Untitled

[alb84h47br-blog]

Like a lot of people who first start trading forex, I would use the market to make a few pips before leaving deal. Although this approach worked a lot of the time, in the longer-term it was unsuccessful. I had occasions when my whole account was wiped out. As it turned out, I was using an approach known as scalping and what I didn't know was that I did not have the right experience or knowledge to properly use this technique.

[alb84h47br-blog]

I, like when most people start trading Forex, attempted to make a few pips within the market and then get out. Although this approach worked a lot of the time, in the longer-term it was unsuccessful. Sometimes I would lose everything within my account. As it turned out, I was using an approach known as scalping and what I didn't know was that I did not have the right experience or knowledge to properly use this technique.

[alb84h47br-blog]

I, like when most people start trading Forex, attempted to make a few pips within the market and then get out. Most of the time this would be successful but eventually the long-term effect was to make losses. I had occasions when my whole account was wiped out. I did not understand that my approach was actually called scalping and unbeknown to me I lacked the experience and knowledge to use this technique properly in the market.

[alb84h47br-blog]

Like a lot of people who first start trading forex, I would use the market to make a few pips before leaving deal. Most of the time this would be successful but eventually the long-term effect was to make losses. Sometimes I would lose everything within my account. As it turned out, I was using an approach known as scalping and what I didn't know was that I did not have the right experience or knowledge to properly use this technique.

[alb84h47br-blog]

When I first started trading forex, I was the same as everyone else in that I would make a few pips and then close the deal. Most of the time this would be successful but eventually the long-term effect was to make losses. Sometimes I would lose everything within my account. What I didn't know was that this style of trading is actually called scalping and my lack of experience and knowledge prevented me from using it properly.

[alb84h47br-blog]

When I first started trading forex, I was the same as everyone else in that I would make a few pips and then close the deal. Although this approach worked a lot of the time, in the longer-term it was unsuccessful. I had occasions when my whole account was wiped out. As it turned out, I was using an approach known as scalping and what I didn't know was that I did not have the right experience or knowledge to properly use this technique.

[alb84h47br-blog]

I, like when most people start trading Forex, attempted to make a few pips within the market and then get out. This would be quite successful a lot of the time but overall I lost out. I had occasions when my whole account was wiped out. As it turned out, I was using an approach known as scalping and what I didn't know was that I did not have the right experience or knowledge to properly use this technique.

[alb84h47br-blog]

I, like when most people start trading Forex, attempted to make a few pips within the market and then get out. Although this approach worked a lot of the time, in the longer-term it was unsuccessful. Sometimes I would lose everything within my account. As it turned out, I was using an approach known as scalping and what I didn't know was that I did not have the right experience or knowledge to properly use this technique.

[alb84h47br-blog]

Like a lot of people who first start trading forex, I would use the market to make a few pips before leaving deal. Most of the time this would be successful but eventually the long-term effect was to make losses. I had occasions when my whole account was wiped out. As it turned out, I was using an approach known as scalping and what I didn't know was that I did not have the right experience or knowledge to properly use this technique.

[alb84h47br-blog]

I, like when most people start trading Forex, attempted to make a few pips within the market and then get out. Most of the time this would be successful but eventually the long-term effect was to make losses. I had occasions when my whole account was wiped out. I did not understand that my approach was actually called scalping and unbeknown to me I lacked the experience and knowledge to use this technique properly in the market.

[alb84h47br-blog]

Scalping Forex Explanation

I then became a positional trader and would open

positions for three of four days with the aim of getting at least 100 pips of profit.

Again, this would work for a number of years and I was mostly successful. But this became a different story

after I had met a trader who had used the same strategy for years. This was

scalping.

The profits he was getting were much bigger than mine yet he was using the same timeframes as I was and using

account sizes that matched his brokers.

I went to him to see if he would share what he did with me and the main factors he considered when trading.

When we met, he showed me his trading technique and why he

would buy or sell at specific times. We spent three days together and what I found most surprising was how I

understood all of what he told me. Bluntly put, he has a very primitive trading style. His system

didn't require any oscillators or indicators and neither did he have to spend too long studying the market conditions.

Having

retained what I could from my three days I started to put in practice my new knowledge and the results were just

outstanding.

In under three weeks my account had

tripled. And this was achieved in less than 4 hours per day.

The

advantages and disadvantages of scalping

In essence, scalping is a method of making a lot of

trades in the course of a day using only small timeframes to make small profits - only a few pips.

