Free Extensive Guide

On Forex Scalping

Reviewed and recommended by Rita Lasker

www.ritalasker.com

How to scalp
Forex scalping is a popular method involving the quick opening and liquidation of
positions. The term quick is imprecise, but it is generally meant to define a
timeframe of about 3-5 minutes at most, while most scalpers will maintain their
positions for as little as one minute.
The popularity of scalping is born of its perceived safety as a trading style. Many
traders argue that since scalpers maintain their positions for a brief time period in
comparison to regular traders, market exposure of a scalper is much shorter than that
of a trend follower, or even a day trader, and consequently, the risk of large losses
resulting from strong market moves is smaller. Indeed, it is possible to claim that the
typical scalper cares only about the bid-ask spread, while concepts like trend, or
range are not very significant to him. Although scalpers need ignore these market
phenomena, they are under no obligation to trade them, because they concern
themselves only with the brief periods of volatility created by them.
Is Forex Scalping for you?
Forex scalping is not a suitable strategy for every type of trader. The returns
generated in each position opened by the scalper is usually small; but great profits
are made as gains from each closed small position are combined. Scalpers do not like
to take large risks, which means that they are willing to forgo great profit
opportunities in return for the safety of small, but frequent gains. Consequently, the
scalper needs to be a patient, diligent individual who is willing to wait as the fruits of
his labors translate to great profits over time. An impulsive, excited character who
seeks instant gratification and aims to make it big with each consecutive trade is
unlikely to achieve anything but frustration while using this strategy.
Attention is essential for the forex scalper
Scalping also demands a lot more attention from the trader in comparison to other
styles such as swing-trading, or trend following. A typical scalper will open and close
tens, and in some cases, more than a hundred positions in an ordinary trading day,
and since none of the positions can be allowed to suffer great losses (so that we can
protect the bottom line), the scalper cannot afford to be careful about some, and
negligent about some of his positions. It may appear to be a formidable task at first
sight, but scalping can be an involving, even fun trading style once the trader is
comfortable with his practices and habits. Still, it is clear that attentiveness and
strong concentration skills are necessary for the successful forex scalper. One does
not need to be born equipped with such talents, but practice and commitment to
achieve them are indispensable if a trader has any serious intention of becoming a
real scalper.
Automated trading systems
Scalping can be demanding, and time-consuming for those who are not full-time
traders. Many of us pursue trading merely as an additional income source, and would
not like to dedicate five six hours every day to the practice. In order to deal with this
problem, automated trading systems have been developed, and they are being sold
with rather incredible claims all over the web. We do not advise our readers to waste
their time trying to make such strategies work for them; at best you will lose some
money while having some lessons about not trusting anyones word so easily.
However, if you design your own automated systems for trading (with some guidance

from seasoned experts and self-education through practice) it may be that you
shorten the time which must be dedicated to trading while still being able to use
scalping techniques. And an automated forex scalping technique does not need to be
fully automatic; you may hand over the routine and systematic tasks such as stoploss and take-profit orders to the automated system, while assuming the analytical
side of the task yourself. This approach, to be sure, is not for everyone, but it is
certainly a worthy option.
Some words on trade sizes and forex scalping
Finally, scalpers should always keep the importance of consistency in trade sizes while
using their favored method. Using erratic trade sizes while scalping is the safest way
to ensure that you will have a wiped-out forex account in no time, unless you stop
practicing scalping before the inevitable end. Scalping is based on the principle that
profitable trades will cover the losses of failing ones in due time, but if you pick
position sizes randomly, the rules of probability dictate that sooner or later an
oversized, leveraged loss will crash all the hard work of a whole day, if not longer.
Thus, the scalper must make sure that he pursues a predefined strategy with
attention, patience and consistent trade sizes. This is just the beginning, of course,
but without a good beginning we would diminish our odds of success, or at least
reduce our profit potential.

