What Is Scalping In Forex? (2024)

Of all forex trading strategies, scalping is considered one of the most intense, risky, and exciting approaches to trading.

In essence, it’s a short-term trading strategy where traders attempt to profit from small price movements within the forex market. Scalpers perform multiple short-term trades throughout the day to gain (scalping) frequent returns on small price fluctuations.

This strategy attracts many traders because these small price movements happen much more frequently than larger fluctuations, even in relatively calmer markets. This provides scalpers with lots of trading opportunities. However, it also requires them to constantly look for trading signals, often requiring being glued to the charts for several hours straight.

Indeed, forex scalping can be incredibly tiring. Every second counts, and even a slight delay in closing or opening a position can lead to significant losses.

So, do you believe you have what it takes to become a forex scalper?

This guide will help you better understand whether engaging in forex scalping might be the right fit for you and provide you with some basic guidelines on starting your scalping journey.

Like any other forex trading strategy, scalping can be incredibly profitable. It is, however, also very risky. As you know already, scalping involves performing multiple (often hundreds) trades throughout the trading day. And while many of them can yield profits, many of them can also generate losses.

If you aren’t careful, these losses can quickly accumulate. Furthermore, that risk is further elevated if you use leverage, which many forex scalpers do. Of course, leverage can also maximise your potential profits, but given the number of trades scalp trading requires, this strategy can quickly generate substantial losses.

To maximize your chances when scalping, you’d need to:

• A – find the appropriate forex broker that offers low spreads, low or none commission fees, fast order execution, and no order price limits;
• B – pick the right scalping strategy;
• C – spend hours daily glued to your monitor, searching for trading signals and opportunities.

You will also need to ensure you have enough funds in your trading account to perform hundreds of trades throughout the day. That is something City Traders Imperium can help you with. Browse our funding programs and register your free account to take advantage of the one that suits your scalping needs best.

In its essence, scalping is incredibly straightforward.

You simply open a position (either bid or ask) and then quickly close it with a price increasing or decreasing by several points to gain a profit. Then, you follow the same path with other trades to generate enough small profits to outscore the losses.

Here’s where things get complicated, though. How to find the best scalping opportunities & which forex scalping strategy to choose? There are multiple things to consider here, so let’s review the most significant ones to help you start your scalping journey off the right foot.

If you want to try scalping in forex, prepare to spend hours searching for trading signals and analysing data. On a positive note, most forex brokers and trading platforms use software and technical indicators to generate trading signals.

These signal providers target a specific number of pips, helping traders spot potential scalping opportunities. These signals are based on several factors, including economic events or forex trading indicators offered by brokers.

A signal provider can estimate the trend and potential price fluctuations based on these factors, sending a scalper a signal with trade entry and exit points. Once you receive such a signal, you need to quickly analyse whether to follow it or not. In scalping, even the tiniest delay can be incredibly costly, so prepare to make a lot of snap decisions if you want to try it.

You can also analyse market trends yourself if you want to have more control over your trades. However, it will require even more time spent on research and analysis.

Popular indicators scalpers use when analysing the forex market for trading signals include a Bollinger Band chart, Simple Moving Average (SMA), Exponential Moving Average (EMA), and Relative Strength Index (RSI).

You should also analyse the news that might impact price movements within the forex market, such as economic downturns, government changes, inflation, etc. Even a simple political speech can affect the forex market prices, so be on a constant lookout for any economic and political news and updates.

Finding trading signals is crucial to master if you want to increase your chances of succeeding in forex scalping. However, you must also learn how to use that information to your advantage – and here’s where picking the right scalping strategy comes into play.

In general, there are countless strategies one can use in forex scalping. If you’re new to scalping, though, it’s best to consider the primary ones first. Basically, there are three main scalping strategies:

Trend-following: Trend scalping strategies involve traders buying the rising asset and selling the falling one. In other words, you follow the current price direction, using technical indicators to find exit points.

Learning to scan the forex market for signals and picking the appropriate scalping strategy are the two most significant things to master when engaging in forex scalping.

However, becoming a successful scalper takes tons of time and effort, and the learning curve can be steep. To speed up this process, we’d like to leave you with some scalping tips from experienced scalpers, including:

• Trade currency pairs with the highest volume and liquidity, as they allow scalpers to dip in and out of the trade at higher speeds;
• Trade during the busiest times of day, which are from 2 AM to 4 AM and 8 AM to 12 PM (EST);
• Focus on one pair at a time when performing multiple trades to increase the chances of your trade’s success;
• Remember to manage your funds appropriately; set yourself limits on how much you can invest throughout the day to avoid losing more than you can afford – especially when scalping with leverage;
• Be sure to account for the spreads and commissions; preferably, trade with brokers that offer the lowest possible spreads and charge low to zero commissions; otherwise, your scalping costs can quickly become higher than potential gains.

Of course, these are only several things to remember when scalping. Be sure to check our Trading Academy for more tips and practices, or join our trading community for tips and potential strategies from other, more experienced traders.

Although forex scalping can be highly profitable, it’s one of the most intense and demanding trading strategies to pull off.

Any aspiring scalper needs to deeply understand how the forex market works and learn everything there is about scalping strategies. Most importantly, though, it requires constant market monitoring as you scan for potential trading opportunities and analyse signals. This can be extremely demanding, both physically and psychologically.

So, before you engage in forex scalping, we’d suggest taking your time to decide whether it’s the best strategy for you. If you don’t like taking too many risks or get easily stressed, it’s better to stick to less demanding forex trading strategies.

However, if you thrive in fast-paced environments and have the time and knowledge to spend hours glued to the monitor – analysing charts and researching the market – scalping might be the strategy to try.

Just be sure you understand the potential risks and rewards. And remember, if you’re ever in need of trading funding, be sure to consider City Traders Imperium. Given how financially demanding scalping is, our funding program can provide the funds you need to kickstart your scalping career off the right foot.