Forex scalping is a trading style that can be categorized as extreme. It involves entering and getting out of the market at quick intervals. It reduces your exposure in the market and you take in small gains. Forex scalping can be extremely profitable if you react well in time and respond quickly. It also requires good trading indicators to generate signals for you.
There are many good forex scalping indicators:
• Parabolic SAR (Stop and Reverse) – This is one of the most powerful forex scalping tools. This indicator generates selling and buying signals on any pair of currencies and its time frames. It is always advisable to confirm the signals of the Parabolic SAR with resistance and support levels so that you can enter into long trades when you get the signals from the SAR and when the price is on a support level. You can enter into short trades when the price is on a resistance level. This tends to make the signals quite accurate and increases the success ratio considerably.
• Stochastic Oscillator – This is another powerful forex scalping indicator. It can generate signals even in scalping time frames of one minute and five minutes and it can be a useful addition to your forex scalping armory. It is again advisable to confirm the signals of the Stochastic Oscillator with resistance and support levels to ensure that the currency prices have a strong motive to reverse. In forex scalping, it is always important to confirm your forex trades with a minimum of two tools as price can sometimes become unstable within short time frames.
• MACD Indicator - You can use the MACD (Moving Average Convergence Divergence) Indicator to check the general trend of the currency market and confirm the trades. You can enter into long trades when the MACD line crosses the trigger line upwards and enter into short trades when the MACD line crosses downwards from the trigger line or the water line. This is another important tool that can increase your forex scalping accuracy. As forex scalping is usually more risky than swing trading and day trading, you can take the help of the signals that are generated by such indicators to make you profitable in the long run.
• Accelerator Oscillator – This is another indicator that can be used for short term signals and it is very sensitive to changes in the currency trends. When the Accelerator Oscillator is above level zero and has turned from red to green, it is a signal to go into long trades and when it is below the level of zero and has turned from green to red, it is a signal to go into short trades.
• FAP Turbo – People are mostly apprehensive about forex robots. But, Forex Auto Pilot Turbo is software that is automated and works well in the case of live trading as a forex scalping indicator. You have to install the system on your computer and watch while it works for you. You don’t need to place trades as the FAP Turbo will do it for you. The forex scalping techniques have been built into its algorithms.