Position traders will have to undertake a lot of market analysis and preparation

before starting a trade whereas a scalper just uses a single signal before they enter the market. He then makes a profit

and leaves a matter of seconds later.

What's

more a position trader will keep their position open for many hours or days but scalpers will only have their positions

left open for a few minutes, sometime seconds. The difference being that these deals will happen many times in a day.

forex scalping method is commonly regarded as being just like gathering

lots of loose change. Whereas a

position trader searches for his profit in one big hit, a scalper will gather up many smaller ones.

Amazingly, scalpers will frequently see their

profits exceed that of the position trader over the same term and would normally expect to pull in between 5% and 10% in a

trading day.

So what are the advantages of scalping?

I believe that the benefits of being a scalper far outweigh the disadvantages and as such it is a more profitable

and appealing choice than position trading. I would say that the

specific benefits are:

1. You get bigger profits than being a position trader

2. Strong trends are irrelevant with this strategy so waiting

for one is unnecessary.

3. It becomes pointless trying t to analyse or forecast the market.

4. All of my open positions are closed off by

the end of the trading day so I am not bothered about what the market might be doing after that point.

.

But what are the

disadvantages of scalping?

Just like all trading

systems, scalping has its disadvantages. These

are quite serious so you need to pay attention:

1. The emotional stress involved in scalping for 4 hours is significant and a

day's trading can be exhausting

2. You can't make mistakes

with scalping. You need to be able to

analyse and understand a situation at once and make cold, calculated decisions immediately.

On this second point,

there is one main difference between scalping and position trading

Position trading risk management dictates that you use no more than 10% of your capital when engaged in

trades. This is not applicable with scalping and 50% or more can be used.

And of course, scalping mean that

you have to be constantly paying attention to what's going on, making decisions quickly and then leaving the market. And not make any mistakes.

So what are the main

indicators for entering the market?

Scalping's main issue is the ability to identify

the support and resistance levels which forms the basis for the whole system of trading.

In my experience,

90% of the time the currencies will bounce back from the resistance and support levels. Often this will only be by a small amount but still enough to make money.

But you might think that as position traders also need to define the support and resistance levels, what is the

difference?.

Quite simply, there are a lot of differences. Traders that define support and resistance levels and the trend channel will also need to have a 2-point

minimum to build up strong levels while simultaneously using time frames of no less than 1 hour. The best indicator to determine trend channels is the LR-Channels Indicator.

This requirement doesn't affect scalpers as they can find a level to trade on using a 1-minute timeframe and

doesn't need a big bounce, as he only needs a small one to make a profit.

As markets keep

changing, trend breaks can cause losses to some traders whereas scalpers will pickup the small profits.

When scalping a big factor is the ability to immediately identify the required support and resistance levels. A good

tool for doing this is BJF support resistance levels indicator.

Next up we will look

at:

Support and resistance levels

It's important to remember the following: With scalping

strategies, you must be precise in defining the correct level of resistance and support and on differing timeframes from

one minute to one hour as opposed to following the more classic method of technical analysis.

IMAGE

Here we have used a 5M

timeframe and the support level has formed.

IMAGE

A timeframe of 5M has been used here and the resistance levels have formed.

When looking at both of these diagrams, the lower and higher levels have been formed

clearly. Ignore the 5M timeframe as what's

relevant here is determining the levels of any of the timeframes and there is hardly any difference.

If a larger timeframe is used then there is a direct correlation to the amount of

money used to come into the market. This will be looked

at more.

What we need to work out is how do you accurately define the support and resistance level?

Our earlier graphs provide the most common depiction and any scalper will be

interested in this.

IMAGES

The images that follow are very similar to that picture but just a bit longer.

We can pick out that

the currency pair returned to the resistance and support levels and rebounded. How do we get

a profit?

Money is made by buying or selling as the support and resistance levels are approached. When we look at the resistance level diagram, the currency clearly

touches the resistance level and rebounds back from it in the short term. There could have been two sales here.

So how are

the levels defined?

We now know that we must define

support and resistance levels when scalping.

And here is where I can give my thoughts on the methods used to define them.

The level will be the price at which there would be a bounce

that goes to either one or the other side.

The more classical technical analysis tells us that the probability of the next bounce is above about 90%.

What is interesting here is to compare

scalping and position trading again.

Position traders look for those instances where the price bounces by a minimum of 100 pips in the

required direction - not 20 to 30 pips. However the amount of these types of bounces are much less

common than the 90% probability where there is a 20 pip jump in price; which then goes back to the level and jumps up

again by 15 pips and could then have a bad bounce or go through the level.

