News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • $EURUSD trying to hold support in the fibonacci zone b/w 1709 and 1736, same that helped to catch the Q1 low one more level below that zone and its the 2021 low at 1664 $USD $DXY https://t.co/sntjlxZrnl
  • EUR/USD has been packed in tightly between two key kevels (1.1700/38) since the open on Sunday night. Get your $EURUSD market update from @HathornSabin here:https://t.co/y8SKCtGUFj https://t.co/7atjCSqVS0
  • 🇺🇸 Building Permits MoM (AUG) Actual: 6% Previous: 2.3% https://www.dailyfx.com/economic-calendar#2021-09-21
  • 🇺🇸 Housing Starts MoM (AUG) Actual: 3.9% Previous: -7% https://www.dailyfx.com/economic-calendar#2021-09-21
  • 🇨🇦 New Housing Price Index YoY (AUG) Actual: 12.2% Previous: 11.9% https://www.dailyfx.com/economic-calendar#2021-09-21
  • Trading bias allows traders to make informative decisions when dealing in the market. This relates to both novice and experienced traders alike. Start learning how you may be able to make more informed decisions here: https://t.co/rz7fqi8ZEe https://t.co/EZHni1zt9V
  • Heads Up:🇺🇸 Building Permits MoM (AUG) due at 12:30 GMT (15min) Previous: 2.3% https://www.dailyfx.com/economic-calendar#2021-09-21
  • Heads Up:🇺🇸 Housing Starts MoM (AUG) due at 12:30 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-09-21
  • Heads Up:🇨🇦 New Housing Price Index YoY (AUG) due at 12:30 GMT (15min) Previous: 11.9% https://www.dailyfx.com/economic-calendar#2021-09-21
  • strong bounce in $SPX overnight was up as much as 100 handles off of the lows at one point, futes pointing to a strong gap on the open $SPY $ES https://t.co/ZT5z74jWeS
Develop a Scalping Strategy in 3 Steps

Develop a Scalping Strategy in 3 Steps

Walker England, Forex Trading Instructor

Talking Points:

  • Scalping strategies can be broken down into three components
  • Always consider market direction and the trend
  • Plan entries around retracements or breakouts

Many traders want to implement a scalping strategy, but don’t know where to get started. The truth is, you can develop a simple scalping strategy in as little as three steps. Today we will review the three components of a scalping strategy. Let’s get started!

Find The Trend

The first step to scalping is finding the trend. Finding the trend is vital because it helps create our trading bias for a currency pair. For example, if the pair is creating a series of higher highs, traders would only want to look for buying opportunities. This is opposed to a graph that is moving towards lower lows, when sell positions are preferred.

Using the example below, we can see the USDCAD has been trending upwards with the creation of a series of higher highs and higher lows. This means that scalpers should look for opportunities to buy the market.

Learn Forex: USDCAD 30Min Trend

Develop-a-Scalping-Strategy-in-3-Steps_body_Picture_2.png, Develop a Scalping Strategy in 3 Steps

Time Your Entry

The next step in developing a scalping strategy is to decide on an entry mechanism. Normally, scalpers will choose from either a retracement strategy, or a breakout strategy. In an uptrend, retracementtraders focus on pullbacks in the trend, in order to buy at a lower price. This is opposed to a breakout trader that will only buy when the market breaks a key level of resistance as price forms a higher high.

Below we can see two points that scalpers could consider as entry points. First, if price moves and forms a higher low, this swing could be an opportune retracement for trading. Next on the USDCAD you can see the breakout above the weeks previous high. This point on the graph would provide an opportune point for breakout traders to scalp in the direction of the trend.

Learn Forex: Breakout & Retracement levels

Develop-a-Scalping-Strategy-in-3-Steps_body_Picture_1.png, Develop a Scalping Strategy in 3 Steps

Manage Risk

The last step of any trading strategy is to manage risk. While there are a variety of ways to place stops, traders should also consider the told risk associated with their trade. Normally a good frame of reference is to risk no more than 1% of your trading balance on any 1 position. This way, in the event of a position being stopped out, the majority of your account balance is remaining to look for other trading opportunities.

Now that you are familiar with the 3 basics steps to designing a scalping strategy, it’s important to find the components that work for you. You can get started developing your own strategy with a Free Forex Demo with FXCM. This way you can develop your trading skills while tracking the market in real time!

---Written by Walker England, Trading Instructor

To contact Walker, email instructor@dailyfx.com. Follow me on Twitter at @WEnglandFX.

To be added to Walker’s e-mail distribution list, CLICK HERE and enter in your email information

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES