The forex scalping strategy is one of the most popular strategy among trader due to the fast entry and exit of the trade. This allows the trader to take quick profit and do not require them to look at the computer chart for a long time.
Due to the fast pace in trading this strategy, you will need to be extremely accurate in your entry as well as your exit. Therefore in this post, I am going to share with you several techniques that will help you to improve the winning accuracy of your scalping strategy today.
Power of Support and Resistance
One of the most important factor in the forex scalping strategy is the support and resistance level. If you take a close at your chart, you will find that the price on your chart are moving in a wavvy manner.
The reason why they are moving in such a way is due to the repulsion of the support and resistance levels. Therefore as a scalper, you will need to know where exactly are those level of strong support and resistance so that you can enter a trade to profit from the repulsion.
Below are several powerful support and resistance level
1) Pivot – The pivot point indicator is one that is commonly used among institutional traders. Therefore you will find that the price usually respect the pivot levels and get repelled by them.
For me, I will usually plot the daily and weekly pivot on the same chart and then look for alignment between these 2 pivots. If you are able to identify the level where there are 2 overlapping pivots, that particular level will be where you are going to enter a trade to trade the repulsion of the price. However you can still enter a trade based on the repulsion of one weekly pivot.
2) Fibonacci - The Fibonacci indicator is another indicator that is also commonly used by institutional trader. Similar to the pivot level, the Fibonacci retracement and extension levels are great level of support and resistance.
To better use the Fibonacci indicator, you will need to understand the relationship between the retracement and extension levels.
When the price retraces to hit the 0.500 or 0.618 retracement level, it will usually be repelled and then moved all the way up to 1.618 Fibonacci extension level.
As a scalper, what I usually do is to enter a trade then the price get repelled by the 0.500 or 0.618 level and then set my target profit at the 1.618 Fibonacci extension level.
If the price retraces back to hit the 0.382 level, it will most probably be extending to the 1.272 Fibonacci extension level. If I am going to enter a trade to trade the repulsion of the 0.382 retracement level, I will set the target profit to be at the 1.272 extension level.
3) 200 EMA - Besides the above 2 indicators, the next powerful level of support and resistance is the 200 EMA. If you take a look at your forex chart, you will find that the price will usually be repelled by the 200 EMA.
As a scalper, you should enter a trade whenever the price hits the 200 EMA for the first time after crossover. From my analysis, the price usually get repelled by the 200 EMA when it first hits that level after a period of time.
For any good forex scalping strategy, you will definitely need the help of the above indicators. I hope that you find the above information useful for you.
If you are still struggling in your trading and do not have any profitable trading strategy on hand, you can take a look at my trading blog where I share with you how I use different indicators as well as my trading strategies.