The goal of every scalper is to gather up

each of these bounces and put them into their account.

We can determine the levels further still by looking at the criteria across a

number of timeframes yet their definitions will stay the same.

Defining of 30M and 1H levels

I believe that trading with the 30M and 1H is best and you use the lowest and highest points on the diagram to do

so.

Currencies will often hang between these points so we need to draw up resistance and support lines and wait

for the currency pair to move to either level.

It can sometimes seem as though the currency

pair can't move from this position giving the impression of being trapped.

Should the currency pair be over the highest point or under the lowest point it should be marked and allow time to

pass until the currency pair moves towards it.

IMAGE- Defining of trade levels on 30M and 1H

Defining of levels on 1M 5M

5M and 1M trade levels aren't marked the same. In this situation, the lowest and the highest points that are obtained within 3-4

hours are marked and the levels of trade are then stated at that point and any trade operations will be processed once

these levels are reached.

Entry rules

With the 1M and 5M, you buy or sell when

trade levels are reached according to if the price is nearing either the resistance or support lines. This is not the same with the 1H and 30M.

These levels have

greater power and more people see them so more enter the market before the price has a chance to approach the currnet

level and the bounce occurs quicker than required.

This is the reason that I decide to trade even when prices are not

nearing the current level and I frequently walk away with between 5 - 20 pips of profit. Occasionally, the price will

get to the level indicated so I will open up a position with a double lot once more.

IMAGE

These images will show that the prices do not reach the level that is marked on

14 pips.

Volume of market entry

As with defining trade levels, the volume when entering a deal is also important when

scalping.

Although this is not as

complicated, you need to know and understand it. It's clear that the greater the volume when entering the market, the greater

the amount of profit per pip. By the same token we make a loss on each unprofitable trade.

So scalping

needs a different method of capital management and can create big losses and profits.

Of course, we aim to minimize all

losses while looking to get the largest possible profit and as such we should only be looking to enter into the market

with a large volume when we are very confident that a bounce will occur.

We can get this confidence from 30M and 1H and this can be

summarised by:

The size of the timeframe will be reflected in the size of the volume.

We need only concern ourselves with getting certain figures; in

other words a certain volume in a specific timeframe.

As an example, with a trade deposit of 5K I will look to use the

following volumes in my trading system:

The 1M and 5m deals would get between 10% to 20

%The 30M and 1H deals would get between 20% and 50%.

So what

if the currency pair does not go our way?

Scalping doesn't let you

relax as it is high risk. Position traders can absorb occasional losses but due

to the trading volumes being so much larger, any losing position that isn't closed quickly will cause large losses.

A good rule to

remember is to close any position with a pip loss exceeding 25 unless you used less than 10% of your deposit. You should only close these ones when losses hit 50 pips.

Profit targets

Scalpers make

money by taking smaller profits frequently and make up to several hundred trades in a day.

So this means that large profits aren't pursued as the main criteria

is to achieve a profit many times. The behaviour of the currency

allows me to operate a scalping strategy that gives 5 to 20 pips of profit.

Should a specific level be achieved and a

bounce occurs quickly I will wait for a 20-pip profit. But if it is slow I will stick at 5 pips.

How currencies can behave when specific levels are reached

If a support or resistance level is reached a currency may respond differently.

Sometimes a quick bounce occurs

as there may be a small movement at precisely the indicated level.

So we can now claim to know about

responding on each level but some more points need to be made.

Once the bounce has happened and the position has been closed, wait for a short while before

going back into the market as there can be quite a significant bounce.

As currency constantly maintains a specific trend, we should wait

until the point gets to a specific limit.

You can often repeat a bounce deal as the currency

will often head towards the level it has just rebounded from again. You can

buy and sell a number of time as the currency pair approaches the support and resistance lines.

Some vital factors about

scalping

Even though scalping is easy you should always remember some vital points when

scalping.

Before trading you must ALWAYS look through the calendar of economic events.

Trades can be impacted by news and bouncing may not occur even with strong levels of trade.

2. Position traders and

scalpers must remove all emotion. Scalpers have to be especially vigilant here as scalping trades use larger volumes. You can't outplay

the market and you will make losses if you try.

3.

Do not start the positions that are unprofitable so any losing positions need to be closed immediately.

You must

adopt the stance that throughout the numerous trades in the day your losses will be covered by your profits.

4. Once

you have opened a trade, you must not move away from your computer for any reason at all as situations can change in a

heartbeat. You will need to be present to quickly make decisions.

