How to choose the right indicators for scalping.
Among traders in the Forex market, trading in short time intervals, all types of which are united by a common concept of scalping or scalping, has become widespread. The essence of such activity is to conclude dozens, hundreds of transactions every day, and the purpose of each contract is to make a profit in the range of 10-20 points. At the slightest risk of losing or incurring large losses, the order is closed, and the trader tries to minimize losses to a maximum of 2-3 points.
It should be noted that the need to select and test indicators for scalping in the Forex market is not supported by all investors. Thus, some professional traders call such lottery trading a lottery, which does not require a serious approach and the creation of a specific strategy. However, the examples of successful players, who consistently achieve high profits by working with this method, show the opposite. Learn about the advantages and disadvantages of scalping in the article “How to earn money on scalping?
It is also worth remembering that not all brokerage companies allow their clients to trade according to scalping strategies. Read more in the article: Why do Forex brokers not like scalpers?
What indicators should be checked for scalping on the currency market?
It is recommended to choose good and effective indicators for scalping at Forex according to the following rules:
1) Technical instruments for short-term trading should reflect a specific parameter necessary for a trader to make a quick decision;
2) Indicators of this kind should be as specific as possible, as there is simply no time left to test them;
3) the mechanism of work of the selected software should be simple and clear, because only in this case it is possible to speak about efficiency, stability, profitability
Examples of indicators for scalping on Forex
Guided by the above principles, we can give examples of the following technical indicators, which are suitable for short-term trading in the foreign exchange market:
1) combination of two moving averages with different periods – an excellent trend indicator that allows you to make the right decision to enter the market when crossing a short indicator of a moving line with a long period (the intervals are determined depending on the selected chart);
2) Stochastic Oscillator – allows you to quickly and accurately detect the points of entry into the market (conclusion of transactions) by detecting overbought and oversold conditions of a particular financial instrument;
3) Channels – a common name for several indicators, which allow you to make an operational decision to buy or sell a certain instrument when the price reaches the upper or lower limit of the visual channel displayed on the chart
This list does not exhaust all the indicators for scalping on the currency market. These tools have simply proved to be the most accessible and effective, which does not preclude the search for other technical means that meet these criteria. However, it is important to keep in mind the need for multiple, rapid decision-making in short-term trade.
If you decide to start scalping on the Forex market, you need to clearly understand the need for a trading system. One should not succumb to false statements that this type of trading is based solely on randomness, and it is simply impossible to analyze the price movement in such periods of time.
The availability of the developed and tested strategy allows to increase the percentage of successful deals significantly, limiting losses to the minimum values.
Also, do not forget that it depends on the chosen broker, whether you will be able to trade on a scalping strategy. Young companies, due to the low capacity of their trading servers do not allow clients to make transactions too often, because it can lead to malfunction. Of course, old and well-known companies that do not save on servers do not have these limitations.