Scalping with low spreads can be advantageous for many reasons. It can bring you lots of cash, which in return makes you feel on top of the world as a forex trader. But if you want to be successful, you must understand your Forex spread and how to take advantage of it.
If you want to start scalping with low spreads, this article will provide you with two great low-spread scalping strategies. We’ll also go over the benefits of scalping.
Gold CFD Trading Strategy
One amazing low-spread scalping strategy is the Gold CFD trading method. In order to implement this, you will have to download MetaTrader 4 or the MT4 Supreme Edition. These platforms will provide you with the pivot indicator that makes this strategy complete.
The indicators are:
- Stochastic Oscillator (8,3,3)
- Exponential Moving Average (10), close
- Exponential Moving Average (5), close
- Relative Strength Index (14) with level 50
The commodity you are going to trade: GOLD
Long entry:
- The price should either be found above the Pivot Point (PP) or close to the Admiral Pivot support (S1, S2, S3)
- Wait until you see the crossing of the 5 EMA above 10 EMA
- The Stochastic Oscillator should have crossed 20 from below recently
- Now, the RSI should exceed 50
Short entry:
- You should see the price being either below Pivot Point (PP) or at/close to Pivot resistance (R1, R2, R3)
- Wait until you see the crossing of the 5 EMA below 10 EMA
- The Stochastic Oscillator should have crossed 80 from above recently
- The RSI should now be below 50
Stop Loss:
- Put the long trade stop-loss below the previous support
- Place the sell trade stop-loss above the previous trade
Take profit:
- Put the profit target very close to the following pivot.
Extreme Scalping
Extreme Scalping is another very popular low-spread scalping strategy. Here is what it involves:
Indicators used:
- MACD Histogram (6,17,8)
- Exponential Moving Average (3), close
- Bollinger Bands (20, 3)
- Relative Strength Index (14) with level 50
There is a 1-minute timeframe. The pairs used in this strategy are GBP/USD, EUR/USD, USD/CAD, and USD/JPY.
Long entry:
- Wait until the 3 EMA crosses up through the middle line of the 18 Bollinger Bands
- Wait until you see the MACD Histogram and Relative Strength Index lining up above 0 on the MACD, and over 50 on RSI
Short entry:
- Wait for the down crossing of the 3 EMA through the middle line of the 18 Bollinger Bands
- Wait until you see the MACD Histogram and Relative Strength Index lining up under 50 on RSI and under 0 on MACD
Stop loss:
- Place the long trade stop-loss several pips under the lower band
- Put the sell stop-loss several pips over the upper hand
Take profit:
- On the opposite band, place the profit target
- There is a 5-15 pips average target
Why Is Scalping So Beneficial?
Scalping has a few advantages, such as:
- There is no pressure to do a market analysis
- You do not have to wait around until a strong trend forms
- There are various trading opportunities
- You have the chance to make a better profit level
Final Thoughts
If you found a forex broker with low trading spreads, you may want some trading strategies that work for you. You can always try the strategies presented in this article for the best results when trading forex.
