- Colombian Trading Sessions: Timing Your Forex Strategies
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Colombian Trading Sessions: Timing Your Forex Strategies – A Forex scalping strategy is based on opening and closing multiple positions on one or more Forex pairs throughout the day, usually in seconds or minutes during a trend. But before we start, if you are new to Forex trading, it is best to start with the basics, “What is Forex trading and how does it work”.
Traders should always consider market liquidity and volatility before adopting a forex scalping strategy. Using leverage is an important part of using a scalping strategy as well – it helps increase profits (don’t forget the opposite side of leverage).
Colombian Trading Sessions: Timing Your Forex Strategies
The best scalping strategies rely on the use of technical indicators including Bollinger Bands, Moving Averages, Stochastic Oscillator, Parabolic SAR and RSI.
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Forex Scalping is a short-term strategy, the goal is to profit from small price movements. The best forex scalping strategies involve leveraged trading. Take advantage of traders’ ability to borrow capital from the broker to gain more exposure to the Forex market, using only a small percentage of the full value of the assets as a deposit. This strategy increases profits but can also increase losses if the market does not move in the needed direction. Forex scalpers are therefore required to constantly monitor the market for any changes.
1. Create an account with IFC MARkets, if you already have one, log in to your CFD trading account
As we mentioned, the best scalping strategies rely on the use of technical indicators including Bollinger Bands, Moving Averages, Stochastic Oscillator, Parabolic SAR and RSI.
Bollinger Bands are used to indicate areas of market volatility. Bollinger Bands rely on a simple moving average (SMA) with a standard deviation set above and below to show how volatile the market can be. Traders believe that wider standard deviations indicate increased volatility and conversely, if the bands are narrow, it may indicate that the market is stable.
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Moving Average (MA) – A moving average is a mathematical formula that helps detect emerging and common trends in markets, represented as a single line showing the average. The reason for calculating a stock’s moving average is to help smooth price data by creating a constantly updated average price.
Stochastic Oscillator – is a momentum indicator that compares a specific closing price of a security with its price range over a certain period of time. The indicator is popular for generating overbought and oversold signals.
A Stochastic Oscillator chart usually consists of two lines: one represents the oscillator’s actual value for each session, and the other represents its three-day simple moving average. Since price is assumed to follow momentum, a crossing of these two lines is considered a signal that a reversal may be underway, as it indicates a large day-to-day momentum shift.
A divergence between the Stochastic Oscillator and trending price action is also considered an important reversal signal. For example, when a bearish trend makes a new lower low, but the oscillator makes a higher low, it may be an indicator that the bearish momentum is ending and an upside reversal is in the offing.
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Parabolic Stop and Reversal (SAR) – Used to determine the price direction of an asset and also to alert when the price direction is changing, also known as a “stop and reversal system”. It will appear on the chart as dots above or below the market price.
A point below the price is considered a bullish signal and vice versa – a point above the price is used to illustrate that the bearish momentum is under control and that a downtrend is likely to remain. When the dots are swapped, it means that a change in price direction is possible. For example, if the dots are above the price, when it turns below the price, this could signal further price growth.
As the stock price rises, the dots will also rise, slowly at first, and then pick up speed and accelerate along with the trend. The SAR starts to move a bit faster as the trend develops and the points soon catch up with the price.
Relative Strength Index (RSI) – is a momentum indicator, uses a range between zero and 100 to assess whether the current market direction may reverse. It uses support and resistance levels – set at 30 and 70 – to identify when the market trend may change.
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When the RSI rises above 70, it probably indicates that the market is overbought and the trader can open a short position. If the RSI falls below 30, it probably indicates that the market is oversold and the trader should open a long position.
Sinse scalpers profits are low, they have to open more trades and work to have something like profit. Due to the specifics of this kind of trading strategy, traders have to open dozens of trades during the day and close them in seconds or minutes.
The 1 minute scalping strategy is based on trend following and mean reversion, which helps minimize false signals. Although this does not preclude the need for a proper risk management strategy that goes with it.
A volatile market is an integral part of a scalping strategy; traders are able to make money due to price fluctuations. Some traders recommend using the New York-London overlay; it is the period when the market is most volatile – during those few hours, prices are low and liquidity is high.
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Both moving averages are used to identify the current trend on a 1-minute time frame. The 50 EMA is used to calculate the average price for the last 50 minutes and the 100 EMA for the last 100 minutes. The 50 EMA reacts to price movements faster than the 100 EMA, so it is faster, both give a good overview of the trend.
Here below you will see our take on the pros and cons of the scalping strategy and can be made up of your own pros and cons:
As we all know, the Forex market is large and volatile; but we have technical analysis that provides a viable strategic opportunity to trade this market. Scalping is also considered a viable strategy for Forex traders. However, Forex scalpers usually need a larger deposit to be able to handle the amount of leverage they have to use to make short and small trades in order to operate.
Scalping requires focus and speed and is vital if trades are to be successful. So if traders like action and prefer to focus on one or two minute charts, then scalping is just what the doctor ordered. To summarize; If a trader has a high tolerance for losses and has the nature to react quickly, then scalping is a suitable option for him. Forex is a decentralized global market where all the world’s currencies are traded against each other and traders make a profit or a loss. currency value changes. The forex market is also known as the foreign exchange market, FX or currency trading market.
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Many novice traders have problems understanding what Forex is and how it works, and they are followed by a quite rational question – is Forex trading worth it?
Of course, beginners are often prone to mistakes such as unrealistic goals, greed, undue haste and lack of knowledge – these are the main reasons why many of those who try to start a career in trading are disappointed and leave empty-handed. Before you do anything, it is extremely important to understand what is behind the forex market and how it works.
The essence of forex trading can be explained as follows – the value of a currency is measured according to how much another currency can be bought for one unit of it. This is called a quote. A price offer always consists of two prices – bid (offer or demand price) and ask (demand or offer). You buy the currency at the ask price and when you sell it at the ask price.
Later in your learning curve, you can also learn what cryptocurrency is. But if you are interested, we welcome you to start now.
What Is Forex (fx) Trading: How Does It Work?
I want to note that the bid price of any financial instrument is always higher than the ask price.
The bank will always buy your currency a little cheaper and sell it to you at a higher rate. The spread is the difference between the bid and ask price, which is the commission you pay the broker for providing services.
Bid and sell prices are available to market participants at all times, except when the market is closed. The trader receives quotes over the Internet from the broker who provided him with a trading account. The brokerage firm, in turn, receives price offers from its liquidity providers, i.e. banks.
In general, the more liquid the market, the smaller the spread. There are usually no problems with Forex trading and there is more than enough liquidity. However, there are times, such as during the release of important news, when there are gaps (price
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