Forex Trading Strategies: Scalping with Trend Alignment

One of the most common Forex trading strategies is known as scalping. Not only is it a simple trading system, but it carries low risk and can be done in a very short period of time. The problem is that the spreads you have to pay for will often eat up a large part of your profits and the risk/reward ratio is often too low.

Many traders do not like the scalping system. This may be due to the fact that they have not combined it with some more advanced strategies. In combination with other strategies, scalping can be more profitable and less risky in the long run. Before discussing the more advanced strategies known as “alignment” and “martingale” strategies, it will be helpful to take a closer look at scalping itself.

In scalping, it is generally best to trade currency pairs with high volatility and low spreads. These include pairs like EUR/JPY, GBP/USD, EUR/USD, and USD/JPY. It’s also best to focus on lower time frame charts, such as one hour or less. The best trading times for a scalper are usually during the intersection of the European/US session and the US/Asian session. Once you think you have “caught” the short-term trend, you can enter a position. Just make sure there are no big events coming up and that you feel confident about your short-term trend.

This is where some advanced strategies can help you in scalping. The first advanced strategy for scalping will be discussed in this article. It has to do with alignment. A second strategy will be discussed in the following article entitled ‘Scalping with Martingale Insurance’. It involves something better known as the Martingale strategy.

In this article we seek to combine scalping with an alignment of two types of trend. As we all know in forex trading, sometimes the short-term price trend is different from the long-term trend. In this strategy, we make it clear that this is not a good time to scalp. This is because the trends are not aligned, and when the short-term trend suddenly decides to realign with the long-term trend, you will start to get into big trouble.

Avoid trading against the long-term trend and wait for the short-term trend to show signs of agreement. You can use EMA on daily and 1 hour charts to determine these trends or you can use your own strategy to determine trends. Whatever you do, wait until the short-term and long-term trends line up. This provides you with a good form of insurance when starting your reselling. If you don’t see your trends line up, come back tomorrow and try again.

Remember, you’re really just scalping, so don’t get greedy when things go your way. Make a 10-20 pip profit and call it a successful trade! Combine this with another advanced strategy discussed in the next article ‘Scalping with Martingale Insurance’. These are just one of many Forex trading strategies that can really help you make scalping a more profitable means of trading.