Scalping Strategies with Low Spreads

Scalping refers to the process through which easy money can be made in no time. It is known to have a reputation among those who wish to earn quick money from reselling by making minor changes in the price quotations. It is more or less a strategic attempt towards accruing massive numbers of small profits. A person who is involved in the process of scalping is referred to as a Scalper. Scalping is most abundantly practiced by traders or brokers who operate in a pool of imbalance between supply and demand. As only under a disturbed market, higher prices can be charged. It is beneficial to aim smaller, given the circumstances, as they are more fluid and more obviously frequent. Scalping primarily works on the principle of low exposure risk-bearing.

There are multiple strategies that can be adopted by a scalper to meet their desired goals in the long run. The strategies are as follows:

• Stochastic Oscillator: Scalping can be performed by using a stochastic oscillator. The work of Stochastic Oscillator essentially is derived from a relative comparison of current price along with the trends in prices recently. By alternating the current with the recent trends, a stochastic aim to determine information about potential turning points.

Scalping with the application of an oscillator attempts to seize fluctuations in the market, meaning a downward or an upward movement of supply and demand in a consistent manner or fashion.

• Move average strategy: Another way of scalping is to use the average move method; under this method, ordinarily, two trends are evaluated. Two relatively short-termed and another quite longer one to depict the trend. It is vital to note that trades vary with trends, and one does not need to follow every fluctuation.
• Parabolic SAR Indicator: The Parabolic SAR acts as an indicator that essentially throws light towards the direction which is favored by the market or where the market is moving. It also tries to provide entry and exit points. SAR typically means stop and reversal. This very indicator is a string of dots positioned either above or below the price bars. The point underneath the price is termed as bullish, and the one placed above is termed as bearish. The change in the positioning of the points or dots suggests that there is a fluctuation in the market, or a change is expected or is underway.
• RSI: Last but not least, traders may use RSI to determine the entry points that follow the existing trends. The working of RSI is slightly inferred with dips are induced, so when there is a decline in RSI up to 30 points, and then when it steadily moves above the dedicated line, a prospective entry point is established.

Now that we have cruised about how various strategies can be implemented in order to go about meeting our desired above objectives. We shall now move further towards the evaluation of the best strategies that can be practiced by Forex brokers with almost zero spread on the EURUSD trading pair. Considering the recent trends and analyzing the outcomes, it can be noted that EUR/USD is one of the most massively traded pairs as compared with the other counter pairs with the lowest spread of 12 pips. It is usually of no benefit to trade in pairs that have low pip spreads, much like the EUR/AUD, as this may be a good trade for some but may not be so great for others. On the contrary, some comparatively fluid pairs, such as CBP/NZD, have an average spread somewhere around 4.4 pips which may not be so encouraging for some traders.

There are various determinants that affect the scalping process, but one can ensure returns if the right criteria are followed. To begin with, choosing the most appropriate spread, the one that has the lowest spread, is considered a vital determinant. Choosing more volatile pairs is another consideration to be made while implementing the scalp trading strategy. Since this market usually seeks faster returns, the market is subject to frequent and unprecedented changes to produce desired results.

Avoiding brokers with Dealing with Desks is another consideration that goes without saying when talking about trading. Finding a profound trader with a good reputation is a crucial decision. However, one that chooses FX scalping techniques comes with an added bonus.

Thankfully, a majority of traders these days have waived off the concept of help desks which has significantly reduced the conflict of interest but offer great spreads on currency pairs. Bollinger Bands are a statistical tool that facilitates categorizing of prices and subsequent volatility of a financial instrument over a given period. These bands come in very handy as a Forex Scalping indicator. It is represented on a chart wherein a flat line or a demark flat Bollinger Band line suggests that there is a decline in the market and that the market is steadily setting down for a strenuous range trading. The basic application of strategy here is not too complex.

A trader buys a specific currency pair when the line falls lower towards the lower bound and makes a purchase when the line rises towards the upper band. This may not guarantee success with the positions but may provide for a robust tactical strategy to be the jack of all trades. Moving on, Trading Support and Resistance. While this may not serve as the best Forex Scalping Strategy, it shares a resemblance with the previously stated methods above. In case a trader does not wish to opt for the Bollinger bands, they might want to consider support and resistance.

Conclusion

Ideally, a trader would investigate the technical data on a Forex update website and then go about selling or buying currency pairs that trade near resistance. Again, trading and support may not be the best viable option as the market breaks down sooner or later. However, it allows traders to get insights in a short time. Lastly, several professionals prefer to Execute Trades manually as it saves a whole lot of time and makes the process more convenient and easier. It allows the trader to oversee any given platform for major changes. But this may not be suitable in case of longer time frames, one that ranges between days or weeks