Scalping the market is always considered to be the riskiest investment in the trading business. Many retail traders in Hong Kong believe th1at a long term trading strategy is the best way to survive in this market. But do you really believe, all the successful traders are using position trading strategy? If you perform an in-depth analysis, you will be surprised to see that many experienced traders are scalping the market and leading their dream life.
So what is scalping?
Scalping is nothing but executing the traders in the lower time frame to make some quick. But the pro scalpers don’t really rely on this definition since they use the higher time frame to scalp the market. Unless you can filter out the key support and resistance level of a certain currency pair, you will not be able to find the very best trades in the market.
Creating your scalping strategy
Though there are many ways to scalp the market, today we are going to discuss the 100 SMA scalping strategy. The strategy is extremely simple but offers power trade signals to the retail traders.100 SMA acts as a dynamic support and resistance level in the price charts. Most of the time the price tends to respect this level and the smart traders take advantage of these simple actions of the market.
Finding the trades
Finding the trades by using the 100 days SMA is extremely easy. Before that, you need to open a trading account with professional brokers like Saxo so that you can get free access to their robust trading platform SaxoTraderGo. After that, you need to use the 100 SMA to find the potential support and resistance level of any currency pairs. Simply set pending orders near the dynamic levels of the SMA with 10 pips stops and 20 pips take profit. Sound a bit confusing? Let’s see the price is trading below the 100 SMA. So you need set pending sell orders right at the 100 SMA to make a profit from this market.
Dealing with the lower time frame data
So far we have discussed how to scalp the market in the higher time frame. Now let’s learn the easiest way to scalp the lower time frame. Lower time frame trading is a little tricky. You need to use the price action confirmation signal to execute the trade. Let’s make it simpler. You can’t use the pending orders right at the key levels by using this setup. Once the price hits the 100 SMA, you need to look for a potential bearish or bullish price action signal. Once you get the confirmation signal, you need to execute the trade with an extreme level of precision.
When it comes to setting up the stop loss and take profit level, you need to use the candlestick pattern. Instead of setting up a fixed stop loss and take profit you need to use the knowledge of candlestick pattern. Things will become easier you learn price action trading and use the 100 SMA to trade the lower time frame data. If possible, learn multiple time frame analysis since it will help you to filter out the false trade signals.
Managing your risk factors
Managing the risk factors in scalping is extremely hard. You must follow a proper trading routine or else you are most likely to blow up the trading account within a short period of time. As a fulltime trader, try to think about your trade management skills. Unless you the proper way to manage the running trades you should never scalp the market. If you lose a few trades in a row, take the day off. Never become addicted to this trading profession as it will result in heavy loss. Consider this business as your long term goal and you will be able to become a profitable scalper in the Forex market.