The first thing you must be clear is that there is no single strategy in the currency market. In a previous post we also talked about the best forex trading strategies. In this market, no strategy (purchase, sale or resale) is unique. Even when your strategy is good it will always fail under certain circumstances of the market. In this article we want to explain what is the Forex scalping strategy.
A good strategy that works in a low volatility market will normally fail in high volatility markets. And this is why you should use indicator tools, your market knowledge, and intuition at all times, always keep in mind that the forex market depends on many circumstances and, for the most part, on good information.
Forex scalping strategy
Although there is no single strategy for this, you must be aware of possibilities, for example, if in a country there is exchange control (with the sale of currency) it is an information to analyse how much can be gained by speculating between the controlled market and the real market, this is a simple way to see how to speculate with currencies, the real market is not so simple. Here you will find a good definition of what is Forex scalping strategy.
In the real market, you have to manage a lot of information that will help you (based on the trend) that your knowledge of the market and intuition will lead you to successful situations, although there will always be the possibility of failure.
In cases of failure is when you have the opportunity to grow your knowledge and intuition if you analyse the causes. This is highly recommended for any serious investor who knows that sometimes he will lose and must learn from it.
Purchasing power parity strategy
This is another possibility to invest even though it is not exactly within the forex market, as it is based on the price level of assets between 2 countries.
For example, if a mobile phone in the USA is worthless (at the exchange rate) than in Europe, it is worth buying in the USA and selling it in Europe since the difference in prices continues to give a profit, of course, it is necessary to determine whether the sum of transport and import costs make the investment viable.
Forex and forex scalping strategies
It may seem that there are different strategies for both, but although the way to analyze each one is different, there are things that do not differ:
- Knowledge of the market
The difference between the two is based mostly on your intuition, information management (some taken from the specialized press) and your decision to invest.
Based on this is that you can have a success rate equal to or greater than 50% and even when the percentage may seem low remember that when you flip a coin you have 50% of hit and you still do.
And even when the currency market is not so simple, it is on what you should base your investments.
Information as a forex strategy
Among the bases for a good forex strategy you can highlight the fundamental analysis of Trading that has as points:
- Evaluate the causes of supply and demand, the economic situation and the evolution (trend) for each currency pair.
- Interest rates, inflation, politics and society, and economic growth.
All this information is very useful in your growth of market knowledge and your intuition and you can do exercises (based on that information) without investing, what happens if you had invested
Even if there are tools for a good forex speculation strategy and companies that are dedicated to this, the most advisable for your success, whether it is buying, selling or reselling currencies, are these points:
- Broad knowledge of the currency market and its concepts.
- Trend tracking tools.
- Daily information on what affects the market (that influences supply and demand).
- Ability to analyse and intuition.
If you are a natural born investor and have a good business sense (better if you know about trading and how it works) and follow these recommendations your success rate when investing will be higher every day.
Keep in mind that is very difficult to invest correctly if you do not have the best knowledge of the market. If you want to invest save with the best brokers, keep a look to our programs of investment with Forex managed accounts.