Forex Scalping – FX Guide
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Trading by using the Forex scalping strategy means taking control of very small changes in currency pairs to achieve small profits. The traders involved in scalping are called scalpers. For example, the scalper in Kenya usually buys a currency at a bid price and sells it at the asking price. This way, the scalper makes both a bid and an ask profit.
Generally, scalpers earn a small amount at a time, but they have accumulated a large sum at the end of the day. Forex scalping in Kenya requires an extremely good and well-developed strategy for making profits; a loss can ruin all the small profits. Moreover, the trading game of scalping forex is second-based since the trader has to move in seconds to profit. Let’s explore more about trends of Forex scalping in Kenya!
Factors to determine scalping strategy
Three factors determine the scalp:
Liquidity: As a forex scalper in Kenya, the more liquidity in a market, the more lucrative the trades become since they can make more profits at any given time.
Volatility: Only markets with a lot of stability appeal to scalpers – a big movement is not what they are looking for. The chances of making lots of small profits from many trades are higher on a stable market.
Time: The most successful forex scalpers don’t always start their trading at the start of the day. While it’s true that the longer the trader has to trade, the more profits they can make, patience is the key. Also, trying to scalp the forex market is pointless if market conditions aren’t right. An example would be a period of severe economic hardship.
To be a successful forex scalper in Kenya, you will need a variety of tools. It is imperative to have the perfect tools, expertise, assistance, and experience. To be successful as a scalper, you need both patience and consistency. If you do not possess the strength and stamina to place many trades in a short period, then you will not see any profits from scalping.
Moreover, if you have all the necessary tools for scalping but lack a successful strategy, you won’t achieve the desired profitable results. Despite the difficulty of learning scalping strategies, professional traders can get into the field after they experience it. Nonetheless, our staff provides you with plenty of scalping forex strategies to make you a millionaire in a very short period. Our staff in Kenya provides you with tons of scalping strategies you cannot imagine!
What is the best Scalping trading strategy?
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FSCA
up to 30%
USD 100
1:400
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FCA, ASIC, CySEC, FSCA, BVIFSC
up to 50%
USD 100
1:300
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SFSA, FSC (BVI), CBCS, FSCA, FSC (Mauritius)
up to 10%
USD 10
1:2000
Broker Verified
FSCA
up to 100%
USD 250
1:300
What is the best way to scalp a trade? This question is one that we are asked most often by eager scalpers. In the forex market in Kenya, scalpers open many short-term positions that last no longer than 5 minutes, making them very attractive to those who like to trade high volumes. The high volume of trades that scalpers make enables them to profit from their positions quickly.
Following is a list of two forex trading strategies used by successful scalpers in Kenya:
- Rapid-fire trading
- Piranha Trading
Scalpers depend heavily on their computers, stable internet connections, and plenty of coffee to stay awake late into the night.
Who is a scalper?
Scalpers are forex traders who set up and close trades on the forex markets quickly. For example, a scalper in Kenya holds open positions for less than 5 minutes on average but opens hundreds of trades per day. This is often referred to as “guerilla trading.”
Traders employed by scalpers in Kenya use price action charts and technical indicators to outline forex trading strategies. In addition, almost all of their trading strategies utilise short-term charts (M1 and M5). Since these charts allow them to plot their trades on any given trading day, they can enter and exit the market at numerous points.
Despite scalping being very exciting and adrenaline-filled, the constant monitoring of the markets in Kenya can make you mentally exhausted, which will result in erroneous decisions when you trade. Taking a break when necessary is key to staying on track. Establish simple rules for yourself, and then be disciplined enough to follow them.
When you have traded for 2 hours or achieved 20 pips, for instance, you might decide to stop trading for the day.
Best scalping trading strategies
Rapid Fire Scalping Strategy
There is no better scalping trading strategy than this! Rapid-fire scalping is most successful when the forex market in Kenya is experiencing a clearly defined trend. The strategy involves fast thinking and fast action and requires you to think on your feet.
Rapid Fire Scalper Strategy in forex trading relies on two main factors:
- Highly liquid currency pairs
- Lowest timeframes available
The strategy with the MI chart window on the EUR/USD currency pair should be used for best results. Trading on the M1 timeframe is similar to driving through the highway in the fast lane. Nearly 50 trades are available on the M1 timeframe every day.
Rapid-fire indicators
Scalpers use the rapid-fire strategy because of the high frequency of trades they witness. Scalpers in Kenya are thus unable to use different indicators to analyse the market.
According to the strategy, there are two indicators:
- Parabolic SAR – This is conducted with settings of Stp02 and Maximum 0.2.
- Simple Moving Average (SMA) – 60-day period and applied to the close.
A Parabolic SAR and a Simple Moving Average are trend indicators in Kenya, meaning that they can be used when the forex market is trending clearly.
The SMA serves as a trend indicator. When the EUR/USD price rises above 60, we tend to go long, and conversely, when it falls below 60, we tend to go short.
Using Parabolic SAR, the exact entry point can be predicted both for longs and shorts. If the price rises above the Parabolic SAR, we go long on the EUR/USD. Our strategy is to short the currency pair if the price falls below the Parabolic SAR.
