Forex scalping is one of the riskiest trading strategies in the industry, and many people are engaged in this style because they want to make their trades shorter and earn money quickly. It is a dream for many newbies to trade in the currency exchange market as a scalper, but the situation becomes too hard for them because they don’t have enough of an idea about this business. As a consequence, some of these new guys can’t continue their journeys as short-term traders.
Why is scalping so risky?
This business style is risky only because of its strict timeframe. A trader in the Mena region has to execute his trade within 15 minutes. But the investors hardly hold their trades for 15 minutes. Commonly, they retain trades for 1 to 5 minutes. Explore some professional articles at Saxo Bank and you will learn how trades are timed in scalping method. Though it provides quick way to earn money but it is critical to dealing with the environment.
So, think about the situation. You have to hold the currency for a shorter duration and you have to sell it within time as well. One wrong decision can ruin the entire trade, and this is where the newbies make mistakes. They can’t make the decisions quickly. As a result, the situation becomes more challenging for them to handle.
Best indicators for scalping
Here, we will mention the best technical indicators for a scalping strategy. Since the duration is shorter, beginners have to utilize technical tools to make a quick move.
There are three strong indicators, which can help any newbies to overcome the troubles in the scalping strategy. These analyzing tools will allow them to find out when there is a sharp movement in the chart. Let’s find out about the three vital tools for the graph.
1. Moving average
This is one of the best technical indicators, and you can use a simple moving average (SMA) or the exponential moving average (EMA). Simple moving average lines can be used to find out the potential entry or exit spots of a deal. In this case, the rookies have to find two different periods, such as 50-days or 100-days, or 100-days or 200-days. If you can successfully discover their intersection, then that will be known either as a buy signal or a sell signal.
2. Relative strength index
Many beginners become confused about when they should take profits or cut losses. In many cases, experts suggest their juniors to combine multiple indicators like Stochastics and Bollinger bands to start trading in the currency exchange market. Stochastics can be used to identify whether the instrument is underbought or oversold. Timing is vital in this business strategy, and one can identify the exit points more accurately using this plan. Retracement or breakouts are common in the graph, and these issues can also be dealt with.
3. Different chart scalping
This is the last and best indicator for the scalping traders. In the Forex industry, tools are used to cope with the previous and upcoming conditions of the market. Keep your eyes on the highs and lows of the chart. Since the investors need to deal with the intraday fluctuations, they need to be more cautious about using any analyzing tools. By aligning with resistance and support, a beginner can find the largest profits in his trade. He can use the timeframe of 15 minutes or 60 minutes or the daily performance of the currency. Experienced businessmen advise that juniors use different chart’s histories to find a possible way. These are the three robust chart analyzing tools for the scalpers. Remember that scalping can have potential if one can use it correctly. But a single move can blow the whole trading account in a second. Therefore, we suggest that every beginner should use their demo accounts before jumping into the real market.