- September 2014
- Posted By Ninoslav
- 0 Comments
Forex scalping relies on the short term, as most trades conducted through this strategy rely on fast-paced market movements with equally fast-paced actions. As a result, traders using forex scalping strategies often trade within mere minutes—something that’s considered too risky for the average trader to try.
Though, those particular forex traders have likely already tried other trading methods, instead setting for the one that appeals to them the most. In this case, it’s forex scalping, as it provides faster results in the short term, despite the high risks.
Since forex scalping is so fast-paced, it naturally relies on exploiting new and profitable trends that can amass traders the most profits across a short amount of time. To take advantage of that, many forex scalpers often use market data to identify market trends that may likely provide them the advantages they need to eventually make profits.
When forex scalpers find new trends that provide advantages, some use a strategy that identifies short term market movements. This is known as the breakout strategy.
The best way to use forex scalping – the breakout strategy
The breakout strategy, when used in forex scalping, merely identifies ‘short term breakouts’ that happen when prices in the market fluctuate to profitable levels.
This strategy usually addresses currency pairs that move upward or downward in the market during short periods of time. Tracking these movements essentially helps them find out how to take advantage of the pair’s upward or downward momentum. So, if they were to find that a currency pair had gone downward on the market, they’d take the opportunity to invest in more.
Some traders might even use the opportunity to sell breakouts if they can identify downtrends in certain currency pairs. This usually happens when the price moves to the ‘lowest lows.’ They can also find support levels here, by finding the ‘price floor’ of a certain currency pair in correlation with their market position.
Most of the time, this is found through connecting together a series of the lowest lows from a currency pair. From here, traders can wait until the price rises again to determine whether or not they want to make additional investments.
Those investments, or entry orders, can be made after identifying those same breakout prices from the support. Most traders place these orders under the support’s threshold, allowing them to maintain some orders under support despite executing other orders on apparent price breaks.
The breakout strategy isn’t for every forex scalper out there. For those that live by this strategy, it’s an effective enough one to gain an ‘upper hand’ in the current forex market