The best currency pair for Scalping
Introduction:
Scalping is a trading strategy that Forex traders use to make small profits by quickly buying and selling currency pairs. Scalpers usually trade in short time frames like 1, 3 or 5 minutes and earn between 5 and 10 pips per trade. The scalp method requires technical analysis, use of appropriate tools and strategies, risk and capital management, and having the necessary spirit and discipline.
Currency pairs with high liquidity, low spreads and good volatility are best for scalping. Some common currency pairs for scalping are: EUR/USD, GBP/USD, USD/JPY, EUR/JPY and GBP/JPY. Of course, it depends on the market conditions and the personal strategy of each trader, which currency pair he chooses.
Scalp trading methods:
- Scalp with the help of indicators
- Scalping with the help of Price Ashken
- Scalp with the help of volume addons
How to trade scalp?
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Technical analysis for the scalp method with the help of indicators
Technical analysis includes examining price charts, technical patterns, technical indicators and trend lines. Technical analysis helps scalpers identify appropriate entry and exit points and predict price movements. Some technical indicators that are useful for the scalp method are:
– Moving Average:
The average of past prices in a certain period of time is called moving average. The moving average can be calculated in two simple and exponential ways. In scalping, the exponential moving average is usually used because it is more sensitive to price changes. Also, for small time frames, a smaller time frame (eg 5 or 10) is more suitable for calculating the moving average.
– Stochastic:
It is a technical indicator that shows where the price is in the range of the previous price range. The stock stick includes two %K and %D lines, which are displayed in a range between zero and one hundred. The %K line represents the price position relative to the previous price range, and the %D line is the moving average of the %K line. Stockstick helps scalpers to identify overbought and oversold points. If the %K line goes down above the 80 level, it indicates an overbought exit and is a sell signal. If the %K line rises above the low level of 20, it indicates an exit from the sell zone and is a buy signal.
– MACD:
It is a technical indicator that shows the difference between two different moving averages. Makadi consists of three parts: Makadi line, signal line and histogram. MACD line is the difference between two moving averages with different time frames (for example, 12 and 26). The signal line is the moving average of the MACD line (for example, with a time frame of 9), which are the default numbers in the MACD indicator. The histogram is the difference between the MACD line and the signal line. Makadi helps scalpers track price trends and changes. If the MACD line goes from below to above the signal line, it indicates the beginning of an upward trend and a buy signal. If the MACD line goes from above to below the signal line, it indicates the beginning of a downtrend and a sell signal.
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Scalping with the help of Price Ashken
With the help of price movements and with tools of trend line, resistance and effective supports in the market, price channels and compression patterns, scalpers will trade with low pips by breaking out of these levels. Usually, scalpers consider up to 10 pips of profit, but according to the type of strategy of scalpers, it is possible to keep the scalp trade in profit and increase the profit limit to earn more profits.
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Scalp with the help of volume addons
With the help of level 2 data, and with volume tools, such as “Foot print” and “Order Flow” tools, and with the detection of volume divergence and inconsistent delta, they trade with profits of 5 to 10 pips. Scalper looks for inconsistent delta or volume hidden divergence in the range of a resistance or support level that is formed based on volume in Edens Footprint, and then in the next candle, when the price returns and hits a high volume level. slow (which is now called “retest”), they start trading with profits of 5 to 10 pips.
Using the right tool and strategy for the scalping method
In the scalping method, it is necessary for the trader to use the right tools and strategy in order to be able to trade with the necessary speed and accuracy. Some of the appropriate tools and strategies for scalping are:
– Choosing the right currency pair:
In the scalping method, it is better to choose currency pairs that have high liquidity, low spread and suitable volatility. Currency pairs that have these conditions are usually major currency pairs or major currency pairs with Japan (Major Crosses).
– Choosing the right time frame:
For the scalping method, smaller time frames such as 1, 3 or 5 minutes are more suitable as they represent price movements in an active market. Larger time frames such as 15 or 30 minutes can also be useful for identifying general price trends and support and resistance points. Some traders recommend that for the scalping method, at least two time frames should be considered: a larger time frame to determine the trend and a smaller time frame to determine the signal.
Risk and capital management in the scalp method
Risk and capital management is an important factor in the success of any trader. In the scalping method, it is necessary for the trader to manage risk and capital with the necessary accuracy and speed so that he can maintain the profit and control the loss. Some risk and capital management methods in the scalp method are:
– Placement of Stop Loss:
A stop loss is a specific price that you set at which your trade will be automatically closed if the price moves in that direction to prevent you from losing money. But some people think that scalpers trade with high risk and low profit, when scalpers take reasonable and specific risk in advance.
– Not placing a stop loss:
Some scalpers take more than one trade in their strategy, maybe they have an unsuccessful entry, but instead of exiting the trade, they try to open another trade or even have trades contrary to the previous trade.
The total risk of scalpers’ open trades does not exceed 1%. That is, scalpers enter with very little risk and consider little profit. These types of traders must be in good mental and psychological condition and they need high discipline. They usually have a lot of deals in one day.
Result:
According to all the parameters that can be considered, the best currency pair for scalpers is the EUR/USD currency pair. This currency pair has the largest trading volume compared to other currency pairs, it has high liquidity, and the spread is very small, and even in some accounts, the Euro-Dollar spread is zero pip. The Euro-Dollar currency pair shows better technical behavior than other currency pairs and is among the most popular currency pairs for scalpers.
