PRACTICE MAKES WISDOM

Have you ever watched a game of some professional sport such as football, hockey, baseball, soccer or basketball? Surely you would agree that the athletes have spent many hours (actually years) practicing and honing their athletic skills before they ran out onto the field for the big game (the real game). Before you trade with real money you too should practice practice practice with fake money in a “demo trading account”.

By the time you finish reading this eBook you’ll likely feel confident that you can successfully scalp trade. Chances are that you’ll probably be able to, but just because you can do something doesn’t mean you should do something. You really do need to practice to gain proficiency as a scalp trader.

You can read this entire eBook, study all the trading rules and trading set ups presented, however there is simply something that I can’t teach you that you can only learn by your own practicing. Being able to read the charts in real time and being able to decipher & to make the decision whether to trade or exit a trade requires what can seem like intuition. Once you are skilled at scalping you almost appear to be psychic to someone sitting next to you.

The only way to develop this “intuition” is by extensive practicing. Once you’ve watched your real-time charts long enough and have witnessed many micro trends as they happen you’ll begin to get a “feel” for what the market is doing based on the behavior of the real-time price action. Again, this isn’t something I (or anyone) can possibly teach you within a book such as this; you can only cultivate this “intuitive” skill by observing the live market.

This eBook will teach you the knowledge you need to know to be able to able to scalp trade the Forex market, but, as any athlete can tell you, you need to practice to develop proficiency. Many people have “knowledge”, but few people have “wisdom” – wisdom is the result of the marriage of “knowledge” and “experience”. Reading this eBook will provide you with easy knowledge, but to develop the wisdom is completely up to you (clue: practice practice practice).

TOOLS OF THE TRADE (pun intended)

The next few sections will discuss some of the tools you will need to scalp trade.

YOUR COMPUTER

Obviously you’ll need the standard tools such as a trading account and charts (we’ll get to those shortly), but here is a topic I haven’t previously discussed in my other eBooks – your computer.

With most Forex trading techniques you can make do with a lame computer and slow Internet (dial up), however with the fast paced world of Forex scalping you really do need a reliably quick computer.

As a Forex scalper you need your charts to display the most up to date price possible, and you need your brokerage software to execute a trade promptly. Even with the best computer and a screaming fast Internet connection you’ll still have some lag time (not to mention how long it takes for you to physically move your mouse and click to enter a trade). Often as a scalper you’ll experience missing out on a few pips (of lost profit) because of slight inefficiencies (somewhat frustrating at times), but if you have to deal with a painfully slow computer and a molasses Internet connection speed then you’ll soon be tempted to introduce your computer to a sledge hammer. For a scalper lost seconds means lost pips which means lost profits. Even in a single day of trading this can add up to HUNDREDS of dollars, even thousands, of missed profits.

The first thing to do to ensure that your computer is running your trading tools smoothly is to NOT have other programs running on your computer while trading. Having many programs open eats up your computer’s resources, which can mean that your charts aren’t refreshing as fast, and it may take longer to execute a trade. If you must listen to music then please turn on the radio, don’t listen to MP3s on your computer, or God forbid, DON’T be streaming music off of the Internet unless you have a very fast computer with High-Speed Internet (even then it’s still better not to).

Chances are your computer itself is good enough to scalp trade with (unless you are using something that is 10 years old), however you may find that it starts running slower over time. If you ever find that your computer is running like molasses, or much slower than you remember from the past then it may be time to reformat your computer. It is generally a good idea to reformat your computer every 6 months (kind of like going to the dentist) to keep it running smoothly. If you don’t know how to do this then invite a tech-savvy friend over for a few beers to help you out with this.

If you think that your computer sucks then perhaps you should consider buying a new one. You don’t have to spend a fortune buying the best computer available, as generally the cheapest computer you can buy at your favorite high-tech toy store is more than adequate for the purpose of scalping with. You can always justify the expense by the profits it’ll make for you.

Your Internet connection is also important. Folks, I can’t understand why anyone would still use dial-up for Internet access (unless it is all that is available in your area) when High-Speed is not that much more expensive (typically around 2 to 3 times the price of dial-up). Just the thought of surfing the web on dial-up stresses me out let alone trading with it. If it is all you have available then it’ll work for you, but seriously, if you can have high speed Internet available then just pay the extra $20 or $30 per month. After a few days of surfing the web you’ll wonder how you’ve ever done without it, and surely each month you’ll catch at least an extra couple of pips that’ll more than pay for it.

SERIOUS TRADING COMPUTER

I wasn’t going to add this topic (as it isn’t specific to scalping techniques) but decided to include these thoughts here for you as it can give you a solution to the problems that I’ve faced for a while before figuring it out myself. These ideas are useful for you regardless of what style of Forex trading you do, however for a scalper these ideas can be of immense value due to the fact that you want to keep a more constant pulse on the market.

I have an “office” in my home where theoretically I am supposed to do most of my work, however I actually spend about 99% of my time “working” (trading & doing all the other things I do) in my living room (actually on my sofa – you should see the “butt print” there – my chiropractor considers me a “valued client”). I have a nice setup in my home office, including multiple screens, but I’ve found that I don’t hang around in that room most of the time, thus I can’t be watching what is happening in the markets throughout the day.

The solution that I’m about to present isn’t for everyone, as it does cost some money, but if you are a serious trader making nice $$$ by trading, especially with scalping, then you should consider this idea for yourself.

Buy a laptop computer that is exclusively dedicated to trading. Don’t use it for anything other than for trading. If you need to use a computer then use another one, but this laptop computer is your dedicated trading machine.

The reason for having this laptop is that it is portable, so you can be lugging it around your home (or elsewhere). What you want to do is to have it turned on and situated wherever you are so you can frequently glance at the charts to see what the market is doing, scanning regularly for potential scalp trading opportunities. If you are in the living room watching television then have it sitting on your coffee table, or on a pedestal next to the sofa, where you can just look at it from time to time. If you are hanging out elsewhere like the kitchen, family room, bedroom (provided that your spouse allows this distraction), backyard, or elsewhere then you can take it with you and place it somewhere you can glance at it periodically. If you are a doctor, lawyer, business owner, or some other professional (if you are an employee your boss might not approve, but if you are the “big kahuna” then you can do whatever you want) then you can also take this laptop computer to your office to scan the markets throughout the day (heck, you might score more profits than what you do at work all week).

You don’t need to buy an expensive laptop computer; the cheapest one available from a large “high-tech toy store” will be far more than adequate. Get a laptop with a “wide screen” (the screen is the dimensions of a wide screen DVD movie). I’d suggest that you talk to the sales agent about which laptop has a quiet fan (as I find the hum of the fan annoying), and you might want to splurge on having a smaller lighter laptop (but these usually cost more, which is not necessary – my personal preference is for tiny computers). I’m a laptop computer addict (my wife rolls her eyes at me because I buy a new one every several months) so I usually don’t buy the extended warrantees that they try to sell (I think that they’re a big rip off), but because of how you’ll be using this computer you might want to consider getting it (it’ll be on for extended periods and so it is possible that it may breakdown from “wear & tear”).

The reason you want a wide screen is because you can have multiple windows open and arranged so that different areas of your screen shows different charts (for visual scanning purposes), and then when you’ll be trading you can have your trading software on one side with the chart on the other side.

Here are some useful accessories that you might want to consider getting.

You might want to get an optical wireless mouse. A wireless mouse is great because you can manipulate your computer without having to move the computer from the convenient place where it is resting, and if the mouse is optical (not a track ball inside) then you can use it on just about any surface, such as a coffee table, sofa, magazine, or anything (no mouse pad required).

Your laptop computer should come with a WiFi wireless device inside that allows you to connect to the Internet wirelessly (obviously you’ll need a wireless router on your Internet connection). I have found that for most purposes the wireless works great, but occasionally I lose the wireless connection. What I did is I bought a “Powerline Ethernet Bridge” (“HomePlug” from IOGear). I simply plug one of the devices (you get two) into the electrical outlet near my Internet router (and plug in the network cable connecting it to the Internet router), and the other device I plug into the electrical outlet near where I intend to work (next to my sofa in my living room). I then connect that device to my computer with a network cable. This ingenious pair of devices uses your home’s electrical wiring to make a direct physical connection from your computer (anywhere in your house) to the Internet. The advantage of using this is that you have a constant connection to the Internet, whereas using wireless is prone to loosing your connection (which can be bad for your trading).

