Implementing a scalping plan can be a great way to establish consistent profitability. Even though the profit targets for scalp trades are not impressive, risks are small and the chance of success is high. In fact, many professional traders prefer scalping over position and swing trading.
However, there are a few things that you must have before scalping is a viable course of action:
- Technology: It is imperative that you secure high-performance internet connectivity and adequate computing power. Without these elements, entering and exiting the market efficiently is not possible.
- Competent Broker: Being able to get your orders filled consistently, with the lowest fees possible, are huge aspects of profitable scalping.
If you have solid technology and a competent broker, then making money scalping the forex, commodities, or equities markets is possible.
Wednesday’s USD/CHF Successful Scalp
In a Wednesday update, I outlined a breakout scalp for the Swissy. The trade went earlier today and was a resounding success. Take a look at the 1-minute chart for a play-by-play on how this short breakout developed.
This breakout trade beneath a double bottom formation is the definition of a winning forex scalp. Order flow to the short picked up immediately after entry driving this market south. As the stop orders resting at market below support were triggered, black-box traders drove bearish momentum to our profit target.
Forex scalps can take a bit longer than those in the futures markets. Often, key levels experience heavy two-way action due to the immense levels of participation. This can slow momentum to a crawl. Markets of Crude Oil and Gold are better candidates for short-term breakout trades. Price action is typically directional and rapid in breakout scenarios.
Kudos to all who grabbed a few pips on this trade. While the payoff was not tremendous, it was fast and stress-free.