Secrets of Forex Scalping

If you are currently scalping FX markets (or are planning to), there are certain
universal rules that you simply need to know to survive. Beyond these rules exist
another level of knowledge that very few traders possess...
This private document will begin to shed some light on what you likely dont know
about how to successfully scalp the Forex markets in such a way that puts the market
at the mercy of your trades...not the other way around, as is so often the case.
Scalping the Forex market brings certain challenges that you dont have when trading
on larger time frames. For example, if you are trying to take 100+ pips out of the
market with a spread of 2 pips, the cost of this trade is only 2% of the total. Now, if
you are scalping for 10 15 pips with a 2 pip spread, the cost of this trade is as high
as 20%.
So, if you are going to be scalping the Forex market you need to be very strategic
with your approach, or you will get eaten for breakfast. There are literally hundreds of
sharks out there in the form of highly skilled professional traders, and large banks
that are waiting to prey on the individual retail trader like you, who so often have no
clue what they are doing.
For the sharks, you are easy prey, and easy profit, and your loss is always their gain.
They literally profit on all of your losses, and for them it's like shooting fish in a barrel.
So in order to avoid being the prey, you need to have a solid understanding of how
the markets work. Armed with the knowledge you are about to receive, you will not
only be protected from sharks, you will also be in a power position that will allow you
to consistently scalp profits out of the market over and over again...just as I do.

You also will be far ahead of the large majority of the other traders out there who
think they know how the markets move, but so often don't. There is a method to
the madness of what some people think are the unpredictable Forex markets. Once
you understand how the markets flow, you will begin to see them as I do, and the
mystery will start to unravel itself to you.
There is a code to the markets, after many years of intense study and practice, I
have cracked it.
There are loop holes that exist as well, I have identified them, and know precisely
when to take advantage.
The techniques youre about to discover and the cheat sheets that I have assembled
for you are going to begin to crack this code that few traders even know exist.
Having this understanding will put the odds back in your favor, and give you the
control so that you can consistently trade the market, while avoiding the typical
challenges that scalping brings.
Below we are going to look at five different approaches that will immediately help you
stack your deck in your favor, and begin to crack the code of the Forex markets... so
you can see them, and even begin to trade them, as I do.

CHEAT SHEET #1
Counter-Trend Scalping During Choppy Markets
Most traders dont think about scalping during choppy, ranging market conditions, but
this is one of the best and most consistent scalping trades I take.
The first thing that you need to ask yourself when scalping choppy markets (a.k.a.
counter-trends) is:
When are choppy/ranging markets most likely to occur?
The best times that I have found to scalp the market using counter-trend strategies
are:
Off-Hours Trading (Specifically between 3:00pm and 7:00pm EST)
Pre-News Trading (12 to 15 hours before a large news announcement)
These time-frames may seem a bit odd at first glance, but if you think about it a little
more closely they makes perfect sense! Lower market activity typically results in
choppy markets. And since choppy markets are what were after, then off-hours
trading (i.e. when the banks are closed) and pre-news announcements are some of
the most predictable times of chop because these time-frames have some of the
lowest trading activity of all!
Well talk more about pre-news trading in just a bit, but first lets talk about
scalping during off-hours.
Off-Hours Scalping
Between 3:00pm and 7:00pm eastern standard time is when all the world banks are
closed. The U.S. banks are closing their doors and the Asian banks have not yet
opened. This is a great time to scalp the market using a counter-trend strategy,
because no larger banks are moving money (i.e. the markets) at that time.

Without the banks around to move the markets, the currency pairs will become
choppy and begin moving sideways in a fairly tight range. And its these tight ranges
that are the ideal scalping environment...when you know what youre looking for.
The screen shot below shows the low volume 3:00pm and 7:00pm eastern standard
time in the EUR/USD on the hour time. As you can see, on both days the market
moved into a choppy, counter-trending mode because the banks and other
institutional traders werent around to move the markets.

Off-Hours Scalping Strategy #1:

As the screenshot above illustrates, once a currency pair has crossed the 3pm EST
threshold, it will rarely move above the 3pm closing price (assuming it closed high) or
below the 3pm closing price (assuming it closed low) during the off-hours period.
So one way to scalp during off-hours is to use the high close (at 3pm) as the top high
water mark or the low close (again, at 3pm) as the bottom low water mark. When
the price hits (or moves very close to) the high or low water mark, you would look for
the pair to retrace. In other words...
If it hits the high water mark, youd want to go short.
If it hits the low water mark, youd want to go long.
A typical range on the 1 hour chart during off-hours is 30 pips, so when Im trading
this strategy during this time-frame Im looking to scalp 10 15 pips. If you choose to
go to a shorter time-frame (i.e. a 15 or 30 minute chart) the best you can hope for is
5 10 pips (which is why I prefer to trade the 1 hour chart).

