logo
Get Our New E-Books For Free

Forex Scalping Facts And Fictions


So, you think you want to try scalping! Just because it seems like an easy way to score a small profit within a minute, this is not always true. Although it is very fast-paced, it can be rewarding as long as you can make the correct decisions within split seconds, and of course as long as your broker doesn’t try to make you lose through increasing the spread, re-quoting and… . It is much like a fast motion video game and though it may seem like fun, it isn’t always. Still, scalping is a trading skill you may want to learn, or at least know how it works, and can build your confidence when engaging in alternate forms of trading such as day or swing trading.

What Is Scalping?

So what is scalping, in case of forex, forex scalping? Scalping is a method of trading where a trader “skims” small profits continuously. It is the act of entering and exiting positions several times in one day while trying to make profits during high velocity moves, a scalper will act quickly on releases of economic data and other significant news events that influence trading activity.

Although similar, scalping is not the same as day trading. While day trading, a trader will open a position once or twice within one day, but close it before the day is through. He will never leave the position open overnight or carry it into another session. A day trader opens and closes positions once or maybe a few times a day based on information they obtain from five minute, fifteen minute or 30 minute charts. A scalper is even more feverish as he aims to skim tiny profits multiple times through going in and out of positions numerous times within a single day. This trader makes trades according to data from tick charts or one minute charts.

As day traders chase after few profits involving dollars and cents per share or unit, scalpers aim to make numerous gains on trades involving between five and ten pips (fractions of pennies). They act fast and furiously when conducting transactions. When trading on standard lots, these petty gains add up. The average made on one pip for trading one lot is $10 and if five pips are involved, $50 can be made on a single trade. If this trade is successfully made ten times within a trading period, the trader can profit by $500. Of course, if everything goes properly and without any problem. Sometimes just one single position takes the profit made through several winning positions down the drain.

Should You Consider Forex Scalping?

What about you? Should you consider scalping? Scalping is very fast paced and requires great persistence and concentration. You must focus steadily on economic activity and react on it quickly. Also, you must be comfortable sitting at a single computer screen for hours on end. You need to be able to make decisions on the spur of the moment and thus, be on your toes at all times. If your attention strays for even a second, you can easily miss out on profits. Hence, it is not advisable to attempt forex scalping.

Redundancy is yet another aspect of forex scalping. By carrying out the same actions over and over, you can minimize your chances of facing catastrophe. Likewise, you need the skill to jump into and out of positions using more than one method. Fast and reliable Internet access must be a high priority for you as well as knowing how to react if your system goes down. You need to be able to contact a dealing desk via phone and identify yourself quickly.

Keeping good records must be a high priority to you as well. Once you maintain a hard copy of your past training activities, you can review them periodically. This will help you improve your trading skills as you learn from your past mistakes. Simply take screenshots of your trades and make a printed copy of each to put in a journal.

Do you really have to handle all these stress and hassles that forex scalping has?

Novice traders like to try forex scalping or day trading, because they like to make some money everyday and close the computer. They don’t like to leave any positions open for several hours, days, or weeks. They hate setting any stop loss and lose money because of it. They are afraid to see they have lost money the next day they turn on their computers. Maybe these are all good reasons, but the problem is scalping or even day trading is not the solution, and if your goal is making some money through forex trading, you can not do it consistently if you do scalping or even day trading. Making some money here and there doesn’t make you a profitable trader in long term. You have to choose a way the makes money for you consistently. I will tell you how.

Why Is Scalping So Popular?

What are the best ways of scalping? And why has scalping become so popular? First of all, there is no one popular method, but this act has become so extremely main stream with traders (as much as 95%) and is overwhelming the Forex market. Over the years, myths about price movements in Forex trading have developed, all which have no factual proof.

