Forex Strategy & Forex Trading Strategies made by Professionals for Beginners & Experts

How to Choose The Right Broker For Scalping ?

Dear Scalper,
Please, rightly choose your Broker!
Sincerely, Investazor

All scalpers, beginners or experienced, need to have an overview of how this area is and how it works. Beyond the scope of making money, known by everybody, it is important to know under what circumstances this passion can be pursued. There are 3 main entities that promote and give access to the trading world: exchange (New York, London, depending on the trading instrument), banks and investment funds (commercial banks) and brokerage houses. Obviously, access is guaranteed depending on the amount of money invested.

A forex scalper will always need to work with a brokerage house in order to have access to a server, a trading platform, quotes and liquidity. Therefore, it is mandatory to rightly choose the broker you work with. In this article you will find out how to choose your broker and to what details you need to pay attention when doing this. Apart from what this person can offer to you as primary conditions to start trading, one big advantage is that if you do not dispose of a big amount of money, a broker can offer lower costs than a bank.

Still, the great job about will be yours, don’t forget that! The broker is only an important factor, willing to give you the possibility, chance and profitability of the forex scalping strategy chosen by the trader. This actor will only create the great environment for your profits, success and gains, while the scalper is fully controlling his / her own time frame for trading, strategies, stop loss and take profit orders.

Technically speaking, what brokerage houses offer to traders are hundreds of offers, depending on his/ her profile. For the day traders and scalpers the business model can be explained simply by the distinction between profit and loss: a tax paid to the broker for his services, on profits and losses. However, the broker remains an important actor contributing to the scalpers success, and this makes the relationship between the two partners a lot deeper than this technical details.

Analyze spreads and offers

As we defined this relationship as starting from the business making point of view, it is important to rightly analyze the offer of the brokerage house. At the end of the day, the broker also has to make money according to your profit and loss.

But the goal of the scalper (short and very short term type of trader) is to obtain profit by repeated short transactions, which is way different from the strategies used by medium to long term traders. Since the scalper will open and close tens of positions during a trading day, the costs will be proportional. So, it is desirable to analyze all the brokerage houses’ offers available on the market before choosing the right one as well as choosing the lowest spread for the currency pair you want to trade. The broker himself, will then be only a matter of preference and intuition.

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6 Essential Scalping Tips For Beginners

In this article you will find 6 essential hints scalpers use in order to end up with profitable trading sessions. As it is the second episode of our trading strategy guide, we invite you to  read the first article on forex scalping.

In the previous article we defined forex scalping as being a small steps strategy, in which short opened transactions are meant to bring profit. However, it is important to know that a good scalper will not manage to be profitable only by using his/her intuition and that luck is not enough for maintaining long term positive results.

Furthermore we are going to give you some hints in order not to restrict your trading strategy, but to improve it by giving evidence of some main untold secrets.

Tip #1: Analysis, Forecast and Money management are the key

In order to have a positive outcome and to constantly maintain the incomes, scalpers use strategies and analyses that attract the probability on their side. For this purpose technical and fundamental analysis techniques are used, together with money management. Of course personal intuition and scalper’s flair is important but always guided by strong analysis and long term strategies.

Tip #2: Learn about the instrument you are trading

It is mandatory for the scalper to be acquainted with the characteristics of the instrument that is traded. Knowing its volatility, its movement force, the conditions that facilitate the moves and the factors that contribute to the movements of the traded instrument are some basic notions that a good investor must know.

Tip #3:  Hunt sharp price movements

It is recommended to base your trading sessions on sharp movements and not on slow movements that happen in the markets. This is not only the case of the currency market, but also of the commodities  and equities markets and is directly related to volatility. The challenge is to be aware of the trade opportunities created by the shortages of liquidity that lead to imbalances in the market.

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Forex Scalping - Complete Beginner to Advanced Strategy Guide

As the term indicates, forex scalping is a method of maintaining short opened transactions, in order to obtain profit.  Literally speaking, it means a small steps strategy, in which are involved many quick moves of opening and closing positions, due to bring profit. Usually, traders use this method in order to accumulate repeatedly gained profits, but paying attention to the risk of loss involved.

In order to be more specific regarding the shortness of the transactions, we need to explain that scalping forex transactions are kept opened starting with some seconds and are not due to last more that 3-5 minute. Usually, traders maintain a position up to a full minute.

Forex Scalping is known as a basic trading strategy due to its characteristic of bringing quick profit. In the meantime, it is very important to keep in mind that the trading volume has a big impact on the profit, as well as on the loss. Usually, traders that prefer this strategy are inclined to accumulate profit from several quick transactions, in order to open long term transactions. Also, because the loss risk remains high, they are often advised to place trades with low volume.

Despite the fact that these strategy seems to need less time than long term trading transactions, opening repeated quick positions and closing them, in order to accumulate profits and attenuate loss may involve more time spent in placing orders.

When first using scalping it is very important to know that:

  • You will have to use instruments that have low and very low spreads, such as:

a) forex currencies (that have high liquidity), EURUSD, GBPUSD, USDJPY etc. ;

b) commodities like gold and oil;

c) stocks like Apple, Microsoft etc.;

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