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Forex Scalping - 10 Step Guide for Scalping Forex

Updated: Mar 23, 2021

Scratching your head about scalping Forex? Scratch no more! Just hold tight, this article will scratch that itch by providing you with the answers that you're looking for.

It'll also prevent further head scratching that could make your scalp sore.

In this article, you will learn & scalp the following knowledge:

What is Forex Scalping?

Forex scalping is a style of trading adopted by Foreign Exchange traders where they buy a currency pair and then shortly after sell off the same currency pair with the objective of making a profit.

Once bought, the trader holds onto the currency pair for a short timeframe, perhaps for a couple of minutes or up to fifteen minutes, with the sole objective of making a profit.

What is a scalping trader?

A scalping trader is somebody who seeks to make small short term gains from the market, with the aim to have a high "success rate" but lower "risk reward".

For example, a simple scalping traders approach could hope to have statistics like this to be profitable:

  • For every £1 they lose they make £1

  • They make £1 over 51% of the time

Those 2 conditions in the above example must be satisfied to be a successful scalping trader.

A scalping trader must be very disciplined in his decision making and prompt with his trades. Moving too late could be financially costly.

A scalper may well place over a couple of hundred trades a day in the hope for a return of a small profit. In reality a 100% return on every trade is unlikely however a successful scalper would walk away at the end of the day with a profit.

Forex scalping is a longer term methodology where small profits are collected consistently rather than for those who are looking for larger returns regularly.

How do Scalpers Measure Their Profit?

The way these very short term traders measure there profits, as they're so small, is in terms of pips.

A Pip is a Percentage in Point. A pip refers to the smallest movement a currency can possible be involved in.

To be more specific, a pip is a movement of 0.0001 in the exchange rate.

Whilst keeping an eye out for small changes in price, a forex scalper will buy in at a lower price and then sell after a small price hike, otherwise known as a movement of pips.

These trades will be made throughout the day as the trader will look to make profit from the many small pip movements (price changes) that happen that very same day.

Profiting from forex scalping will involve the movement of only a small number of pips.

A scalper is quite literally looking to ‘make a scalp’ and move swiftly onto the next trade.

A forex scalper is akin to the tinder guy (or gal) who likes to swipe left a lot. The long-term trader is the two-year relationship type. As a scalper, you might trade that currency again, but you won’t get hitched to it!!!

It is important to note that a forex scalper looks to swoop in and out making regular trades whereas a forex trader will buy in for the long haul and will most probably aim for larger returns.

This is why a scalper is like the tinder user and a regular trader is more like the two-year relationship type.

Currency Pairs & Forex Scalping

Forex scalping is the action of buying a chosen currency pair at a certain price , waiting a small timeframe for a price rise and then selling the currency pair at a higher price point for a profit.

For example, you may want to trade the EUR/USD currency pair. In this case, you will look at the price movements for this pair. Below is a demonstration of a currency pair: