Learning how to scalp – skimming profits off the top on a regular basis, even if they are relatively small – is a big piece of the puzzle to succeeding in forex. Sure, this kind of trading is a little more active than most people might be used to.
You are, after all, going to have to get in and out of multiple positions multiple times a day if you want to scalp effectively. At the same time, though, there aren’t a lot of active trading strategies that are as effective and as reliable as scalping. You can manage and mitigate risk with this approach. You don’t need a mountain of money to succeed with scalping, either.
Of course, finding the best currency pairs for scalping forex is hugely important if you are going to do this reliably and consistently. You need to know which pairs to focus your attention on, especially if you are going to be dipping into and out of multiple positions all the time. With that being said, which are the best forex pairs for scalping?
The best forex pairs for scalping are EURUSD, GBPUSD and USDJPY. These pairs have high volume, high levels of liquidity but extremely low spreads, making it possible for scalpers to make profit on small pip moves. Trading these pairs within the first few hours of their trading session is crucial.
Which Forex Pairs Are Best For Scalping?
The best currency pairs for scalping forex are inevitably going to be major pairs with lower levels of volume and lower spreads – pairs like EURUSD and GBPUSD, for example.
You definitely want pairs that have a lot of liquidity
. On top of that, you want to be able to capitalize on specific sessions for those currency pairs that have the most amount of liquidity in them.
Sure, Forex markets are traded on a 24/7 basis – but the volume of trades coming in on a currency pair are going to fluctuate depending on the time of day. Your highly liquid markets (your major pairs) are going to see the most activity in the highest level of volume during the daytime hours.
Try to mesh these daytime hours together to get the most liquidity possible.
If you are trading in the US, for example, you know that the London markets are going to get much more active around 3 AM EST. You know that the New York markets are going to get more active at 8 AM EST – and that’s when these two markets are going to be trading at high volume levels.
Guaranteed executions also need to be locked in if you are scalping.
You have to know that your trades are going to execute at the exact levels that you establish. This requires you to know the ins and outs of your broker and trading platform.
If you are on a platform that doesn’t offer execution guarantees (or limited execution guarantees) you might want to keep shopping around until you find a broker that can deliver those things for you.
Anticipating slippage is critical, too.
Scalpers can’t afford slippage on top of spread. Make sure that those levels are executing when you want them to or you could end up losing a pile of money on an otherwise fantastic trade.
Large Spread Forex Pairs Don’t Work Well for Scalping
Large spread Forex pairs really throw a monkey wrench into the mix when you are looking to do a bit of scalping.
These larger spreads are usually indicative of higher levels of volatility. While that might sound like good news when you are actively trading like you must when scalping, all that volatility can cause you to miss out on opportunities.
You might recognize movement, go to execute your trade, and realize that slippage has already occurred and the window has closed on these larger spreads.
That’s just not a position that you want to find yourself in. This can be avoided by focusing on the major pairs and avoiding exotic currency pair crosses.
Forex investors need to be sure that they are concentrating only on the best currency pairs for scalping forex, and that means focusing primarily on the major currency pairs with lots of volume and liquidity.
The Importance of Volume and Liquidity in Choosing a Forex Pair to Scalp
While scalping can be a wonderfully profitable strategy in the Forex world today, it’s not without risk.
As we highlighted a moment ago, when you are trading larger spreads that have a lot more volatility you aren’t always going to have time necessary to make the smartest move in the most strategic investment.
You are, after all, looking to pull out tiny pockets of profit on a consistent basis.
A single bad move might not just wipe out a day’s worth of profits. It could wipe out all week (or more).
That’s a nightmare position to find yourself in.
The reason that savvy scalpers go for major currency pairs with a tremendous amount of volume and a lot more liquidity is that there’s a lot less volatility in these pairs. That makes them a whole lot more predictable.
You have a lot more time to be deliberate in your trades. You have the room in the space to chart and track the pairs that you are eyeballing.
These kinds of trades can be scaled, rinsed, and repeated a bunch of times on the same currency pair – on the same day – to get you those pockets of profits you’re after.
On top of all of that, when you are scalping high volume and high liquidity currency pairs you don’t need a whole lot of specialized knowledge or tons and tons of analysis experience.
The learning curve on scalping major pairs isn’t all that severe.
If you can read a chart and understand what you’re seeing, recognize emerging trends and pick proper exits you are going to have a lot of fun (and make a decent chunk of money) with scalping.
The bottom line is this – if you’re going to get into these kinds of trades you need to hunt down the best currency pairs for scalping forex.
In Conclusion – What Is The Best Forex Pair For Scalpers?
In summary, the best forex pairs for scalping the markets are EURUSD, GBPUSD and USDJPY. These pairs have high liquidity and volume, making them easier to trade and less volatile. They also offer a great opportunity to scalp profits in a short amount of time and limit long term exposure to economic events in the markets.
Which pairs do you like scalping? Let me know below.