However, to trade simply in forex, use and automated trading system and I would recommend

the Forex Robot TFOT.

Some advice when picking a broker

You will need a broker to scalp to look out for:

1.

Narrow spreads like 0.8 - 2.5 pips

for GBP/USD and 0.8 - 1.5 on EUR / USD

2. A high speed of trade commands execution.

You might find some brokers who prevent

scalping as they don't all like it. Other brokers will prevent scalpers from receiving profit. They should be avoided. Successful scalping will be inhibited if you do not have a

fast execution when trading.

I then became a positional trader and would open

positions for three of four days with the aim of getting at least 100 pips of profit.

Again, this would work for a number of years and I was mostly successful. However, things

all became very different after I had met a trader who used only the one strategy year after year. That strategy was the free forex scalping indicators strategy.

The amount of profit he was getting was huge

and a lot more than what I was making but in the same amount of time as me and with account sizes similar to his

broker's.

I asked him if he could tell me his approach and the key points he used to help

trade.

We met up and he told me about what he looked for that triggered him

to buy or sell and when to do so. We spent three days together and what I found most surprising was how I

understood all of what he told me. Bluntly put, he has a very primitive trading style. His system

didn't require any oscillators or indicators and neither did he have to spend too long studying the market conditions.

So, armed with what I had learned within those 3 days I traded myself and the results were amazing.

In no more than three weeks I had tripled the size of my account. And this was achieved in less than 4 hours per day.

The

advantages and disadvantages of scalping

Essentially scalping is all about making many trades within one day using small

timeframes that garner smaller profits - no more than a few pips.

Whereas position trading requires a trader to thoroughly prepare for a deal, including all the necessary analysis

before initiating the trade, the scalper only needs one signal before entering into the market. Once his profit is made,

he leaves a few seconds later.

Furthermore, position traders will have to

leave their trade open for several hours or even days scalpers will hold open positions for minutes or seconds. The difference being that these deals will happen many times in a day.

Scalping is commonly regarded as being just like gathering

lots of loose change. Whereas a

position trader searches for his profit in one big hit, a scalper will gather up many smaller ones.

Interestingly, scalping has shown to generate greater profits over the equivalent timeframe when

compared to a position trader, often bringing in 5% to 10% in a trading day.

So what are the advantages of scalping?

I believe that the benefits of being a scalper far outweigh the disadvantages and as such it is a more profitable

and appealing choice than position trading. Specifically I would say that the benefits are:

1. Your

profits are larger than those of a position trader.

2. Strong trends are irrelevant with this strategy so waiting

for one is unnecessary.

3. Market analysis and forecasting becomes

redundant.

4. When the trading day finishes, all of my positions are closed and I am not

concerned about whether the market will turn against my positions overnight.

.

But what are the

disadvantages of scalping?

Just like all trading

systems, scalping has its disadvantages. These

are quite serious so you need to pay attention:

1. The emotional stress involved in scalping for 4 hours is significant and a

day's trading can be exhausting

2. You can't make mistakes

with scalping. You have to be able to

immediately understand and analyse a situation and come up with clear and unemotional decisions straight away.

Continuing this point, there is a single large difference between scalping and

position trading.

From a risk management position, position traders will not use up more than 10% of their capital when they are

conducting trades. With scalping, this doesn't apply and sometimes 50% or more is used.

And scalping demands that you are constantly monitoring market activity so as to make quick decisions and

leave the market. And steer clear of mistakes.

So what are the main

indicators for entering the market?

The main issue with scalping is being able to correctly determine the support

resistance levels and this forms the basis for the whole trading system.

My own experience has

shown that in more than 90% of the time, currencies will rebound from the support and resistance levels. This won't always be by a lot and

sometimes it's quite small but it's enough to make some money.

But you might think that as position traders also need to define the support and resistance levels, what is the

difference?.

There are lots of

differences. Traders that define support and resistance levels and the trend channel will also need to have a 2-point

minimum to build up strong levels while simultaneously using time frames of no less than 1 hour. When determining trend channels, the best indicator is the LR-Channels

indicator.

This requirement doesn't affect scalpers as they can find a level to trade on using a 1-minute timeframe and

doesn't need a big bounce, as he only needs a small one to make a profit.

As markets keep

changing, trend breaks can cause losses to some traders whereas scalpers will pickup the small profits.

One

of the biggest factors when scalping is being able to very quickly identify what support and resistance levels are

needed. For this, I can recommend

BJF support resistance levels indicator.

