⚡ What is Scalping?
Scalping is a high-frequency trading strategy where traders open and close positions within seconds to minutes, aiming to capture small price movements (5-20 pips) multiple times per day.
Introduction to Scalping
Scalping is one of the most intense trading styles in forex. Unlike swing traders who hold positions for days, scalpers might execute 50-100 trades per day, targeting tiny profits that compound over time.
Why Scalp?
- Quick Results: See profits (or losses) within minutes
- No Overnight Risk: All positions closed before market close
- High Frequency: More opportunities throughout the day
- Lower Market Exposure: Less time in the market = less risk from unexpected news
The Reality Check
⚠️ Scalping is NOT for beginners. It requires:
- Lightning-fast decision making
- Excellent risk management
- Low spreads (ideally under 1 pip)
- Fast execution (ECN/STP brokers)
- Strong emotional control
Best Timeframes for Scalping
Scalpers typically use 1-minute (M1) or 5-minute (M5) charts. Some advanced scalpers even use tick charts.
M1 (1-Minute) Scalping
- Pros: Maximum opportunities, quick entries/exits
- Cons: High noise, requires constant attention
- Best For: Experienced traders with fast internet
M5 (5-Minute) Scalping
- Pros: Less noise, more reliable signals
- Cons: Fewer opportunities
- Best For: Most scalpers (recommended starting point)
Essential Scalping Strategies
1. The Moving Average Crossover
Setup:
- Fast EMA (9) and Slow EMA (21) on M5 chart
- Enter when fast EMA crosses above slow EMA (buy signal)
- Exit when fast EMA crosses below slow EMA (sell signal)
Example:
EUR/USD at 1.1050
Fast EMA crosses above Slow EMA → BUY at 1.1050
Price moves to 1.1055 → Take Profit (5 pips)
2. Support & Resistance Scalping
Setup:
- Identify key support/resistance levels on H1 chart
- Switch to M5 for entries
- Buy at support, sell at resistance
Risk Management:
- Stop Loss: 5-10 pips
- Take Profit: 5-15 pips
- Risk/Reward: 1:1 or 1:1.5
3. News Scalping (Advanced)
Scalping during high-impact news events (NFP, Interest Rate Decisions).
⚠️ Warning: Extremely risky. Spreads can widen to 20+ pips during news.
Choosing the Right Broker for Scalping
Not all brokers are scalper-friendly. You need:
✅ Essential Requirements
- Low Spreads: Under 1 pip on major pairs (EUR/USD, GBP/USD)
- Fast Execution: Under 50ms execution speed
- No Dealing Desk: ECN/STP model (no conflict of interest)
- No Restrictions: Some brokers ban scalping
- Reliable Platform: MT5 with VPS support recommended
Looking for a Scalper-Friendly Broker?
Risk Management for Scalpers
The 1% Rule
Never risk more than 1% of your account per trade.
Example:
- Account: $1,000
- Risk per trade: $10 (1%)
- Stop Loss: 10 pips
- Position size: 0.10 lots (micro lot)
Daily Loss Limit
Set a maximum daily loss (e.g., 3% of account). Once hit, STOP TRADING for the day.
Position Sizing Formula
Position Size = (Account Risk %) × Account Balance / (Stop Loss in Pips × Pip Value)
Common Scalping Mistakes
- Overtrading: Taking trades just because you're bored
- Ignoring Spreads: Trading during high spread times (news, low liquidity)
- No Stop Loss: "It's just 5 pips, I'll hold it" → Turns into 50 pip loss
- Emotional Trading: Revenge trading after a loss
- Wrong Broker: High spreads eat all your profits
Best Trading Sessions for Scalping
London Session (8:00 AM - 12:00 PM GMT)
- Best Pairs: EUR/USD, GBP/USD, EUR/GBP
- Why: Highest liquidity, tight spreads
- Volatility: High
New York Session (1:00 PM - 5:00 PM GMT)
- Best Pairs: USD pairs (EUR/USD, USD/JPY, USD/CAD)
- Why: Overlaps with London, massive volume
- Volatility: Very High
Asian Session (11:00 PM - 8:00 AM GMT)
- Best Pairs: USD/JPY, AUD/USD, NZD/USD
- Why: Lower volatility, range-bound markets
- Volatility: Low to Medium
Scalping Checklist
Before you start scalping, ensure you have:
- [ ] Broker with spreads under 1 pip
- [ ] Fast internet connection (low latency)
- [ ] VPS (Virtual Private Server) for 24/7 trading
- [ ] Clear trading plan with entry/exit rules
- [ ] Risk management rules (1% risk, daily loss limit)
- [ ] Demo account practice (minimum 3 months)
- [ ] Emotional control (no revenge trading)
Summary
Scalping can be profitable, but it's a high-stress, high-skill trading style. Start on a demo account, master one strategy, and only move to live trading when you're consistently profitable for at least 3 months.