How to scalp in forex trading

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Short Term Strategies, Scalping, Price Action Analysis, and Risk Management.

Creating a Forex trading strategy does not have to be a difficult process. Today we will review a simple scalping strategy using the Stochastics indicator. Traders who are looking to peruse Scalping opportunities in the Forex market will benefit from having a completed trading strategy at their disposal. The number of variables that can be added to a strategy are limitless, and it is often good to have a simple strategy on standby.

Today we are going to review a simple stochastic strategy that can be used for scalping trending Forex currency pairs. The first step to trading any successful trend based strategy is to locate the trend!

The period MVA Simple Moving Average is one of the markets most used tools for this purpose. Traders can add this indicator to any graph and identify whether price is above or below the average. If price is above the MVA traders can assume the trend is up and look to buy. Below we can see a 5minute AUDJPY chart accompanied with the period MVA.

Given the information above, traders should look to buy the AUD JPY as long as it remains trending higher.

If the trend continues, expectations are that price will remain above the period MVA and new highs will be created. Once a trend is spotted using the period MVA, and a trading bias has been established, traders will begin looking for a technical trigger to enter into the market. Oscillators are common choices, and SSD slow stochastics can be added to your graph for this exact purpose.

Forex Scalping - A Dangerous Game

Below we can see the AUDJPY 5minute graph, this time with SSD added. Since we have identified the AUDJPY in an uptrend traders will look to buy when SSD signals momentum returning back in the direction of the trend.

Who Can Trade a Scalping Strategy?

Note how only buy positions are to be taken on bullish crossovers as the uptrend continues. At no point should traders consider selling as the uptrend continues.

As with any active market strategy, scalping Forex trends carries risk. It is important to know upfront that trends eventually do end.

Scalpers can use a swing low or even the period MVA as places to set stop orders. In the event that price breaks and begins creating lower lows, traders will wish to exit any existing long positions and look for other opportunities. To contact Walker, email wengland DailyFX.

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