This is what we will look at next:

Support and resistance levels

It's vital to

remember that when you are scalping you must be very precise when determining the accurate resistance and support levels

across timeframes from one minute to one hour instead of following a more classically accepted approach to technical

analysis.

IMAGE

Here we have used a 5M

timeframe and the support level has formed.

IMAGE

A timeframe of 5M has been used here and the resistance levels have formed.

When looking at both of these diagrams, the lower and higher levels have been formed

clearly. Ignore the 5M timeframe as what's

relevant here is determining the levels of any of the timeframes and there is hardly any difference.

Quite simply, a larger timeframe will result in a direct increase in the amount of

money used to come into the market. We look at this more later.

We need to find the

answer to how to accurately calculate the resistance and support level.

Our earlier graphs provide the most common depiction and any scalper will be

interested in this.

IMAGES

The following images are exactly the same picture but a little longer.

We can

see that the pair of currencies did return to the support and resistance levels and then rebounded. So how do we make money?

We make the money by

selling or buying as the resistance and support levels are approached. When we look at the resistance level diagram, the currency clearly

touches the resistance level and rebounds back from it in the short term. Two sales could have been achieved here.

So how are

the levels defined?

We now know that we must define

support and resistance levels when scalping.

So how they are defined is what I can share now.

The level will be the price at which there would be a bounce

that goes to either one or the other side.

Typical technical analysis dictates that there is a 90% probability as to where the next bounce will go.

Here is an appropriate juncture to make another comparison between position trading

and scalping.

Position traders will be looking for the price to bounce by at least 100 pips in the right direction - not

just the 20 to 30 pips. Bounces of this magnitude are not as common as those that

happen with 90% probability that have the 20 pip price jump to then go back to the level only to jump again by 15 pips to

then possibly have an unfavourable bounce or maybe break through the level.

The goal of every scalper is to gather up

each of these bounces and put them into their account.

We can determine the levels further still by looking at the criteria across a

number of timeframes yet their definitions will stay the same.

Defining of 30M and 1H levels

I believe that trading with the 30M and 1H is best and you use the lowest and highest points on the diagram to do

so.

Currencies will often hang between these points so we need to draw up resistance and support lines and wait

for the currency pair to move to either level.

The currency pair can

sometimes look as though it is trapped and can't move from this position.

Should the currency pair be over the highest point or under the lowest point it should be marked and allow time to

pass until the currency pair moves towards it.

IMAGE- Defining of trade levels on 30M and 1H

Defining of levels on 1M 5M

5M and 1M trade levels aren't marked the same. Here the highest and lowest points obtained within 3 or 4 hours will be noted and the trade

levels will be stated then meaning any trade operations are processed once those levels are achieved.

Entry rules

With the 1M and 5M, you buy or sell when

trade levels are reached according to if the price is nearing either the resistance or support lines. However with 30M and 1H this changes.

The issue here is that these levels are more powerful and can be seen by a lot of people

which is why more people will enter into the market before the price is able to get near to the current level and the

bounce arrives too quickly.

This is the reason that I decide to trade even when prices are not

nearing the current level and I frequently walk away with between 5 - 20 pips of profit. Sometimes the price hits the

indicated level so I will use a double lot to open up a position.

IMAGE

This image shows that the price

didn't reach the marked level on 14 pips.

Volume of market entry

As with defining trade levels, the volume when entering a deal is also important when

scalping.

This isn't complicated but you need to know it. It's commonly accepted that the higher the volume at entry point the

greater the amount of profit earned per pip. But

each unprofitable trade will still cause losses.

So scalping

needs a different method of capital management and can create big losses and profits.

Obviously everyone wants to maximise their

profits and minimise losses so we should come into the market with big volumes once we are clear there will be big

bounces.

We can get this confidence from 30M and 1H and this can be

summarised by:

With a larger time frame

comes a bigger volume and a smaller timeframe a smaller volume.

Our concern is

to get hold of specific figures; namely certain volumes in a certain timeframe.

If I had a trade deposit of 5K, I would be using these volumes with my trades:

10% to 20% of the deposit will be used in the deals on the 1M,

5M

The 30M and 1H deals would get between 20% and 50%.

So what

if the currency pair does not go our way?

Scalping doesn't let you

relax as it is high risk. Position traders can absorb occasional losses but due

to the trading volumes being so much larger, any losing position that isn't closed quickly will cause large losses.

As a rule, any position that is showing a loss

in excess of 25 pips should be closed apart from any that were opened with less than 10% of the deposit. You should only close these ones when losses hit 50 pips.

