Using the Best Currencies for Scalping
Scalpers, are a type of traders who make profit on the shortest term transactions. Scalping, as a technique, is executed in just a few minutes, it consists on a very short term specific intraday trade, based on a set of technical analysis. A good trading knowledge and the ease of technical comfort, like knowing how to read charts properly, support and resistance levels, fibonacci indicators, and others; are great allies to the scalping technique, so dominating these patterns can eventually turn into a huge profit.
Since scalping consists on a very particular movement, certain currencies are definitely more favourable than others. Usually, the currencies with shorter spreads and lower costs have a bigger room for earnings. For this matter, the most liquid currencies are the ones who usually fit best for scalping.
Always bear in mind that trading, as well as techniques, are in constant changes. So, despite Majors usually stay the same; it is advisable to analyse pairs right before trading. This way, we make sure that the trade, and our portfolios, are facing the best possible scenario. To simplify your learning process, let’s separate them in currency groups: The Majors, Carry pairs and Exotic Currencies.
Major, Carry or Exotic?
Majors are the biggest, most powerful currencies in the market, therefore, their liquidity is pretty much granted, as well as their responsiveness. We could put in this category the USDCHF, GBPUSD, USDJPY and of course, the EURUSD pairs. These pairs are used all around the world, and for scalpers, these tend to hold the highest opportunities for their earnings. Knowing that a currency pair is reliable, liquid and on constant movement, give traders the confidence to scalp them day in and day out.
Carry Pairs, on the other hand, are formed by different currency pairs, while some of them remain the same, the filters that placed them here are different. This time, USDJPY, EURUSD, AUDJPY, NZDJPy, EURAUD and AUDUSD fit to scalper traders looking for big interest spreads between a currency and the other, as well as higher volatility.
We encourage traders, specially when scalping, to be very careful with Carry pair trades. The speed in which the Carry pair trades move can be absurd, sometimes faster than you can set up your stop loss. Experienced and beginner traders can take advantage or suffer from this technique, so be very careful while on it.
Last, but not least, we have the Exotic Currencies. These are, for example: USDEK, USDZAR, USDTRI, NOKUSD and BLRUSD. The main quality of these pairs is that one of the currencies (the exotic one) belongs to a less-known, less liquid country. If you have experience managing money and conversion rates, these could be the pairs for you.
Every technique adapts to certain traders. It depends on the personality and knowledge of the person in question. If you think 1 minute Forex scalping strategy is for you, you should definitely give it a try.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING COMMODITY FUTURES, OPTIONS, AND FOREIGN EXCHANGE (“FOREX”) IS SUBSTANTIAL