The Best Forex Scalping Strategy
What is Forex Scalping and how can I properly use it to trade?
In this article, I will be going all out to share about my style of trading – mainly forex scalping – and how you can learn it, use it and make money with it. I will not only explain why I prefer this above other types of trading strategies (eg. day trading, swing trading) but also touch on the downfalls of it (eg. you need freaking nerves of steel, hell lot of patience and be super zen.
Wait, why you?
What makes you qualified to teach this topic?
A bit of self-introduction to well, myself. My name is Desmond Leong, besides The Forex Army which is my crazy side project to build an army of traders which can one day move the market (crazy, right?), I also run Everest Fortune Group which is an:
- Award-winning research house (2019 & 2020 Best FX Research for Forex and Equities)
- Provides institutional-grade research to the largest banks, hedge funds and brokers.
- Boasts a team of CFA, CMT, CFTe accredited traders
- Constantly featured on radio programs advising Singapore on how to navigate the markets
- Last, but not least – 30 years old, married to my lovely wife and living a humble and happy life. (None of those flashy Lamborghinis, sorry. You can look for @fullt1m3f0r3xtrad3R$$$ on Instagram for that)
Here’s a recent video of a day in my life as a full-time trader done by Dollarsandsense Singapore, sponsored by IG.
Why bother to teach?
If you're making so much money, why not just trade?
First and foremost, I am not here to sell you some funny course which you’ll need to pay $3,000 to sign up and after which I’ll bring you to a secret Hawaii Bootcamp where we sit together for 3 days and I reveal my secret Price Action 1000 for you.
I’m doing this for free. I don’t need the money (note: I would love it, but I don’t need it) as my main business is B2B.
Here are my top reasons for teaching everyone how to scalp forex profitably for free:
- It’s freaking time-consuming.
The method I use (Fibonacci confluence, harmonics, support and resistance, true RSI, true Stochastic) is so damn time-consuming. If there are more like-minded people who start trading the same style as me and everyone analyzes various currency pairs on different timeframes, that would help us all keep an eye on the markets very well (which helps in using correlation to filter out trades).
- Someone will improve on it.
If there’s one thing I learnt – it’s that I don’t know it all. Someone will find my strategy and improve on it greatly and I hope to reap the rewards of that too. The forex scalping strategy we have has been built the many great minds I have had the privilege of picking.
- Stop reading and learning crap.
I used to work at OANDA and my heart breaks seeing so many people (>90%) of people reading crap on babypips forums (no offence to them they can be quite good) and using some stupid Moving Average crossover to try to make money. Like seriously? The secret to unlocking the world’ s riches is a moving average crossover? Let us educate ourselves properly and put those retarded Instagram forex millionaires out of business.
So, is forex scalping profitable?
Give me the cold hard truth!
Hell yeah, it is.
And hell yeah, it’s tough.
Forex scalping can be really profitable, but only if you do it right. It’s a tough skill to master. You’ll need nerves of steel (no, don’t inject adamantium into your veins), great risk management and a super accurate entry & exit strategy. Note: I include “exit” because too many people focus on the entry while forgetting about the exit.
I can give you the blueprint to trading success but if you do not have proper risk management, or you are unable to control your emotions, you will ultimately still lose money.
Okay, why Forex Scalping?
Why not day trading or swing trading?
Simple. Forex scalping is essentially the art of getting in and out of a position fast. Now, don’t confuse this with High-Frequency Trading (HFT) where you get in and out and in and out fast. Think of forex scalping as like a sniper. You’re waiting there for the perfect opportunity to take the perfect shot. One shot, one kill. That should be your moto.
I prefer Forex scalping because it reduces your exposure to crazy news events and black swan events (which are once in a blue moon events that can really wipe a trader out). So when you scalp in forex, you get in and out fast – this reduces the time you are in the market (eg. your trade is only opened for 30 minutes) and your exposure to crazy uncontrollable news events is limited to that 30 minutes (or less, since we can simply check the economic calendar and avoid placing a trade when a high impact news event is coming around the corner).
Now, this is so important because news events are what I call “known unknowns“. You know they are coming, but their outcomes are largely unknown and are almost impossible to predict with a high degree of accuracy. Especially more when market forces are pricing it in already. The more such “known unknowns” you can avoid, the better your strategy edge can work itself out over the law of large numbers.
Next, along the same lines – we are able to control more variables. What do I mean? Well the longer you hold your position, the more you allow economic forecasts, news and even Donald Trump’s tweets to affect it. How does one factor all those in accurately when placing a long term trading strategy? Especially one that relies more on technical analysis.
So the main reasons I love Forex Scalping is:
- Largely a technical analysis style of trading.
- Allows you to get in and out fast.
- Reduces your exposure to news events (known unknowns).
- Allows you more control of the variables that would move your trade.
What are some of the cons of Forex Scalping?
Surely it can't be all that good, right?
Well, I’m glad you asked! (Although you probably didn’t).
Forex scalping requires nerves of steel. Because when you get in, your stop loss and take profit can literally be 5 to 10 pips away. You’ll need to stand your ground and trust in your strategy.
Forex scalping requires supreme accuracy. A sniper doesn’t get to take 10 shots to hit his target. You’ll need to wait for the moment, have your weapon properly calibrated and take the shot without hesitation when the opportunity presents itself.
Forex scalping requires you to have a trustable broker. We’re talking about a broker who doesn’t nudge the market 1 pip against you just to stop you out (trust me, brokers can do that). This is because unlike day trades and swing trades where a 1 pip is equivalent to like 1% of your entire stop loss, 1 pip is equivalent to 10-20% of your entire stop loss in scalping. (I personally recommend Vantage FX. I use them myself and can vouch for them. Anyone who joins under my IB link will get “special” protection too ;))
Okay, what do I need to scalp profitably?
Ah, asking the right questions!
These are a list of techniques I combine to scalp the forex market accurately. I’ll cover them in detail as we go through this article.
- Fibonacci retracements
- Fibonacci extensions
- Support and Resistance (done properly)
- Correlation (super important too)
- True RSI
- True Stochastic
- Price Action
- And of course, proper trade management (most important)
I have written detailed guides for some of these which you can click on to view. But this article will focus on how I combine them to scalp the market, picking entries and exits.
Forex scalping strategy Part 1: Using Fibonacci Retracements
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