Profit targets

So scalpers make their profits

through numerous daily smaller profit-making deals

So larger profits are actively ignored in the pursuit of the numerous smaller ones. The behaviour of the currency

allows me to operate a scalping strategy that gives 5 to 20 pips of profit.

If a bounce happens quickly as a specific level has been achieved my aim will be 20 pips. But if it is slow I will stick at 5 pips.

How currencies can behave when specific levels are reached

When a resistance or

support level is reached the currency can react differently

Sometimes a quick bounce occurs

as there may be a small movement at precisely the indicated level.

As already discussed, we now understand how to

respond on either level but there are some relevant points to make at this juncture.

Once you have closed your position after a bounce,

wait before returning as a large bounce often comes up.

Because currency will continue to maintain a certain trend, we should hang on

until the point reaches a limit.

Frequently, once a bounce has occurred, the currency will approach the level that it had rebounded

from once more and so the deal can be repeated. As the currency pair

repeatedly approaches the support and resistance lines, this deal can be repeated many times.

Some vital factors about

scalping

Even though scalping is easy you should always remember some vital points when

scalping.

You must look at the economic event calendar before you start to trade. Breaking news

can have a marked effect on the currency pairs that are being traded and any strong fluctuations that bounce will not take

place even with strong trade levels as they will disintegrate as though they had never happened.

2. Position trades and

scalpers need to become devoid of emotions. As

scalpers trade with larger volumes they are most affected. You can't outplay

the market and you will make losses if you try.

3.

Do not start the positions that are unprofitable so any losing positions need to be closed immediately.

A lot of deals are done over the course of the day so you need to work on the view that the overall profit will exceed

the overall loss.

4. Things can change

instantly so never move away from your computer. You must be on hand and prepared to make a quick decision so you will

need to be able to react quickly.

But the simplest way to start forex trading is to use an automated trading system and for this I would

recommend the Forex Robot TFOT.

Some advice when picking a broker

Scalping needs to involve a broker so look for:

1.

Narrow spreads like 0.8 - 2.5 pips

for GBP/USD and 0.8 - 1.5 on EUR / USD

2. A high speed of trade commands execution.

You might find some brokers who prevent

scalping as they don't all like it. Other brokers will prevent scalpers from receiving profit. Do

not use them. Successful scalping will be inhibited if you do not have a

fast execution when trading.

[alb84h47br-blog]

I, like when most people start trading Forex, attempted to make a few pips within the market and then get out. Most of the time this would be successful but eventually the long-term effect was to make losses. Sometimes I would lose everything within my account. I did not understand that my approach was actually called scalping and unbeknown to me I lacked the experience and knowledge to use this technique properly in the market.

[alb84h47br-blog]

Scalping Forex Explanation

I then became a positional trader and would open

positions for three of four days with the aim of getting at least 100 pips of profit.

Again, I would mostly succeed and this worked for a number of years. But this became a different story

after I had met a trader who had used the same strategy for years. That strategy was the free forex scalping strategy.

He was enjoying huge profits; a lot larger than my own but

in the same timeframe to me and with account sizes that matched his broker.

I asked

him about how he approached trading and what tactics he used.

Upon meeting up, he took me through his technique for trading and what it was about

trades that made him either buy or sell when he did. I spent 3 days with him and the most surprising part was that I actually did understand

all of what he showed me. To be quite blunt, his

trading style was basic. The system he used needed no oscillators or

indicators; neither did he need to spend a long time keeping up to date with the current market conditions.

After having taken in what I could in those three days, I gave it a go myself and the results were

incredible.

In less than three weeks, my account had grown by over three times. All this for no more than 4 hours trading per

day.

The

advantages and disadvantages of scalping

Essentially scalping is all about making many trades within one day using small

timeframes that garner smaller profits - no more than a few pips.

Unlike position trading

where a lot of preparation is needed before a deal takes place as well as the market analysis, scalpers just need to have

one signal before they enter the market. He then makes a profit

and leaves a matter of seconds later.

Furthermore, position traders will have to

leave their trade open for several hours or even days scalpers will hold open positions for minutes or seconds. Where this changes is that this will happen

many time throughout a day.

Scalping is

known as being like picking up loose change but a lot of it. Position traders will look for the big profits in one hit whereas scalpers take many little

profits.

The most remarkable

part is that scalpers will often gain more over the same term than a position trader would, usually making between 5% to

10% in one trading day.

So what are the advantages of scalping?

