Trading CFDs carries considerable risk of capital loss. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.

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The Best Forex Indicators for Scalping

December 25, 2017

Scalpers can use a range of indicators on very short time frames, but often the simple strategies are the best.

What is scalping?

Scalping is a forex trading strategy whereby the trader looks to make a profit from small market movements. This means that generally, shortly after entering a trade and it becomes profitable a trader will look to close the trade out. This strategy involves lots of small gains. However, a very strict exit strategy is required, otherwise one big loss could wipe out all the small gains that the trader has achieved.

Is scalping right for you?

Scalping strategies tend to be very short term and can be very time consuming. In fact, scalping can be one of the most time-consuming to trade forex that there is. Scalping strategies often require constant market analysis and the trader must think quickly or the opportunity will have passed

There is a huge choice scalping strategies to select from and this can be a daunting process. Scalping strategies are also used by longer term traders, however to scalp it is necessary to use a shorter time frame – for example the one-minute chart rather than anything longer. Also worth noting, these strategies work best when the market is with trading sideways or trending higher, but not when the market is in a period of confusion.

EMA’s & Stochastic

Sometime the best strategy is the simplest. Indicators which are really useful when scalping include the Exponential moving average (EMA), specifically the 50 EMA and the 100 EMA and Stochastic, specifically periods of 5, 3 and 3.

After applying these indicators, the trader would watch the chart for certain signals in order to know whether to go long or short a particular market.

For example, a trader would take a long position if the 50 EMA surpasses the 100 EMA. The price should also be close to the EMA indicators and the stochastic needs to move higher than 20.

A short order might be entered when the reverse is applicable. So, when the 50 EMA is below the 100 EMA, with the price close to the lines, whilst the stochastic should ideally be below the level of 80.

As mentioned earlier clear exit points are essential when scalping and many traders use major currency pairs as they have tighter spreads.

Where can I scalp?

Vantage FX is an award-winning broker, they offer unparalleled execution and some of the tightest spreads in the industry. Furthermore, they offer MT4, the most popular forex trading platform in the world, making them a very suitable broker to try scalping strategies with.


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