Scalping is the act of buying or selling multiple currency pairs simultaneously.
It’s a highly leveraged approach, so scalpers must be aware of risk.
Scalping, however, can lead to significant profit potential, especially during volatile markets.
For scalpers, price movements tend to be quite rapid.
They want to get a good entry point on the markets and profit from small price moves. But, scalpers have to be quick.
If you are looking to use scalping techniques, you need to know what time frame to use.
Scalping is one of the most exciting ways to trade forex, but there are a few different ways to do this successfully.
In this article, we’ll outline the best time frame for scalping.
Best Time Frame for Scalping
Scalping is an approach to the markets that involves making micro-trades, in which traders take advantage of short-term opportunities for profit.
Scalpers are often more aggressive than position traders, so they trade with smaller sizes.
They tend to be active during times when the market is moving rapidly, such as when there’s a lot of volatility in the market.
When a scalper buys or sells a position, they’re looking to take a small gain or loss on each trade. It’s a good idea to avoid scalping when the market is more stable because the potential for large gains or losses is reduced.
For scalping, you need a time frame that can be divided into smaller sections – for example, a five-minute time frame.
You then take a position based on a technical analysis of the price of the currency, looking at things like the moving average, and whether it’s trading above or below the moving average.
If it’s trading above the moving average, you sell the currency and if it’s below the moving average you buy it.
The following are the different types of charts you could use to trade currencies.
- 1 hour
- 4 hour
- 1 minute
- 5 minute
- 15 minute
- 30 minute
Now depending on your tolerance to risk and skill level, you could choose one of the above time frames.
It all depends on what you are comfortable with and how much time you have available to trade.
As an example, you could use a 1-minute chart, with a 5-minute time frame.
Moreover, if you’re a novice trader, you may want to use the 15-minute time frame, which will give you a better idea of how to trade.
In reality, there is no “best” time frame to use, but for traders looking for a base start the most common time frames for scalping are:
- 15 minute
- 5 minute
- 1 minute
The way that it is done is by using a multi-timeframe analysis, which consists of the following:
Review overall trends and strengths using the 15-minute chart.
Look for near term trading opportunities forming in the 5-minute chart.
Execute your trades with precision in the 1-minute chart.
How Long Should Scalping Last?
Although scalping is a relatively straightforward method of short-term trading, it can sometimes be confusing for newer traders.
After all, the idea behind scalping is to take advantage of small price moves and trade them for only a few pips.
First of all, it’s important to note that scalping isn’t really about profit maximisation.
Instead, it’s all about taking profit little and often.
On the other hand, it’s also about taking small losses too.
Scalping doesn’t leave much room for error, and if you are not careful – 1 simple loss could wipe out 3-4 trades’ worth of profit.
Realistically, scalpers tend to be in and out of the market within minutes.
There is not set period for you to follow in order to be classed as a scalper, you are essentially trading within a confined price parameter – you either make a quick profit, or a quick loss. Time isn’t much of a factor here.
Best Times to Avoid Scalping in Forex
It’s in your interest to understand times when you should avoid scalping altogether.
Because when the market is illiquid (slow-moving) then your scalps can take longer to execute, be more expensive due to spread widening, and of course – open to more risk from market impacting events.
The best forex trading sessions are the new york trading session and london trading session.
Even though forex is a global market open 24 hours a day during the workweek, liquidity is highest between these two sessions.
This is also where most of the majors are traded, which makes them the most liquid pairs to trade.
However, if you are based in Asia and want to trade in the Tokyo trading session or Sydney trading session, then you will find that the markets are slower in the morning but pick up towards the end of the trading session (when Europe wakes up to enter the markets).
Based on GMT, the best times to avoid scalping is before 7am GMT and after 6pm GMT.
This is of course personal preference.
In addition to the time of day, one of the best times to avoid scalping in forex is before a major news data release.
For example, entering a trade pre-non-farm payroll announcement could either make you or lose you 100 or so pips in seconds.
So you want to take time away from scalping for at least 15-20 minutes pre and post high impact news announcements.
Best Time Frame for Scalping in Crypto
Crypto is the new kid on the block and adds a lot of excitement to new traders with it’s volatility and 24/7 trading opportunities.
when trading cryptocurrencies, traders usually look at a specific time frame or time window of the market, depending on their preferences.
It’s important to understand that cryptocurrency markets tend to exhibit a wide variety of dynamics, making it challenging to predict future movements. This makes scalping a cryptocurrency risky and volatile, especially if you’re using the same trade settings for every position.
For that reason, traders who want to scalp should do their homework before going live. While some traders use strategies to create a win-loss ratio of 1:1 or 2:1, others prefer to maintain a much tighter margin. You need to weigh up your trading goals and preferences to decide which approach works best for you.
If you’re planning to enter or exit a trade within a few seconds, then you should be looking at the very short-term time frame, such as 10 or 15 minutes. If you’re looking to make more conservative long-term bets, you’ll need to consider a time frame of 30 minutes to one hour.
You should focus on doing something similar to what you would with trading forex.
Scalping has become popular because of its low-risk profile and high rewards. However, it is also important to understand when to exit these small positions in order to minimise losses.
Generally speaking, the time frame for scalping is short term and is mainly used for intraday trading.
You can trade in different time frames depending on your preferences, but scalping strategies are typically short term and high frequency.
So if you’re looking to start your forex trading career, it’s best to choose an intraday trading time frame such as 5 minutes, 1 minute, or 15 minutes.
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