There are many kinds of trading, and there is one kind that seems to attract all the newbies. It's scalping. And the funny thing about scalping is that it's a good way to get your but kicked by the market. Probably it's the easiest looking kind of trading there is, but the hardest to actually do successfully.
Don't believe me? Go try it. Yeah, it looks simple, but try it for thirty days and come back to me with a profit.
Okay, if it's so hard, what's the secret? Practice? Hard work? Nope. Well, those won't hurt, of course, but I've got something more tangible here.
The secret to successfully scalping the forex market is to fade. Fade the market. If you can fade the market, you'll be doing the same as the hot-shot New York traders or London traders. So, what's fading and how do you do it? You fade the market by trading against what it seems to be doing. If it's going up, you're looking to sell, and if it's coming down, you're looking to buy.
Okay, that sounds crazy. How do you do it? You use a simple indicator. Get on the 5 minute chart, or 2 minute chart is even better. Then put on the MACD indicator. Use the settings of 5, 15, and 1. You are now set up to fade the market. This is what you're looking for. When the market diverges with the MACD, that's your cue. Jump in.
In my experience, you can use a stop of 5 pips and profit target of 10 pips.
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