Forex Scalping- A Key Market Factor You Must Know

Forex scalping requires a completely different mindset to other forms of day trading. Those who engage in Forex scalping normally make a number of trades a day taking somewhere between 5 to 10 pips from the market each time in many cases. Of course, the more trades that are made, the higher probability the scalper will have losses.

Hence the need to exercise discipline and not shoot at everything that moves. Look for only high probability trades. This however is easier said than done. That is why the following piece of information is critical in understanding market behavior from a Forex scalping point of view.

A Crucial Piece Of Information

The crucial piece of information we are referring to is this:

Somewhere between 60 - 80% of the time, the market is in consolidation.

This means that most of the time, the market is not making significant moves. It tends to range in a consolidation channel for hours at times before another significant move takes price to another level.

This market behavior pattern is ideal for Forex scalping once the trader fully understands it.

Develop Recognition Skills

Whenever the trader opens a chart, key support and resistance levels need to be identified. Previous highs and lows should jump out at the trader and be quickly recognized and identified.

To this end it helps to draw horizontal lines on the charting software to mark the top of a channel and the bottom of a channel on whichever time frame the trader is using.

The Key Forex Scalping Principle

The main principle that governs Forex scalping is the same principle that applies to all forms of day trading:

Sell The Rallies - Buy The Dips

Hence, when Forex scalping, the trader will look for ranges or consolidation channels where price is obviously moving (often within a 20, 30 or 40 pip range) and set an entry order to go long when price hits the bottom of the range, or an entry order to go short when price hits the top of the range.

There is always the possibility price will breakout at that point in which case it will be a losing trade. That's why it is important to maintain tight stops, perhaps no more than around 15 pips to keep the profit/loss ratio within reason.

Be Selective

To make Forex scalping trades higher probability it is important to select trades that have a number of elements going for them.

It is often not enough to just jump in on any range you see and enter an order to go long or short at the top or bottom of the range.

You want to look for ranges where the top or bottom coincides with other indicators. For example, the 200 EMA (Exponential Moving Average) is a very powerful indicator on the 4 hour, 1 hour, and 15 minute time frames. Seeing it is one of the most popular indicators of all time used by traders in the global market place, it pays to take notice of where price is in relation to the 200 EMA.

So if you see a trading range where the top or bottom also coincides with the 200 EMA on one of the higher time frames, zero in using the 5 minute chart, draw your horizontal lines to mark the range or consolidation channel, and choose a suitable order entry point. The 200 EMA provides a strong level of support or resistance, depending on which direction you are trading.

Likewise, if the top or bottom of the range is also lining up with a pivot level, or a Fibonacci retracement or extension level, you have added reasons to believe price is going to respect that level, at least for a while. You can then enter an order at the price point with reasonable certainty that you can grab 5 to 10 pips from the market, depending on the height or depth of the trading range.

Why Forex Scalping Methods Should Be Part Of Your Overall Strategy

This characteristic of market behavior, the fact price spends most of its time in trading ranges, makes Forex scalping a very profitable method once the trader has acquired experience and developed understanding and recognition skills.

Rather than waiting for the occasional significant price move, the trader who also has a Forex scalping strategy in his toolkit can utilize those long periods in the trading day when price doesn't go anywhere.

The powerful 200 EMA strategy - easy for newer traders:

http://www.vitalstop.com/Forex/Advisor/200EMA-forex-strategy.htm

How do you trade the non-farm payroll report? Read this:

http://www.vitalstop.com/Forex/Advisor/forex-strategy-non-farm-payroll.htm

For the best free economic calendars plus a free pivot point calculator and Fibonacci calculator click here:

http://www.vitalstop.com/Forex/tools.html

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Is Forex Better Than Stocks? 3 Reasons Why It Is

If you're looking for the ultimate trading market, forget Wall Street. The Forex Market is where the largest volume in trading is going on, with an incredible amount of nearly $2 billion worth of trading in a 24 hour day. Why is the Forex Market better than stocks? Why is a dollar better than a nickel? Because it's worth a lot more. That is one of the most basic and obvious answers to this question. There is a fortune that can be made in trading Forex because the Forex market is constantly trading.

Reason #1 Why Forex is Better Than Stocks Because:

The Forex market trades a larger volume than any other market in the world. The stock market trades roughly $10 billion in volume a day. That's not bad at all, but it isn't even 1% of what the Forex market trades daily. Not even close.

The Forex market trades an average of $1.8 TRILLION dollars of currency a day. No other market in the world comes remotely close to this figure. $1.8 Trillion dollars is only the first reason that the Forex is better than stocks.

Reason #2 Why Forex is Better Than Stocks:

No Enron, no WorldCom, no Tyco. These currencies are based on the strength of an entire nation's economy, not the reports of one company. This doesn't mean there isn't risk - every market has risk and Forex is no exception, but usually stable countries don't fall overnight.

I had a friend who went to college, got into stock trading, and had a personal stock portfolio worth six figures by the time he was only 27. Not bad. But almost all of it was McCloud, Enron, and MCI WorldCom. Nearly overnight his small fortune was worth less than $20,000.

All because of false stock reports from CEOs. This can't happen in the Forex. While economies can go up or down, there is both technical and fundamental analysis that can help you identify ahead of time the potential for a currency that is going to drop. Forex trading has risks like anywhere else, but one corrupt CEO is not one of them.

Also, when one currency goes down, the other in the pair goes up, so being on the right side can mean that one country's misery can still makes you a fortune.

Reason #3 Why Forex is Better Than Stocks:

There's always action. Unlike the stock market, which has a daily close to the market day, the Forex market is open every day, except Saturday. There is only one close in the Forex for an entire week, meaning almost any day, any time, you have the ability to trade. This allows a great flexibility in when, where, and how you can trade. Options are good.

These are only three of several reasons why the Forex is better than stocks, but if you want to trade where the most action is, there's no question you want the Forex market.

And now I would like to offer you free access to a Forex trading system that is 89.1% accurate, so you can literally start trading the Forex today. You can access it now by going to: http://www.foreximpact.com/reports/89percent

From Jason Fielder - Founder, http://www.ForexImpact.com

Reuters - Citigroup Inc on Thursday posted its fourth straight quarterly loss, hurt by increasing credit losses and write-downs tied to complex and low quality debt.

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