I also apply a 1 : 1 risk to reward ratio, meaning if Im looking to scalp 15 pips I use a
15 pip stop-loss. If Im looking to scalp 10 pips Ill use a 10 pip stop-loss.
SIDE NOTE: I realize that the markets dont technically close in the U.S. until 5:00pm
EST, but they slow drastically the final two hours, which is why I say you can treat the
3:00pm 5:00pm like offhours.
That said, if you want to be even more conservative, use the U.S. close at 5:00pm (as
opposed to the 3:00pm close) to establish your high and low water marks. This will
give you less trading opportunities (because you have two less hours to trade), but it
should improve your overall accuracy.
Off-Hours Scalping Strategy #2:
Another way to trade during off-hours is to use the 3:00pm and the 5:00pm close to
establish your Dead-Time Range.
SIDE NOTE: The Dead-Time Range is another word for the range
during the off-hours trading period.
Once you have established the mid-point of your Dead-Time Range:
Go LONG if the price is below the mid-point of the first bar after
5:00pm, and...
Go SHORT if the price is above the mid-point of the first bar after 5:00pm
The same rules apply as with the first strategy...
Trade on the 1 hour chart and look to pull 10 15 pips using a 1 : 1 risk to reward
ratio. (Remember, the typical range during off-hours for the major pairs is only 30
pips.)
Pre-New Scalping
The 12 to 15 hours before an important news announcement (i.e. the U.S. FOMC
announcement or the U.S. Non-farm payroll) is a low volume time in the market as
well because most banks and institutional traders are sitting on the sidelines waiting
to see what the news will be. And as we just discussed, lower trading volumes lead to
choppy, ranging markets. And again, choppy, ranging markets are one of the best
times to scalp and pull pips out of the market.
The next screen shot shows the 17 hours before two U.S. news announcements were
released (the CPI report and the FOMC announcement). Here again, the 7market
moved sideways, but allowed for enough movement to scalp the market several
times

To scalp the pre-news announcement, we need to first get the Dead Time Range
midpoint we established back in Off-Hours Trading Strategy #2, because the Dead
Time Range for off-hours trading can also be used to predict the range for the 12
15 hours prior to a news announcement (since its a type of Dead Time).
Once the Dead Time Range and midpoint have been established, well use the same
strategy discussed in Off Hours Trading Strategy #2 to trade the pre-news
announcement.
Go LONG if the price is below the mid-point the first bar after 5:00pm,
and...
Go SHORT if the price is above the mid-point the first bar after 5:00pm
Trade on the 1 hour chart and look to pull 10 15 pips using a 1 : 1 risk to reward
ratio. (Actually, since the range is a bit larger during pre-news announcements than
off-hours trading you can try to scalp a few more pips...but dont get greedy.)
If you want to trade on a shorter time-frame you can, but just remember that the
market needs time and room to move. And with 2 3 pip spreads being the norm,
you really need to pull more than 8-10 pips to make it
worthwhile.
Estimated time in the market:
Off-Hours Trading: 45 90 minutes
Pre-News Trading: 45 75 minutes

CHEAT SHEET #2
Breakout Scalping
Using breakouts to scalp the market is by far the most popular scalping
method. One reason is that it works, and the second is that it is the simplest. When
looking for breakouts to scalp, Im only interested in the first hour the different global
bank sessions. This includes the:

Asian session open at 7:00pm EST

European session open at 2:00am EST
London session open at 3am EST
New York session open at 8am EST

As the different banks come online and start moving money, the odds of the market
moving and causing a sustained breakout go up. And the more breakouts we get, the
more opportunities we have to scalp some quick pips!
Take a look at the chart below where I have identified the session opens and look to
see if you can find any breakouts:

As you can see, on this day this particular pair moved hard at the European and New
York session opens creating two very nice scalping opportunities. But obviously before
we can talk about how to scalp breakouts, we first need to cover how we determine
when a breakout has even occurred.

