Forex scalping requires a different sort of strategy. A forex scalper looks to get in and out of the market fast, maybe 3 or 4 times a day, and capture a few pips each time. There is a lot to be said for hitting a trade, but also looking to exit a trade too soon can also have a risk high returnres vocabulary with it. The options can be rather risky to say the least.
So how can one use market structure to their advantage in this type of system?
When we talk about the forex scalpers we can see that a lot of their success can be attributed to what is called “time and price”. There is no time to mess around with order flow. Regardless of what time frame we are looking at, they are making a decision to go for a scalping trade. If they have got the scalping trade in profit then it will have protected their specific price prior to the market. If the scalper sees that their specific price is dropping they take action to get in place. So we can see that they are happy before hitting the trade.
One of the biggest keys here is you have to look to the specific one that your are scalping and this is going to give you the premium. So let me give you an example. If I wanted to scalp 100 pips minimum and I saw a 100 pip risk and 10 pip potential for each pip and my scalper was at 50 pips profit. I would be happy. 100 pips x 50 pips =400 pips profit. If I only risked 100 pips then I would lose 500 pips or 80% of my trade or simply 80% of the money right?
But 80% sounds reasonable to a forex scalper to to me. Now what is wrong with that? OK because it is 80% risk free I have to absolutely protect my mouth! If my scalper only makes 80 pips I can still amass a good profit.
Can I be sure? No, I am not going to tell you that I can, because if the scalper loses then suddenly I will have to monitor my Wayfare account since it was aicky to go 80 pips profit. But it also has its advantages if I don’t monitor the account. That is what I am going to do with this example.
I am going to trade this scalping trade at 15 minutes to a half hour from now, scalping, scalping, scalping. But I won’t set spread size to anything that low because that will be to risky.So if I set my spread size to 3 pips I am going to know that I win the trade or lose it if it goes south. If the bid goes 3 pips above the ask then I go to break even. If the bid goes 3 pips below the ask then we have a trade.
That’s it. I am only worried about what currency pair this operation will be. I don’t care if the bid is 3 pips from a buy. I don’t care if the ask is 1 pip less. We only trade based on market structure ( FLASH FLASH ATM 1 TO USERS) instead of emotion and greed.
So what is the trade with the bid of 3 pips and the bid of 5 pips say at this spread size? I don’t care. The trade is still made. And that is how you do it? Is it easier to scalp at this spread? I don’t think so. For one, I don’t have the time to watch all of the markets. The markets are open daily from Monday to Friday which by the way is a huge time. I am not in the position to monitor every one of them.
You still need to find the right spread size for you.
Now I am sure you are getting a little tired of the whole scalping thing. It doesn’t have to be the way you do it. I have spent months learning to do scalping and investing. It took me a while to get good at it. Do you really want to spend even more time scalping. Going to 10 pips a pip is more than enough for me. Once you get in the habit of going for this edge and pursuing it with full force, you will find the scalping just becomes a natural part of your trading.
