What is Forex Scalping? Forex scalping is a trading strategy that is very popular amongst professional traders and entails quickly entering and exiting the market grabbing something like 10-20 pips each time. Now, you might be wondering when you enter and exit the market, you have to pay a cost in the shape of the spread. This is true. So in scalping, you try to make pips that are more than the spread that you have to pay when you enter and exit the market so that you are profitable.
Let’s make it clear with an example. Suppose, you want to scalp EUR/USD pair. This is the most liquid pair. The spread on the pair is very small. Some brokers offer a spread of 3 pips, others offer 2.5 pips and there are some who even offer a spread of 1 pip or even lower for this pair. So this pair is ideal for scalping as the spread is very low. Now, there are pair that have spreads like 5 pips, 6 pips or even 7 pips. These are mostly the exotic pairs and may not be good for scalping.
So if you are scalping EUR/USD pair, every time you make a trade, you must make something like 10-20 pips. Suppose, you make 10 pips. Deduct the spread. Let’s say the spread is 3 pips. So after deducting the spread you made 7 pips. Now, you might be thinking that 7 pips are not much. True! Precisely because of this reason you will have to make at least 5-10 scalping trades daily if you want to make 35-70 pips per day.
You might be wondering if this is so then why is forex scalping so popular. Good question. The reason why scalping is most popular is that it works very well when the market is ranging or what you call moving sideways. When the market is ranging there is no clear trend present and the price action will be bouncing like a ping pong ball between the two horizontal levels of support and resistance.
So, what you will do is buy at the support and sell at the resistance. It sounds simple but there are fine details in forex scalping that you will have to master before you can use it profitably. Since currency markets are mostly ranging something like 70% of the time, there is nothing else you can do but practice forex scalping. When the market starts trending, you can practice trend trading strategies that make hundreds of pips per trade. But the problem is these trend trading strategies only work in a trending market. So most of the time, you have to use forex scalping as your trading strategy especially if you happen to be a day trader or a full time trader who makes a living as a trader. If you are interested, download these Forex Scalping Cheatsheets and discover the best times for scalping the market plus 5 different methods of forex scalping. Also learn Instant Pips Scalping technique that you can use anytime you want.