Understanding how Forex Scalping Works

While there are many different forex scalping strategies that are available, one of the most popular and easy ways to scalp forex is trading during significant economic news releases. The fact that the currencies tend to fluctuate quite a bit during such economic releases, makes it one of the easiest ways to scalp the forex markets even for complete beginners to forex.

One of the important aspects of scalping forex during economic news releases is that it involves the use of technical market analysis as well as identifying how the particular markets tend to move as a result of the news, be it positive or negative. The volatility in the pricing arises out of the fact that the news which is being released very rarely comes out to meet the market expectations. This is due to the many variables that come into play which is quite hard for the average economist, let alone a forex analyst to take into account.

The discrepancy thus gives rise for traders to take advantage of the situation and thus set up a robust scalping strategy.

Often, during economic news releases, the prices that fluctuate is largely on account of trader sentiment and the initial reaction. If you observe closely, there are three stages during economic news releases. The first being the instant reaction where the prices tend to fluctuate quite a bit. This is usually triggered by too much buying or selling immediately upon the news that is being released. The second stage is when the markets tend to correct itself and close the discrepancy. Most often, traders with an eye for trading opportunities tend to take advantage in the first step as it usually results in a breakout of the trends and thus placing a proper buy or sell order alongside a stop loss can be quite beneficial.

The third stage is usually when investors digest the information and take into account the news from a larger perspective. In most cases, it is during this stage that the right trends come into play. For example, upon releasing a certain economic news, it could trigger a panic selling, which is later corrected by the markets itself and eventually when the dust settles, traders make the right choice, which is either to buy or sell or hold on to the currency.

The ideal way to scalp the forex markets during news releases is to take up your positions 10 or 15 minutes ahead of the news releases with the right stop losses in place so as to minimize your trading losses in the event the market goes against you. Following a 15 minute chart is ideal in such cases as it enables you to properly monitor the trends in the pricing and place your trades accordingly.

There are many automated systems that tend to scalp the forex markets on your behalf. Such tools, indicators or even EA's does the same job of analyzing the markets and identifying potential trading opportunities. Bear in mind that not all forex brokers allow you to scalp the markets. In fact some brokers do not encourage trading during news releases. For a list of brokers that allow forex scalping, click here.

Scalping itself does not yield instant returns but once you find a discipline and a pattern it can become almost second nature to scalp the forex markets for a few minutes in order to gain a few pips in profits.

Want to trade forex online? Important tips to bear in mind

Most of us want to trade forex online. It could be for many reasons. Some like to trade forex simply because love to play with the financial markets. Others see forex as a way of alternative investment. Whatever your reasons may be, here are some important tips to bear in mind even before you start trading or investing in forex.

Currency markets and the movers and shakers

Ask a seasoned forex trader on how they divide their time trading forex and the most obvious answer you get is the amount of time they use in order to analyze the markets and looking out for economic news and developments. These are two of the most important factors that tend to directly influence the economy of country and thus impact the currency’s value as well.

When you have a good understanding of the market movers and the news that you need to follow, it would be as obvious as looking into the various signs that forecast how the currency prices will move.

Because the value of a currency is directly tied to a country’s economy, factors such as political stability, economic strength and to some extent even the geographical factors such as weather tend to influence the prices. It is little wonder why, that so many experienced forex traders tend to spend more time into analyzing and reading the charts. This basically prepares them for upcoming trends or price falls and thus such traders manage to fare better than those who just trade blindly on gut feel.

Tools and tips for analyzing forex markets

There are many ways for traders to get started in analyzing the forex markets. One specific tool that is a ‘must have’ in every forex trader’s arsenal is the forex economic calendar. The economic calendar is nothing but a list of events scheduled for the day or the week or month, depending on how you wish to see it. Traders usually prefer the weekly charts, if they are weekend strategy planners or perhaps the daily chart which gives details on the day’s upcoming economic events.

Most of the events usually carry the currency that will be affected, time of the release and the release website. Other critical information also includes previous performance and the market expected data. Traders, especially forex scalpers find it very beneficial to use the economic calendar as it can help them to prepare their forex scalping strategy.

Risk management is another important factor that we will touch upon. A wise trader usually places their traders in a way that they limit their risks. This can include, using only a small part of their invested capital to using trailing stops and setting up the stop loss and take profit levels. All of these combined basically are targeted towards building a safety net for the trader in the event the markets do a reversal and the prices go against your trades.

It is always good to focus on a single currency pair instead of trading 3 or 4 pairs at a time. This helps you to retain your focus and also pick any signals you might see from the market events. Looking at charts for a currency pair and how it has been performing in the past few days is a good indicator on how things stand and can help the trader to gain context in this aspect.

The above tips are just tip of the iceberg and indeed volumes can be written about the many important tips for forex traders. However, the key is to start slow and steady and always look for long term gains instead of chasing the short term profits, which might seem big enough to give it a chase. In forex, people fail because either they are too greedy or do not follow a trading strategy, let alone having a goal.

This article is aimed towards beginners in forex who want to make the right start.

Weekend Forex Analysis - A strategy worth exploring

While the forex markets operate 24 hours a day, trading is at its minimal during the weekends are most of the major trading markets such as London, US, Asia are closed on the weekends. Some traders tend to make use of this slow periods in order to draft up a trading plan for the week ahead. When markets are closed, it provides a different environment, where in the trader doesn't have to do much expect to focus on the week's upcoming events and how the currencies will react in the week ahead.

In this article, we'll outline some ways on how you can conduct your weekend forex trading analysis and how it can help you out for the week ahead.

Forex Charts - Past Week's Analysis

Looking at forex charts during the past week can prove to be detrimental for traders in order to get an idea on how and where the markets are by the time the markets were closed on the weekends. Furthermore the price movements can offer a great source of information to get an idea on how the prices were moving during the previous week. Reflecting on past week's charts and also analyzing any of the trades made can provide some insights for traders and rectify any mistakes that might have been made. Various trading strategies such as forex hedging and scalping can be planned out in advance.

Forex Economic Calendar - Looking ahead

The Forex economic calender is a great way to plan the trading week ahead. Traders know that currencies tend to get very volatile during important news releases. By preparing a trading plan for the week ahead, based on the economic calendar can be a great way to build a trading strategy. Coorelating the week ahead based on previous weeks price movements can help traders to identify potential trading opportunities and prepare for any eventualities as well.

Focus on the fundamental

Forex fundamental analysis can be a great way to gain insights into the most important market movements and also the price action on the currencies in focus. Fundamental analysis can help give the trader insights into the market and thus enable traders to plan their trades accordingly. As traders know that there are many factors that influence the currency prices, fundamental analysis can help the traders to get a better economic and political idea on the countries in question which can tend to influence the currencies.

Forex weekend analysis is a great way for traders to relax and observe the forex markets without having to spend a great deal of time focusing on their trades. Weekend forex analysis should infact become one of the basic steps for traders in order to plan for the long term and also prepare for the trading week ahead.