A first myth is that Forex prices move according to some form of scientific formula making these movements easy to predict. This is nonsense since the Forex market is made up of humans and because humans are unpredictable, so are these markets. Forex prices move with great uncertainty on the short time frames like 1min and 5min, and thus after so many trades, you are trading on random volatility or maybe even “market noise.” To win, you need to get the odds on your side, but that is not always so easily done.

A second myth is that because of the scientific accuracy concept, you can win the majority of your trades (as much as 90%). However, past successful scalpers are likely to say they won less than half of their trades rather than almost all of them. Even those that have said to scored up to 90% trade wins have no basis to prove why they have done so.

A third myth is that you can trade with an incredibly tight stop loss or on as little as five pips. That is merely based on random volatility and there is no evidence that such a trading practice will work in the real world. A five pips stop loss can easily get hit by a small price or spread fluctuation.

No matter what anyone says, playing on the Forex market is not a way to make easy money. Also remember, brokers like scalpers since they conduct numerous transactions and thus, it means more money in commissions for them. Hence, the forex scalping strategies and market are extremely dangerous, especially for those who enter it with pure emotional impulse.

When Can Forex Scalpers Trade?

Since scalpers are doing high-speed trading, high liquidity is extremely important. This enables them to execute trades within seconds. They have to stick with trading major currencies since they are most liquid and only when trading activity is high, such as the hours when trading sessions overlap.

Since scalping requires alertness and fast-paced action, they have to not to attempt it if they do not feel up to it for whatever reason. If they feel tired or stressed out or are consumed with an emotional issue in their lives, they will have to avoid scalping altogether – of course if greed allows them to cease trading for one day. Having a cold or the flu or perhaps any type of illness will not only hamper the scalpers ability to make quick and effective decisions, but may require frequent trips away from their terminal. Also, if they feel they are on a losing streak and need time to rest, they have to stop trading. They can trade only when they feel well rested and energized and prepared for action.

Conclusion

Even if we believe that some people make money through scalping, but scalping is not for everyone, and most probably you are among those who can not make any money through scalping. It is mainly for traders who are highly focused on their activities and can make effective decisions without thinking things through (although I have never seen any of these traders make money consistently through scalping). Also, one must be OK working at a computer for as long as an entire trading session and not become easily fatigued. Unlike what most people think, scalping needs a lot more experience and knowledge compared to the other trading styles.

Don’t believe positive things you hear about scalping from people you know. There is no one established formula that will guarantee you success at scalping at least 90% of the time. Likewise, if something sounds too good to be true, it most likely is, especially in the forex scalping atmosphere.

There is a much easier way to make money through forex trading (or any kind of trading). To make money through forex trading, you don’t have to do scalping or day trading. You don’t have to sit at the computer several hours per day, and you don’t have to push yourself to handle a lot of pressure and stress. If you want to trade forex to make money, then you have to forget about dealing with short time frames. They can not show you the right way. Working with the long time frames not only is more profitable, but it is easier and safer. This is what we have been doing for the past several years and we are so happy with it.

Follow this article and become a consistently profitable trader risk and hassle free: Become A Profitable Forex Trader In 5 Easy Steps

Good luck 🙂



Join Our 20,000+ Loyal Followers Now & Receive Our E-Book For Free!
Download Our E-book For FREE and Don't Miss Our New Articles!
Enter your email address and check your inbox now:

About

"Whether you think you can, or you think you cannot, you are right." - Henry Ford

I want to...

47 thoughts on “Forex Scalping Facts And Fictions
  1. richard

    Oh Chris, i was reviewing my last demo account activity .and u just wrote a related article ! i double my account within 2 weeks but now i knew how risky i am , i trade up to maximum lot just before i get margin call ! but a 10 pip fast move is gonna kill me . I know through scalping might bring me big money but that is not the lifestyle i want ! By spending so much time and effort making money and don’t have time to spend with love one or do other hobby sounds stupid .

    Guys , i like what Chris says ,” Place the order , set the stop loss, just let market work for you .

  2. Mohammad Ismail

    Yes it is proof reality that from short time frame a trader can not judge a right trend , now i want to ask about gold , this weak candle can confirm for buy trend.