My view is that the benefits of scalping outweigh the downsides and

therefore I see it as a more profitable and attractive option than position trading. I would say that the

specific benefits are:

1. Your

profits are larger than those of a position trader.

2. You don't

have to wait for a strong trend to start - it's just not relevant with this strategy

3. It becomes pointless trying t to analyse or forecast the market.

4. When the trading day finishes, all of my positions are closed and I am not

concerned about whether the market will turn against my positions overnight.

.

But what are the

disadvantages of scalping?

All trading systems have their downsides and scalping is no different. Pay attention to this next bit as it's serious stuff:

1. Even though you are scalping for just 4 hours in a day, the emotional stress is

significant.

2. You can't make mistakes

with scalping. You need to be able to

analyse and understand a situation at once and make cold, calculated decisions immediately.

Continuing this point, there is a single large difference between scalping and

position trading.

Position trading risk management dictates that you use no more than 10% of your capital when engaged in

trades. This is not applicable with scalping and 50% or more can be used.

And of course, scalping mean that

you have to be constantly paying attention to what's going on, making decisions quickly and then leaving the market. And avoid all mistakes.

So what are the main

indicators for entering the market?

The main issue with scalping is being able to correctly determine the support

resistance levels and this forms the basis for the whole trading system.

My own experience has

shown that in more than 90% of the time, currencies will rebound from the support and resistance levels. This will often be only a small amount but usually enough

to make some money.

But you might think that as position traders also need to define the support and resistance levels, what is the

difference?.

There are lots of

differences. When traders define the

resistance and support levels and trend channel, they need a minimum of 2 points so as to build up a strong level while

also using time frames of less than one hour. When determining trend channels, the best indicator is the LR-Channels

indicator.

This requirement doesn't affect scalpers as they can find a level to trade on using a 1-minute timeframe and

doesn't need a big bounce, as he only needs a small one to make a profit.

As the market continues to change,

bringing a break in trends that means losses to some traders; the scalper takes the small profits.

When scalping a big factor is the ability to immediately identify the required support and resistance levels. A good

tool for doing this is BJF support resistance levels indicator.

This is what we will look at next:

Support and resistance levels

Remember the following:

Scalping strategies mean that you have to be precise in defining the right level of support and resistance using differing

timeframes ranging from one minute to one hour instead of using the classic technical analysis methods.

IMAGE

This uses a 5M time frame and you can clearly see that the level of support has been formed.

IMAGE

A timeframe of 5M has been used here and the resistance levels have formed.

When looking at both of these diagrams, the lower and higher levels have been formed

clearly. We do not need to be

bothered by the fact that there is a 5M timeframe just that the levels of the timeframe have been defined and there is

hardly any difference.

Basically, if there is a larger timeframe, there will be a corresponding increase in how much

money we use to enter into the market. We look at this more later.

We need to find the

answer to how to accurately calculate the resistance and support level.

The graphs we looked at earlier give the most typical illustration and this is an

interesting point for any scalpers.

IMAGES

The images that follow are very similar to that picture but just a bit longer.

We can

see that the pair of currencies did return to the support and resistance levels and then rebounded. So how is money made?

As the support and resistance levels are

approached, profit occurs through buying or selling. Referring to the resistance level diagram, it's

clear that the currency is in contact with the level of resistance and then rebounds from it over the short term. This

could have given us two sales.

So how are

the levels defined?

We know now that when we scalp we must define resistance and support levels.

And here is where I can give my thoughts on the methods used to define them.

At the price where the bounce could go to either one side or the other is

where the level is set.

The direction of

the next bounce has a 90% probability according to technical analysis.

It's interesting at this point to make a

comparison between the scalping levels and the position trading levels again.

Position traders look for those instances where the price bounces by a minimum of 100 pips in the

required direction - not 20 to 30 pips. Bounces of this magnitude are not as common as those that

happen with 90% probability that have the 20 pip price jump to then go back to the level only to jump again by 15 pips to

then possibly have an unfavourable bounce or maybe break through the level.

Every scalper has a goal to collect all of these bounces into their

account.

We can determine the levels further still by looking at the criteria across a

number of timeframes yet their definitions will stay the same.

Defining of 30M and 1H levels

The 1H and 30M charts are the easiest ones to trade on and you take the highest and lowest points on the diagram for

your trades.

Currencies will often hang between these points so we need to draw up resistance and support lines and wait

for the currency pair to move to either level.

It can appear as though the currency pair

is trapped and not able to find a way out from this position and would eventually go up or down.