There are two methods I use to establish breakouts...one is more conservative (but
yields less trading opportunities) and one is MUCH more risky (but gives you A LOT
more trading opportunities).
Breakout Scalping Strategy #1:
The first method (which is the one I use) for establishing a breakout point is to look at
the high and low for the session so far and use that as our breakout point. In the
example above, you can clearly see that the pair broke below the previous low of the
session, so in this case we would go short and hope to scalp 10 15 pips out of the
market.
I like to trade this strategy on a 1 hour chart. You can trade it on a smaller timeframe if you want, but in my experience the ranges get too tight and you wind up
getting stopped out a lot more than if you stick with the 1 hour chart. I place my stop
loss at 1 pip above the previous bars high if Im shorting, and 1 pip below the
previous bars low if Im going long OR 10 pips (whichever is smaller).
SIDE NOTE: You need a fairly tight stop-loss when scalping breakouts, because the
markets move quick on you (especially during session opens) and you dont want to
be on the wrong side of a scalping trade when youre intended return is only 10 15
pips.
My goal is 10 15 pips, but no matter what I exit at the end the bar. (One of the
biggest mistakes a trader can make is trying to wait for the market to breakout when
there is no breakout. If the breakout is not there, then move on to the next trade.)
Looking back at our example screenshot above, you can see that the New York
session opened with a massive move to the high side. But for this strategy, we would
NOT take the trade because it did NOT break the highest high so far of today's
session.
If you wanted to take that trade, however, you would need to be trading the more
aggressive strategy...
Breakout Strategy #2:
This scalping strategy is traded the same way as Breakout Strategy #1, but instead
of using the previous high or low of the SESSION as our breakout point, we would
instead use the high or low of the PREVIOUS BAR.
As you might imagine, this is a much more aggressive scalping strategy, and I DO
NOT recommend trading it on a smaller time-frame than the 1 hour chart.
The stop-loss and exit are the same as Strategy #1.
Estimated time in the market (both strategies): 15 60 minutes

Final Thoughts..
The key to successfully scalping in the Forex market is to stack the deck in your
favor.

You've just seen five different strategies that I use to scalp, depending on my
objectives, what time of day I'm trading, or the type of situation or market condition
that exists.
Most traders have only one strategy, and try the same approach regardless of what
the markets are doing. This is the biggest mistake one can make. Being flexible is
key, and to truly unlock the code to the ever-changing markets you need to look at
the market, not as a single market, but as several different markets with entirely
different behaviors.
Once you learn to identify the specific time frames to focus on, and the different
market conditions that exist, you can simply pull out the appropriate strategy, plug it
in, and immediately be entirely more successful, and a FAR more accurate trader.
Now that you know the Forex trades as several independent markets you are much
further along your path to becoming a successful trader... but even I don't try to do it
on my own. The loop hole I refer to is the next level of what you have just finished
reading about.
I have just recorded a very special video showing my Triad Trading Formula System in
action. Trust me, it takes everything you have just read to an entirely different level!
You can see what I mean by watching the video. It uses a very special set of rules
and proprietary indicators that I personally use every day to take my trades. And the
best part is anyone who trades with my Triad system actually takes the EXACT same
trades as I do.
That's right, there is no subjectivity, so you'll always know EXACTLY:
When to enter
When to exit and...
Where to set all of your stops
No second-guessing, no doubting, no fear.
Once I finished the development of TRIAD and began using it, it literally took me from
a part time trading hobbyist to a full time trading professional.
I've never looked back.
If you want to catapult yourself to the very same level it took me well over 14 years
of backbreaking effort, thousands of hours of testing and far more painful losses that I
care to remember to get to...keep watching closely. I'll be revealing how you can get
involved very soon.
Good trading.

If you have any questions, please feel free to ask our support team by sending an
E-mail to: [email protected] We will do our best to help you.

Yours,
Rita Lasker & Green Forex Group
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