Forex 1-Minute Scalping Strategy With 50 EMA and 100 EMA
Forex scalping is a method of trading that involves buying or selling currencies and holding the position for a few minutes at the most. Many scalpers will maintain their position for as little as one minute before closing it. The main objective for forex scalpers is to place a large number of trades throughout the busiest times of a trading day in the hope of making a small profit each time. When using this approach, scalpers typically gain between 5 and 10 pips for every successful trade.
Scalpers make their trading decisions based on a set of real-time charts, which help them to determine the best times to buy or sell. With this in mind, a forex scalper will need to dedicate a lot of time to being glued to charts and placing multiple trades. They need to make quick predictions as to where the market will go and will only have seconds to open and close positions.
Forex scalping is suitable for those who don’t get stressed easily and can commit to looking at charts for several hours at a time. It also requires quick thinking, fast fingers and intense focus.
Forex 1-Minute Scalping Strategy Explained
A trading strategy is critical in order to be successful in the forex market, and scalping is no different. While scalpers will develop their own strategies over time, it’s always best to have a simple strategy on standby, such as the 1-minute scalping strategy.
The 1-minute forex scalping strategy is considered a good starting point for beginners looking to trade forex. Having said that, this strategy demands time and is only suitable for traders who are able to fully concentrate and sit in front of a computer screen for at least a few hours a day.
Put simply, forex 1-minute scalping involves opening a position, gaining a small number of pips, and closing the position. Each day, traders open a large number of trades which can last seconds or minutes. They sometimes place as many as 100 trades and, for this reason, pick brokers with the smallest spreads and commissions.
When using the forex 1-minute scalping strategy, traders are able to work with their choice of currency pair. However, it’s recommended they choose a pair with the lowest spreads. Scalpers tend to set up their terminals with indicators of 50 EMA (exponential moving average) and 100 EMA, as well as stochastic with periods of 5, 3 and 3. They also look for high volatility sessions, such as London, New York sessions.
Opening Long Positions using the Forex 1-Minute Scalping Strategy
When it comes to the entry point, it’s crucial for scalpers using this strategy to wait until the price comes back to the EMAs, placing the 50 EMA above the 100 EMA. It’s also recommended they use the stochastic oscillator below the 20 level. Many scalpers choose to stay safe by setting stop-losses around 2 to 3 pips below the last swing and expect to gain around 8 to 12 pips on each trade.
Opening Short Positions using the Forex 1-Minute Scalping Strategy
Basically, scalpers follow the same procedure as they would when opening long positions using this strategy, but they do things the other way around. This means they position the 20 EMA below the 100 EMA and wait until the price returns to the EMAs. The stochastic oscillator will be above the 80 level, and stop-losses are positioned around 2 to 3 pips below the last swing. Again, the average take-profits remain around 8 to 12 pips from the entry price.
Advantages and Disadvantages of Forex Scalping
While forex scalping is an effective strategy, the strategy a trader will go on to use for the long term will be one that matches their personality and trading ability. Here is a list of the advantages and disadvantage a potential scalper will need to weigh up before adopting this trading method.
Advantages
Many forex traders prefer to stay constantly involved in the market, and scalping enables traders to trade as often as they like throughout a day. Most scalpers either have a part-time job or don’t work at all, allowing them keep up with the excitement of trading over short trade sessions.
With a good stopping strategy, traders can bring in small, regular profits every day. It can take days or weeks before closing a profitable trade with other trading strategies, but forex scalping is consistent and traders can book smaller profits even when the market is less volatile.
Scalpers use a small position size, which means they only risk a small amount of money each time they trade. They can also implement stop-loss orders to further minimise risk. As positions are only held for short periods of time on the same trading day, scalpers do not have money at risk overnight and are not subject to reversals on the market.
Less knowledge of the forex market is needed, especially as positions are held for very short periods. Most trading decisions are based on real-time charts rather than long-term analysis and news events.
Scalping is a very efficient way to trade, and you don’t need a lot of money to start up or make trades because it requires very little trading capital.
Disadvantages
With scalping, trades need to be placed quickly, and it can be very difficult to predict what the market is going to do within the next five minutes.
Scalpers will need to win one trade after the other in order to make a decent profit. Only winning a few trades here and there will not be enough for a trader to accomplish their financial goals.
Not only does scalping require excellent concentration skills but it also requires a trader to keep doing the same thing over and over again. This can be difficult for many traders and extremely exhausting, which can lead to stress.
Forex scalpers will typically trade with a 1:1 ratio, which could lead to problems. With just one loss, they can take out all of the profits they’ve made from a number of trades.
Forex Scalping Tips
If you think scalping might be the right strategy for you, there are some things you need to consider, so we’ve shared some of the best ways to avoid the common pitfalls that plague forex scalpers.
As you will be entering the market on a frequent basis, you’ll want your spreads to be as tight as possible. This means you should only trade the most liquid pairs that offer the tightest spreads and the highest trading volume, such as GBP/USD, USD/JPY, EUR/USD and USD/CHF.
When starting out, focus on one pair to give yourself a better chance of success. Scalping demands intense concentration and trying to scalp multiple pairs as a beginner is only going to end in failure. Once you get used to the fast pace nature of scalping, you can add on another pair and gradually progress.
The most liquid times of the day are from 2:00 am to 4:00 am and from 8:00 am to 12:00 pm EST, during the session overlaps. You can also obtain good profits between 3:00 pm and 7:00 pm EST when the market is more predictable.
Obviously, this goes without saying but it’s especially important when you’re making lots of individual trades within a day. Always learn how to manage risk and stick to good risk management practices to minimise potential losses.
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