Scalping is a method to earn money from forex trading that often doesn’t require broader market knowledge. Moreover, it is a quick method where traders don’t have to keep their position open for a long time. Therefore, if you want to enrich your trading portfolio with an excellent monthly return, scalping would be a perfect option for you.
However, making money from scalping is not easy. There is a possibility of making a massive profit from the intraday swing. But, on the other hand, you can easily blow up your account if you make consecutive losses.
The following section will see a complete guide for scalping with a trading method to earn $100 a day.
Is the forex scalping strategy profitable?
You have to go to the lower time frame in forex trading and make money from small price changes. Traders often use the short-term fluctuation of the bid and ask price and take benefit from it. In that case, you can earn a higher profit than swing or position traders.
But, wait! The profitability of forex scalping depends on how you are utilizing your knowledge. As it is a risky method, you must concentrate on the trade management and risk management system.
Moreover, the most crucial part is the proper system. You cannot rely on small time frame trading just by following some rules. First, you have to consider what is happening in the overall market and define a direction. After that, you should follow the market direction with some rules. After completing these steps, you will make a good profit from scalping.
How much do forex traders make a day?
Scalping is a process to make a profit from intraday price fluctuation. Therefore, if you consider forex pairs, there are more than 100 tradable currencies, and all of them can provide multiple trades a day. Therefore, in scalping, you will enjoy more trades than day trading and swing trading.
If you know how to become profitable in every set of trades, you will find scalping as beneficial as other methods. So, if you invest $1000 in your account and make a 2% gain per trade with ten trades in a day, you will earn 20% in a single trading day.
However, how much profit you will earn from scalping depends on your risk tolerance, money management, market opportunity, and others.
Why is the forex scalping strategy worth using?
In forex trading, you have to know the concept of supply-demand, fundamental and technical analysis with price action. After knowing all or all of these, you are eligible to make money online. So making money from forex needs to know how the market works and methods of following the market direction.
So, why should you choose the scalp over other methods? The reason is simple. In scalping, you don’t have to wait hours or days to see the trading result. If you see an appropriate opportunity in the chart, you can grab it and close the position with a result within a minute.
Traders should skip watching the floating loss for hours. On the other hand, scalping allows one to take the most crucial part of a trend and skip the extreme market condition.
A short-term strategy
As scalping is the quickest method to earn money from FX trading, it does not involve knowing what is happening in the broader market. However, if you want to understand the market context, there is no alternative to knowing a higher time frame.
Therefore, even if it is a short-term method, you need to match the higher and lower time frame direction. Moreover, we will use the moving average and weekly VWAP to define the market trend.
Bullish trade setup
- The long-term market trend is bullish.
- A London session appeared.
- The 5-minute candle moves above the VWAP and 20 EMA.
- MACD histogram turned positive.
Bearish trade setup
- The long-term market trend is bearish.
- A London session appeared.
- The 5-minute candle moves below the VWAP and 20 EMA.
- MACD histogram turned negative.
A long-term strategy
Although it is a long-term strategy, we will focus on making intraday profits from scalping. This method is almost similar to the short-term strategy, but we will use Traders Dynamic Index instead of MACD histogram. When the TDI shows a regular divergence, we will open the trade with other confirmations and hold it until getting 20-50 pips.
Bullish trade setup
- The long-term market trend is bullish.
- A London session appeared.
- Traders Dynamic Index (TDI) showed a divergence.
- The 5-minute candle moves above the VWAP and 20 EMA.
Bearish trade setup
- The long-term market trend is bearish.
- A London session appeared.
- Traders Dynamic Index (TDI) showed a divergence.
- The 5-minute candle moves below the VWAP and 20 EMA.
Pros & cons
Let’s see the pros and cons of the scalping strategy in forex trading.
| Pros | Cons |
| A straightforward method with a higher accuracy rate. | Need a deep knowledge about the market trend. |
| Traders don’t have to wait for hours to see the trading result. | A strong trade management system is needed. |
| Works well in both bullish and bearish markets. | This method does not work well in the volatile market. |
Final thoughts
Scalping is a quick method to earn money where investors should closely focus on the broader market risk. In the forex market, the main participants are the central banks and big financial institutes. Therefore, if your strategy does not match their direction, there is a higher possibility of losing.
So before building a trading strategy, focus on identifying the market direction. Moreover, strong trade management is the only tool that can save you from uncertain market conditions.
