It is almost a right of passage to becoming a forex trader, that you go through a phase where all you want to do is scalp the market. You open up your MetaTrader 4 broker platform, flick straight down to the 1 minute charts and start scalping.
You aim for just 2 or 3 pips each trade, taking your profit at the first opportunity that is presented to you. Your account experiences drawdown, but you are always taking small profits, so the forex market never goes against you to the point that you lock in a loss.
“The main objective of a forex scalper, is to grab a small number of pips as many times as they can through their MT4 platform.”
But can scalping forex on MT4 actually make you money long term? Is scalping the market a profitable trading strategy, or is it just a myth that is used to suck new traders into churning their account quicker? We take a look at some of the key factors you must account for if scalping is the trading style that you wish to employ.
Trade only the most liquid forex currency pairs
If you want to be a successful forex scalper, then you should only be trading the most liquid currency pairs. On your MetaTrader 4 platform, only keep charts of the majors open at in your watch list. By doing this, you won’t be tempted to take a setup on one of the more illiquid currency pairs and take an unnecessary risk.
The reason that scalpers should only trade the most liquid currency pairs, is because they feature the tightest spreads and under normal market conditions, are less likely to experience gaps that could see your scalp position slipped.
Remember to always account for the spread when you are taking a scalp trade. If you’re always entering and exiting the market over and over again, the spread is going to become one of the most important aspects of keeping your trading costs down.
Choosing an ECN forex broker such as Vantage FX with spreads from 0.0 can go a long way to keeping you in profit.
Only trade during the busiest trading sessions
The next factor that you must account for if you are to become a profitable forex scalper, is which trading session you are focusing on. As you know, there are four trading sessions: The Sydney session, the Tokyo session, the London session and finally, the New York session.
Just like we spoke about above with choosing the most liquid forex currency pairs to trade, you also want to choose the most liquid trading sessions to trade too. Combining these two together will go a long way to minimising scalping risks associated with slippage and lack of liquidity.
The London session has by far the highest trading volume and the peak volumes go through during the London/New York crossover. While your MetaTrader 4 platform allows you to download and install various custom session times indicators, you can easily work out the London/NY crossover by looking at the server time at the bottom of your active chart.
Vantage FX runs on GMT+1, so the busiest trading time would be from 2pm to 6pm on your MT4 charts.
Keep your trades small, but not too small
Because of the spreads that your forex broker displays through your MetaTrader 4 platform, a scalper isn’t able to target single pip moves. If the spread is bigger than your entire profit target, then it just won’t be viable for you to scalp with these sorts of targets.
You also should be giving yourself some general room to move. We all make mistakes and even professional traders sometimes make a bad decision when it comes to keeping a losing trade open to cutting the loss right then and there. You’re only a human and as a result you’re going to make mistakes, so why leave your trading account vulnerable?
Think about risk:reward ratios when you’re scalping on MT4. Depending on your win rate, you should be looking to have a risk:reward ratio no lower than 1:1. Think about these numbers when you’re setting your profit targets and stop loss levels.
To scalp profitably, it’s imperative to choose an ECN forex broker with absolutely the tightest spreads such as Vantage FX. Check out their MT4 platform with a demo account by following the associated links.
Still set a stop loss
It doesn’t matter whether you’re scalping, day trading, swing trading or position trading. You should always set a stop loss on every position that you take no matter what. Having that extra piece of insurance for if the market suddenly turns while your eyes or mind are elsewhere will save your account at least once in your trading career, so set them.
When you’re scalping forex on MT4, things can so easily go wrong. Because your targets are so tight, you often don’t have the risk:reward to play with and as a scalper you therefore can’t afford to be taking a consistent number of large losses.
The MetaTrader 4 platform makes it so easy to set stop loss and take profit orders either when you first enter the market, or immediately after you’ve opened the trade.
Make those extra 3 mouse clicks and don’t ever let yourself get lazy. As a scalper, you simply can’t afford to let a week’s worth of profits that you’ve gained via 100 profitable small trades, be wiped out by a single loser because you didn’t set a stop loss.
Scalp forex on the Vantage FX MetaTrader 4 (MT4) platform with our RAW ECN account
As you can see, as long as you account for some key factors, it is definitely possible to make money scalping the forex market on MetaTrader 4 and having a Vantage FX RAW ECN account is the final key component to scalping successfully.
At Vantage FX, we have linked the highest grade, top tier forex liquidity providers directly to you via MT4. If you’re trading on a RAW ECN account, then our aggregated price feed is so competitive, that you will even see spreads go down as low as 0.0. With some of the lowest ECN account based commissions in the industry, if you have ambitions of becoming a scalper, then a Vantage FX RAW ECN account is perfect for you.
Profitable scalpers make smart decisions. Equip yourself with seamless access to the interbank forex market using the Vantage FX RAW ECN account and MT4 platform.
Source: Vantage FX Blog