Although with the

currency below the lowest point or above the highest point, you should mark it and wait while the currency pair gets

near.

IMAGE- Defining of trade levels on 30M and 1H

Defining of levels on 1M 5M

5M and 1M trade levels aren't marked the same. Here the highest and lowest points obtained within 3 or 4 hours will be noted and the trade

levels will be stated then meaning any trade operations are processed once those levels are achieved.

Entry rules

The 1M and 5M requires you to buy or sell according to the price hitting the trade levels as it nears the support

or the resistance line. This is not the same with the 1H and 30M.

These levels have

greater power and more people see them so more enter the market before the price has a chance to approach the currnet

level and the bounce occurs quicker than required.

So I will trade despite prices not

approaching the current level and often I will close with between 5 to 20 pips of profit. There might be times when the price hits the level

indicated and this is where I would open up a new position using a double lot.

IMAGE

This image shows that the price

didn't reach the marked level on 14 pips.

Volume of market entry

As with defining trade levels, the volume when entering a deal is also important when

scalping.

Although this is not as

complicated, you need to know and understand it. It's clear that the greater the volume when entering the market, the greater

the amount of profit per pip. But we cannot overlook the issues that at every unprofitable deal will make us a loss.

As touched

upon earlier, as scalping can create high profits and losses, it requires an alternative capital management method.

It's preferable to make the most profit possible and suffer the smallest losses which is why we should only enter

the market with large volumes when we have a lot of confidence that a bounce will take place.

30M and 1H can give us that

confidence and we can sum up this approach with the following:

A larger frame brings bigger volumes and smaller

timeframes gives smaller volumes.

We need only concern ourselves with getting certain figures; in

other words a certain volume in a specific timeframe.

As an example, with a trade deposit of 5K I will look to use the

following volumes in my trading system:

10% to 20% of the deposit will be used in the deals on the 1M,

5M

20% - 50% on the 30M or 1H.

So what

if the currency pair does not go our way?

Scalping doesn't let you

relax as it is high risk. A

position trader could take the hit of a loss but a scalper can't as the volume he trades with is a lot bigger and should a

losing position remain open longer than necessary, big losses can result.

A good rule to

remember is to close any position with a pip loss exceeding 25 unless you used less than 10% of your deposit. You

can keep this ones open until the losses reach 50 pips by which time they should be closed.

Profit targets

The scalping method means profit is make by conducting several hundred

deals per day to make a smaller individual profit.

So larger profits are actively ignored in the pursuit of the numerous smaller ones. My

scalping trading strategy gets me 5 to 20 pips as a result of the currency's behaviour.

If a bounce happens quickly as a specific level has been achieved my aim will be 20 pips. But profit will remain

fixed at 5 pips should the bounce be slow.

How currencies can behave when specific levels are reached

When a resistance or

support level is reached the currency can react differently

Occasionally a swift

bounce will happen; there might be a minimal movement exactly around the level indicated.

So we can now claim to know about

responding on each level but some more points need to be made.

Once you have closed your position after a bounce,

wait before returning as a large bounce often comes up.

As there is a specific trend with currency, the point should get to a certain limit

before we take action.

You can often repeat a bounce deal as the currency

will often head towards the level it has just rebounded from again. You can

buy and sell a number of time as the currency pair approaches the support and resistance lines.

Some vital factors about

scalping

Even though scalping is easy you should always remember some vital points when

scalping.

You must look at the economic event calendar before you start to trade. Breaking news

can have a marked effect on the currency pairs that are being traded and any strong fluctuations that bounce will not take

place even with strong trade levels as they will disintegrate as though they had never happened.

2. Position traders and

scalpers must remove all emotion. Scalpers trade with larger volumes so need to be more

vigilant. Defeating the market is futile and losses will occur should you try.

3.

Close losing positions straight away and never start unprofitable positions.

You must

adopt the stance that throughout the numerous trades in the day your losses will be covered by your profits.

4. Don't move from the computer once a trade has been opened as things can change instantly. You will need to be present to quickly make decisions.

But the simplest way to start forex trading is to use an automated trading system and for this I would

recommend the Forex Robot TFOT.

Some advice when picking a broker

Scalping needs to involve a broker so look for:

1.

Narrow spreads like 0.8 - 2.5 pips

for GBP/USD and 0.8 - 1.5 on EUR / USD

2. A very high speed of trade execution

command

You might find some brokers who prevent

scalping as they don't all like it. Some might stop fixed

profits being received. Do

not use them. Successful scalping will be inhibited if you do not have a

fast execution when trading.