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For the big question, profitability. A nasty surprise awaits our hypothetical trader in his account.
Forex scalping is a short term trading strategy that requires forex traders to trade currency pairs by buying and selling them, typically holding onto each trade for a short period of time looking for small profitable gains. A proper forex scalping method usually although not definitely involves executing a higher number of trades when compared to longer term trading strategies which can hold a position for months. This decision is crucial. Pick the wrong strategy and you could be going down a 12 months road to losses.
The next question is, what makes a good forex scalping system? The difference between a scalping strategy and scalping system is that a strategy simply lays out the rules, you buy here you sell there, however, a system empower you to carry out the strategy. Sure, some of them might come in the form of an Expert Advisor EA for those who are familiar with MT4 that helps you buy, sell and close off trades.
That is the most basic functions of a system. In a nutshell, the best forex scalping system and I am holding nothing back here should at least have these 5 features:.
At this stage, you know the few main differences that makes up a good forex scalping system. The key here is to know that a good forex scalping system has both a good offense and good defense. So up to this point, we have established why forex scalping is a more profitable strategy compared to other trading strategies, along with that, the list of requirements that makes a good forex scalping system. We now take a look at the different forex scalping strategies we have engineered to be used with our world class forex scalping system: The first strategy is the EZ Scalping strategy, this is our bread and butter trade and usually has one of the highest probability of success.
Nonetheless, it remains one of our most successful scalping strategy. You can read about it here: The second strategy we use is the DZ Scalping Strategy. This strategy is almost the same as the EZ Scalping Strategy with the main difference being the strictness which we employ when entering into a trade.
By the very nature of its entry requirements being less strict, the DZ Scalping Strategy is a riskier strategy and usually occurs much more often than its EZ counterpart. The third strategy that we use was developed by our very own TFA Hedge Fund trader Timothy Veteran Tim on this site , he has used it to great success on his live account and has been generating consistent returns over the last 8 months with this method.
It targets a healthy risk to reward return of 1: The strategy uses a risk to reward ratio of 1: In this strategy, it is very clear to see just how strong the market is in your direction and the goal is to ride the flag whenever price retraces a bit into it and is close to the DZ area. Such a strategy seems to be best used with these majors: It works really well in predicting when a strong flag formation might end too.
We categorize this as an advanced forex scalping strategy because it requires chart reading skills and a lot more discretion than the other strategies. It uses a modified version of the normal breakout pullback strategy utilizing the full power of the momentum indicators of the TFA Sniper and the predictive nature of the advanced fibonacci waves to pick really accurate pullback trades.
We categorize this as an advanced forex scalping strategy because it requires chart reading along with monitoring the TFA Sniper and advanced fibonacci waves. A good reading would also be understanding how support and resistance levels are found with out new TFA Fractal Support and Resistance Radar.
This is not just some bogus nonsense, in fact, I would classify this as even more important than any trading strategy mentioned above. The interesting thing is that every part of our human body is designed to be bad at trading and investing, especially scalping. It is also heavily recommended to take a look at this amazing and free e-book and go through it — this is one of the strongest pieces of advice I have for you. When it comes to scalping, not every forex broker is a good choice. There are jurisdictions where the regulators of the forex industry have rules that specifically prohibit scalping.
Therefore, you need to know if the broker you intend to use is located in such a jurisdiction. As stated earlier in this article, scalping is usually acceptable on ECN accounts because a commission is charged for trade entries and exits in addition to spreads. Furthermore, ECN brokers do not act as counter parties so they have nothing to lose from traders making repeated small profits from scalping.
In contrast, market makers do not charge commissions on trades and act as counter parties to trades, so they stand to lose if traders keep making consistent profits from scalping.
Many market makers do not allow scalping on their platforms. In scalping, the speed of entry and exit is essential in setting up a trade. Your intended broker must be able to provide fast price feeds so you are sure you are getting prices which are up to date.
Speed matters and delayed price feeds are detrimental for scalpers. Where you have doubts as to what the terms and conditions of your broker say about scalping, you can settle these doubts by contacting the broker directly via email or live chat.
A reputable broker should be able to provide a definitive statement on whether you are allowed to scalp or not. Typically, terms and conditions contain some details in fine print which can easily be missed by anybody. This will help prevent problems down the road.
Some main things you should look out for include:. If this is not allowed, it is a sign that scalping is not allowed as well. So you need to look at the terms and conditions to see what the policy of your intended broker is when it comes to scalping.
Where there are doubts, contacting the broker directly before opening an account would be advisable. Offers over 15, global markets. See Details Try a Demo. Fixed Variable See Spreads. Live chat Phone support Email support Contact Details. Financial Conduct Authority an Let our tool do the hard work of finding your next broker.
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