  3. dionsis

    Chris,
    One more amazing article! What I really like about your strategy is that one doesn’t have to spend several hours per day in front of a computer. I am an engineer and I truly enjoy my job; I would hardly quit to become a full time trader, regardless of how much I like the process of trading . I would never waste my whole time just to earn more money- I need also some time to spend them!

  4. dionisis

    Chris,
    I found some forex platforms with which one can follow successful traders. They also provide tools to protect your capital, spread the risk among different traders etc. What is your opinion on that? Is this as easy as it sounds?

    • Hi Dionisis,

      I have seen them, but honestly I have never tried them and also I have never heard that others have been too happy with it. The only way to find out the reality is that you open a too small account and connect it with one of those successful traders accounts and see how it goes. Keep in your mind that it is always possible that you lose. So just risk a small amount of money.

  5. Majid

    Dear Chris
    i agree with you 100% . i worked on short time frames ,i also worked binary options that is kind of gambling , but i wiped my demo account out every time .
    as you know , brokers charge traders SWAP fee for holding positions during nights that some times is considerable , so i’m testing a new method that i invented 😀 .
    i look on charts on MN , then W1 , and then D1, and then H4 ,i analyze them , draw support and resistance lines , i consider candlesticks shadows and find out bulls and bears power direction,and if all of them show me the same direction , i make a trade . when all time frames show me the same direction , it means i’m not in false waves on shorter time frames , so if i enter to market , i can close my position when the market start going opposite direction in sorter time frames , and if i lose the exit time , i can wait for next opportunity .
    and it’s funny because it actually works . i started with a 300$ Demo account and after less than one week i have 500$ in it.
    thank you so much .
    bests

    • Hi Majid,

      What you are following as a trading system and style looks good. I am sure you will get good results in long term if you stick to this system.

  6. Jho

    Nice article Chris. Thanks!

  7. Jho

    Hi Chris, what is thoughts on short set-up on USDCAD? Is the short signal not risky? Regards!

    • Hi Jho,

      It is not a 100 score setup. As you said it is a little risky.

  8. Daniel

    Hello Chris,

    you mentioned in one of your comments that professional traders do not even think of a Risk Reward Ratio (RRR) less than 1:5. I have analysed most of the currency pairs starting with 2013 and came to this conclusion:
    – if we consider the safe stop loss to be above the high/low of the candle then the majority of setups give a 2-3 RRR. So if we enter at the close of the candle which created the setup we have a chance to win 2 or 3 times the SL pips. Most of the time only.

    It is then for me obvious that professional traders like you use the risky SL level in order to have higher RRR.
    How do you set the risky SL? For the safe one the rule is clear: it has to be above the high/low of the candle which created the setup plus the spread, but it is not clear for me how do you set the risky one. Do we have here also a clear rule? Do you look at the shorter time frames like 4H or 1H and try to find support/resistances? Do you pick the middle of the previous candle? Maybe there is already an article about the risky SL, sorry but I haven’t found it yet …
    Thank you & respect!
    Daniel.

    • Hi Daniel,

      It is usually at the middle of the candle that forms the setup. For example when the setup is formed by a Dark Cloud Cover, the risky SL is almost at the middle of bearish candle (second candle). There is no special rule for it. I don’t check the shorter time frames for that.

      If you like to go for the risky SL, then please note that it is possible that it gets triggered by the next a few candlesticks that usually go against the setup. Then you will have to enter again when the SL is triggered. If you don’t want to take that risk and handle that loss, there is a way for it:

      You don’t enter right when the setup is formed. You set pending orders right where the risky stop loss would have to be placed if you had entered right after the setup was formed. In this case, it is possible that you never enter, because sometimes the price moves without going against the setup, and so you will miss the chance. However, if the next a few candlesticks go against the setup, you will enter with a much better price. Then you can set the stop where the safer stop loss has to be which is the high price of the second candlestick in case of a short trade setup, and low price of the second candlestick in case of a long trade setup. You will miss some of the setups if you use pending orders, but it will be much much safer and better. You can back test again and see how it works.

