Scalping the Forex Market

Forex market is unique in many senses. Unlike most other financial markets where scalping is done solely based on technical analysis, scalping on news in currency market requires both fundamental and technical knowledge. Every nation’s economy is interlinked with other nations’ economies and thus any news that affect a nation’s economy (and currency pairs having that nation’s currency) can impact other nations’ economies (and corresponding currency pairs).

In forex trading, it is a good strategy to trigger your trades fundamentally and to enter and exit trades technically. Knowing market expectations is one of the most basic requirements of scalping the forex market. A forex scalper must anticipate what can happen if the news fails to meet market expectations or what can happen if it meet expectations or when it exceed market expectations. Then he must rely on his technical analysis tools to analyze the most profitable entry and exit points (or if there is any).

A forex scalper must be vigilant about market extremes like oversold and overbought conditions, highest highs and lowest lows, etc; because these are the positions which can produce big profits or big losses. Remember, good news for a currency may produce reduced effect when it is in overbought condition or enhanced effect when it is in oversold condition. Both effects can be magnified (or nullified) when the big players, like banks, enter the market.

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