Piranha Scalping strategy
In the absence of a trend, the forex market moves in a range. Therefore, piranha strategies were devised to be used when the market is within reach.
Let’s examine marine life. Piranhas attack their prey in a series of small repeated bites until it is completely swallowed. A single bite may not affect the prey, but repeated bites can be fatal and cause the prey to die. This is similar to the way piranhas scalp. With this, forex scalpers in Kenya have ample opportunities to profit from the foreign exchange market.
When using the M5 (5-minutes) timeframe, the piranha strategy is most effective on the GBP/USD currency pair. On average, the strategy provides trades with 15-20 trading opportunities each day.
Indicators to use with the piranha strategy
The piranha strategy uses Bollinger Bands as its single indicator, with a Period 12, Shift 0, and Deviation set to its default value.
A Bollinger Band chart in Kenya is used to determine market entry opportunities. In ideal conditions, you should go long when the GBP/USD crosses the lower band and go short when it crosses the upper band.
Bollinger bands
The Bollinger Bands can be used to determine the direction of market trends and reversal trends. These bands are essentially used to measure high and low prices. Bollinger bands indicate an expansion of a trend when the prices depart from them. As a result, you will know exactly what the trend will be and can trade accordingly.
ADX
ADX stands for Average Directional Index, one of the best scalping strategies in Kenya. This indicator determines market trends. The ADX indicates the strength of the market’s trend. For example, a trend of 40 or higher signifies a strong trend. A strong market is more conducive to scalping.
Scalping strategies should only be applied when the market trend is above 20 and increasing, and not when the market trend is between 20 and 30. During fragile times, trade uses other methods rather than scalping.
Using fibonacci levels
As one of the most effective scalping trade strategies, Fibonacci levels in Kenya can be used as a useful tool to determine the direction of the trade. In particular, these levels are ideal for assessing market trends without considering the size of sudden price fluctuations or the lack of clarity regarding the potential destination of the price.
The purpose of using this strategy is to identify the prices at which the price could rebound. Therefore, when drawing the Fibonacci extension, it is imperative to identify the desired price movement’s beginning and ending.
The USD CHF pair’s five-minute chart shows a sudden and sharp movement after the first red bar. If we draw this extension in the highlighted area, we will see that the first movement has 61.8, 100, and 161.8.
Additionally, the other two levels created performance bars for the trend that, when broken, engendered further momentum for the trend. It would help if you avoided trading against the trend in Kenya since sudden reversals can occur. With the Fibonacci levels, we can determine the general direction of the trend, even if we incur some losses; our gains will more than compensate for our losses.
In the example above, we scalp the market buying at the red arrows; if we detect that the pierce is returning to that resistance level we are looking for, we should stop trading until the market shows some clarity. As long as the trend continues, there is a benefit to scalping in between the extension levels.
The main momentum of price action through the Fibonacci extension level with a reasonable level of accuracy, and we can reach incredible profits.
More about forex scalping
Scalping is a strategy that trades forex for a very short period. Scalping is a trading strategy where the trader enters a trade and takes profit almost immediately after the trade turns a profit. In forex scalping, moves between pips are not captured in the way they are in conventional forex trading. In contrast, the trader monitors the market closely, engages in quick trades, and gradually increases positions by 5 – 15 pips.
Scalping is conducted on short timeframes, like five-minute trade charts. However, in the quick trades, the amount is entered with large amounts so that a few pips scalped still results in significant profits. For example, when a trader uses scalping techniques, he makes only 5 pips in 5 minutes at $60 a pip, a $300 profit.
There are hundreds of forex brokers online in Kenya, but only a small number of them encourage scalping or support it. Therefore, you will need a broker who supports forex scalping if you intend to use it as a trading strategy.
Traders who have experience with scalping profit from extremely slight changes in price, as little as one or two pip. They build their accounts gradually and accumulate these profits.
With the pips gained from each trade being so small, this strategy must use large leverage to succeed. Nonetheless, traders should be aware that high leverage is risky since it can swing either way. Gaining a few pips can make a big difference in your account while losing a few pips can ruin your bank account. To minimise losses, scalpers set tight stop-loss levels.
Traders who use a forex scalping strategy in Kenya must be alert and agile mentally and physically. Traders cannot walk away from their computers after entering a trade since it might last for a few seconds or longer. The use of automated systems or robots for trading using scalping techniques can be seen among some traders. On the other hand, some traders prefer to scalp the market manually.
Bottom line
Forex markets in Kenya are large and liquid, and technical analysis is considered viable for trading. Therefore, the retail forex trader can also assume that scalping might be a feasible strategy. On the other hand, the forex scalper usually requires a larger deposit to make the short and small trades worthwhile because of the amount of leverage the scalper needs to employ.
There is a lot of speed involved in scalping. Those who love action and prefer to monitor one- or two-minute charts can benefit from scalping. In general, scalping is for those who are quick to react and don’t have a problem taking losses that aren’t more than two or three pips.
However, if you are analytical and like to think through each decision you make, scalping might not be for you.
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Heinrich is a forex and CFD enthusiast with a passion for writing good informative quality content. He strives to showcase the best forex brokers in Africa. Join him on his Journey!
Content Writer | Market Analyst
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