level of risk and the size of the planned profit.
As practice shows, simple scalping on Forex is nothing more than a myth for beginners; for successful trading you need to take into account many important aspects.
In this article I will talk about the main points of pipsing, and also give an example of a simple working strategy.
Pros and cons of scalping.
Pros.
1. Maximum volume of transactions - for trading you can use the highest leverage and open transactions for the maximum possible volume. At the same time, without fear that during a rollback the deposit will be drained, since the strategy provides for the immediate closure of the transaction in the event of a counter-trend movement.
Example, with only $100 on deposit and using a leverage of 1:1000, you can open a deal up to 0.5 of a standard lot in euros. That is, each trend movement of 1 point will bring you 5 US dollars.
2. Trading without analysis - for successful trading you just need to study the specifics of price movement, and you do not need to make a long-term forecast.
The main thing is to correctly determine the magnitude of the movement towards the main correction and the magnitude of the rollbacks and continue to play precisely on these indicators.
3. You can trade at any time - regardless of the direction of the trend or the current situation on the market, the main thing is that there is price movement.
Minuses.
1. High risk - since you trade almost the entire deposit, if the equipment fails or the stop loss is not triggered, the loss occurs instantly, you physically simply will not be able to reach your manager.
2. Trading with virtually no insurance, since setting a stop loss, much less a trailing stop, is practically impossible.
3. A small selection of instruments - to trade using the pipsing strategy, you should choose currency pairs that have a minimum spread, since in the short time that the transaction exists, your profit may simply not cover the size of the spread, or a small counter movement will drain the deposit.
For example, you took a pair with a spread of 10 points, when you open a transaction with the conditions described above (depository -100, 1:1000, volume - 0.5), your loss will immediately be $50, and to repay it you will need that the price passed at least 10 points.
4. Heavy workload – you will have to trade constantly, you will not be able to leave your transaction unattended, you will need to open more than a dozen orders per day.
5. Broker sanctions - most brokerage companies impose sanctions if the duration of the transaction is less than a certain time. Most often this time is from 1 to 5 minutes, but sometimes it can be longer.
Therefore, if you do not want to be subject to sanctions (deposit blocking), you should only work with scalping brokers . You can find a list of them at this link.
Trading strategy, pipsing.
Trading is carried out on the shortest time frame of 1 minute; a senior time frame of 5 minutes is also used to determine the main trend.
We open trades exclusively in the direction of the trend movement on a five-minute time period.
1. Go to the trading terminal and determine the direction of the trend on M5. For example - ascending.
2. Switch to M1 and catch the moment when the rollback ends and the price goes up, immediately open a deal.
3. The deal is closed if the profit reaches 5 points, or the loss reaches 3 points.
This is perhaps the simplest scalping on Forex; we choose the euro/dollar pair for trading, since it usually has the lowest spread.