      Good luck 🙂

      • Daniel

        thank you Chris! you’re great!
        Wish you a pleasant Sunday!

  9. Merry

    Hi Chris,

    When you have time, I would love to know what you think on AUD/CAD daily chart. Can we consider it as strong engulfing trade there?
    Many thanks, Merry

    • Hi Merry,

      It is your first comment here. Welcome 🙂

      It is a too strong Bearish Engulfing. But as the 2014.11.05 candlestick is a huge bearish candlestick it has made the market oversold and it is possible that some candles go up before the price follows this short trade setup.

      • Igor

        Hi

        I have my sell stop order at 0,9715 (support breakout), since there is DBB setup on the weekly chart as well.

        BTW thank you very much for this great site and your effort to teach people for free. I think this knowledge is life changing.

        Regards

        • You are welcome Igor, and welcome to the site 🙂

      • Merry

        Many thanks for your thoughts on AUD CAD. I have just come across your website recently. I have read so many trading articles from books to online , and I am impressed at your explanation. I like how you explained your trading system in simple words.

  10. Andy Aristiyanto

    Hi Chris,

    The first time I knew forex from a friend of mine, he told me his trading system, which is scalping. Although it was a profitable system, I felt it is time consuming. In a day I could make 4-8 trades.

    Until I finally found your system. It’s much easier and consume less time. Best of all more profitable and FREE!

    Thanks Chris!

  11. kamal

    Hi Chris, great article. I had traded 5 minutes time frame before I found LuckScout. It was confusing and time consuming for me. Your system is simple to understand. Thanks a lot.

  12. simon

    Hi, Chris.
    A SHORT setup formed at AUDCAD weekly based on DBB system on candlestick closed 2014.11.02 ? Hence, is it right to say , a bearish continuation ?

  13. Maria

    Hi Chris,

    I know you’re not trading Silver but if you don’t mind, would you like to see my analysis? I see the last weekly candle closed forming a strong weekly support line (http://i57.tinypic.com/2rf7i13.jpg) with a long lower shadow. The daily candles (http://i62.tinypic.com/de7hw9.jpg) formed doji + confirmation pattern too. Can this be considered as a long trade setup? Thank you very much

    • It can be known as weak setup on the daily chart.

  14. Daniel

    and the second question for the day 🙂

    how would you draw your Fibonacci levels on the monthly NZD/USD?
    Option 1: from March 2008 (High price: 0.8216) until Feb 2009 (Low price: 0.4964) or
    Option 2: from March 2009 (Low price: 0.4896) until August 2011 (High price: 0.8844)?
    The 0.8844 was by the way also the resistance level which started the downtrend.
    I think the first option is the correct one, right? We have a clear defined trend which has ended. Which would be your arguments? Or you don’t make your life that complicated? 🙂
    Hope I’m not stressing that much with questions but your articles are very interesting and motivate one to ask questions.
    Respect!
    Daniel.

    • Hi Daniel,

      Please read the today’s article that will be published in an hour. Then I will answer your question if you still want to know how to plot Fibonacci on your charts 🙂

  15. Redpants

    A great article enjoyed it thanks again Chris , good luck this week to all . Best John

  16. Otto

    Great article, thank you Chris. I really would like to avoid this kind of trading style.
    Have a look at this guy, he is trading the XAU/USD M1 chart: http://tozsdetanfolyam.hu/trade09_29 (it’s not in English, but it does not matter, the picture speaks for itself)
    You can see, how tired he is because of staring at the screen for a long time.

    • Hi Otto,

      Thank you too.

      Does he make money?

    • Otto

      I’m sorry, it is not XAU/USD, but YM.

