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Technical Analysis Scalping Systems

Based on the growing community of scalping clients at Capital Grow, the unique and beneficial trading conditions that our brokerage offers forex scalpers, scalping systems and Expert Advisors, we are delighted to provide our clients and potential clients a series of educational articles to give traders an insight into scalping the forex markets from a traders perspective as well as the view point of the broker.

In this article, we identify typical chart formations and indications associated with scalping opportunities and certain events that scalping allows traders to take advantage of.

Making profits in Forex trading is based on trends of the market and movements to increase profits or minimising losses. By using smart strategies in forex trading profits can be made. Forex Scalping System is a popular method that is based on the movements between two currencies in very small points.

Forex trading is effected by economic, political and general news throughout day trading. These cause movements within currency pairs, scalping strategies take advantage of these movements and can make short and long term profits through trading.

A proper risk management system in a trading strategy is important. To overcome risk a Forex Scalping System can make small but multiple profits. Retracements and the momentum of currency pairs are taken advantage of when trading forex.

A Forex Scalping System relies on making profits from part of a trend, gaining a few pips is part of a good scalping strategy.

News Breakouts

Breakouts are caused by news releases. Volatility is caused by these events and generates swings which are exploited by a scalping system. Scalping after news releases requires sensible stop-loss settings and a risk strategy.

Scalping the news can take advantage of bull or bear trends. The currency market’s behaviour during these releases gives scalpers the chance to scalp for profits.

The graph shows hourly EURUSD chart, highlighted with price reaction after a news release, it is followed by levelling out. As news is released the market becomes Bullish and gives traders a scalping profit making opportunity. As liquidity comes back to the market (traders adjust their orders) the market stabilises.

When scalping news breakouts, manual scalping systems avoid trading the market during the actual news release. Only automated scalping systems trade here, manual traders first confirm a bullish formation before trading.

In the example we can scalp the market for a four-hour period, and an increase of 646 points giving us a scalping profit making opportunity. During volatile periods the use of tight stop loss is advised.

Scalping news can be profitable, large moves in the timeframe during news enables scalpers to expose the market formation and perform profitable forex scalping strategies.

Technical breakouts

Technical breakouts are not as obvious as news price action. A forex technical breakout is difficult to predict. Scalping technical breakouts is harder than scalping news, there are little indicators to confirm market trands and prices can change direction. Scalpers should trade smaller volumes and stop-loss during technical breakouts.

The chart shows hourly movements of the USDJPY pair. Highlighted areas show the trading action. The range warns us that some scalping opportunities we can exploit the breakout which occurs at around 13:00. The upward arrow after the “range” (highlighted by shaded area) is where scalping strategy trades for five, 10 or 30 minutes or longer.

Range Patterns

Scalping systems can trade in a range. When trading the range, scalpers monitor the hourly and the minute charts to understand true market trends. Checking the hourly chart confirms a range. Below we confirm EURUSD is in a range.

When checking the 30 minute chart (below), we can see many opportunities to scalp the market in a range (shown by blue arrows):

The price us between 1.33923 and 1.32655 (1268 points difference or 126.8 pips) the movements within the range give us many forex scalping opportunities.

Flags

Scalpers maximise range patterns as they are less risky. Scalpers are happy with generating scalping profits on normal conditions, like a range trader.

The fifteen minute chart of the USDCHF pair over a three hour trend is interrupted by flags. The formations identify continuing patterns where the scalper can generate profits from the downward trend. The three flags highlighted show some stability before the trend continues bearish.

Flags are very strong continuation patterns, but a scalping trader must be careful not to get caught in a breakout when the flag pattern gives way to the momentum of the trend.

We hope that the series of valuable articles will help you to decide whether forex scalping strategy is right for you.
 

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The capitalgrow.info brand is a Financial Services Company, authorised and regulated by the FSC under the Securities and Investment Business Act, 2010 License#: SIBA/L/11/0964. Forex commodities and CFDs (OTC Trading) are leveraged products that carry a substantial risk of loss up to your invested capital and may not be suitable for everyone. Please ensure that you understand fully the risks involved and do not invest money you cannot afford to lose. The information provided can under no circumstances be considered as a recommendation to engage in any trade.