  17. Otto

    In this case he did (otherwise it probably wouldn’t have been published :)). But, in general, I really don’t know. They used to teach (for money) a trend following trading system with position scaling up, when a new signal appeared in the same direction, and moving stop losses accordingly. The central part of the course was risk management, which is actually great. IMO this system may be profitable if one is disciplined enough, and can tolerate the lower success rate, and lots of false signals. But there is a great risk of overtrading, as I experienced on their forum. I didn’t take this course, all I know is from their public forum.
    Nowadays, they teach some other kind of system (perhaps they need more money from students :)), a quite mysterious one. I really don’t know anything about it. It looks suspecious.
    In my opinion, even if they are profitable, there is a much easier way to trade profitably. And it is the way, you teach here. Thank you.

    • I hope they are profitable and I wish success for them. They are hard working people and they are spending lots of time both on their trading and on the site, and this is appreciable. However, as you also mentioned, when it is possible to make money through an easier way, why should you spend several hours in front of the computer every day. It is not easy, and I don’t think one can keep on doing it for long.

      Thank you too.

  18. Abdelghani

    Thank you!

  19. Tafadzwa

    This is just masterstroke. I have traded shorter time frames and came to this conclusion that it just doesn’t work. You can make a few hundred dollars during some days but it won’t be sustainable. It will only be a matter of time before you give it all back to the market.

    I appreciate the information you give Chris, I really do. There are a lot of forex “gurus” on the web. I have realized that the majority of them don’t have any real trading experience but they work for brokers and some are even IBs. They want to make you think that making money trading forex is way too easy. There is a lot of conflict of interest in the industry.

    Thank you so much Chris.

  20. Hello Chris,
    I found LuckScout while look for something else.
    I bookmarked it and came back about two weeks later.
    I started exploring it and I have become addictive to it. I have not been able to do nothing but read Articles that’s mainly because one can not read an article without having to read several others before being finish with the first one. When I started I want to know how do I start? After about three weeks to a month I think I found out how to start on this site. I paid several thousand dollars for a course in 09/2013 started trading via an automated system in a live account of $500.00 The system lost about $80.00 & I stopped it and started learning how to trade manually. Scalping was the first thing introduce to me, but I didn’t like that and still don’t. I have other things to do with my time and sitting in front of my computer all those hours is not for me. I always said that I’m the set it and forget it kind of trader. After all the time spent studying the paid course I’m learning more here than I did there. Thank you for all you have and are doing for all of us who desire to be Pro’s in the Forex Market.
    AGAIN THANK YOU, THANK YOU, THANK YOU!
    Love you!

  21. Hi Chris,

    I agree with your articles. I introduced my friend to LuckScout and.. He is too lazy to read the articles, and he want me to forward him only the links of the DBB and strong setup strategy.

    Instead of using the strategies offered in LuckScout, he continues to be a daytrader and scalper, scalping 5-10 pips per trade. He is money oriented and doesnt have the patience to trade the daily, weekly and monthly charts. He feels that he can still scalp 50-100 pips in a day and aiming small pips is the safest as compared to aiming huge profits

    • Si,

      There is nothing wrong with it if he really can do that and if he can be positive in long term.

      • Hi Chris,

        Although his hit rate is quite high, whenever he hit stop loss i will shake my head. Most of the time his losses will be higher than his profits as his stop loss is based on daily candle and he always follow the trend

        • This is what I expected to hear. It is not that easy to be a consistently profitable day trader. It is too hard and time consuming indeed.

          • Thanks Chris. Its a pity he cant be a loyal LuckScout follower. He is the most skilled forex trader among my group of trader friends including myself.

  22. Hello , I trade 1HR time frame, sometimes when the market is ranging,has not hit my target or hit my target but i move my 2nd position to breakeven and let the profit run and it becomes night already,I am wondering is it right to leave my position run in these situations.I am wondering, because the market has lower volatilty in the night, my position is entering different session, and does it make me a day trader?

    Thanks for your help!


Download Our E-Book For Free!