A few more thoughts for you.

If your laptop is plugged into your power outlet then remove the battery (as the battery will get weaker over time of constant use). Keep your battery fully charged and use it when you need to move the computer (without turning it off) to another location.

Over hours and hours of being turned on your laptop will tend to get quite hot. Don’t place it on surfaces that might get damaged from the heat. When you are not paying attention to the markets then simply turn your computer off (giving it a rest and a chance to cool off).

Turn your “screen saver” off. A screen saver is there to prevent damage to your screen due to images burning into the screen, but you need to have your charts displayed at all times, so you’ll want to disable this feature (another reason to buy the extended warrantee). Right-click on your desktop (assuming you have a Windows computer – I hope you didn’t buy a Mac computer (sorry to any die-hard Mac users for this offense, but unless you’re a graphic designer why the heck would you buy a Mac in a predominantly Microsoft world) then choose “Properties” then click on the “Screen Saver” tab on the top, then set your screen saver to “None”.

To save power and to reduce wear on your computer do the following: In the same place where you made the change to your screensaver you should see an option to change your power settings. Click on the button to get there and another window should pop up. Change the following settings for “When computer is PLUGGED IN” (not when running on batteries). “Turn off monitor” = Never (or “After 2 hours” incase you’ve abandoned your computer – if it shuts off then just touch the mouse to reactivate the screen). “Turn off hard disks” = After 5 mins. “System standby” = Never. “System hibernates” = Never.

If you don’t know how to do the above simple steps then ask a teenager to help you out. If you broke your computer following the above steps (highly unlikely, but hey, I need to protect myself legally) then too bad for you; I accept no responsibility for your actions. You are fully responsible for what you do, and don’t come crying to me.

If you are serious as a trader, especially as a scalper, then you’ll find that having a secondary laptop computer exclusively dedicated to trading will be quite useful, convenient, and will allow you to catch more trades than you might otherwise. This computer should pay for itself.

BROKER

For Forex Scalping it is important that you carefully select a suitable Forex broker based on these criteria. Your Forex broker must provide a live data feed for charts (further explained below), must have very competitive spreads for the currency pairs you will be trading on, and the trading software must be easy to use & quick to execute trades with.

I have had numerous trading accounts with various brokers (some real money and some just demo) and at the time of this writing would recommend to my friends to use FXCM or RefcoFX. This isn’t to claim that they are the best of all brokers, but overall they are the ones I personally most recommend for several reasons.

FXCM (and RefcoFX that is pretty much similar) has a very simple user interface (the trading station software), so simple that even a child can be taught to use. However other brokers, such as Forex.com and ACM have nice web based trading interfaces that is simply too complicated for a newbie to use with ease, and takes far too long to execute a trade when precious seconds count.

In this eBook I show how to place trades on the FXCM system because it is so easy to explain, and easy for you to do. Thus all examples in this eBook are based on FXCM. I have chosen against explaining the methodologies applicable to such brokers as Forex.com, ACM, and others simply because it would take far more time to explain how to place OCO, IF THEN, etc… trades, and the nuances of stop / limit orders. When you become more advanced as a trader you can figure these out on your own (it took me a while to wrap my brain around those concepts).

Different brokers also offer different pip spreads on the various currency pairs. For example, FXCM unfortunately offers 5 pips for GBP/USD (too bad as it is one of my favorite pairs to trade and scalp), so once you become more advanced then you might want to have two or more accounts with various brokers to take advantage of the best that they have to offer. Some brokers have lower pip spreads than others (i.e. you can get 2 pip spreads on some of the majors – if your account is large enough), but some of those brokers don’t have their spreads “fixed”, meaning that they can widen during volatility (but is generally not a problem for most of the time). FXCM is fixed (good for you).

Some brokers have streaming executable prices, meaning that the price you click on is the price you get (even if the market has already moved), whereas some brokers “request for quote” meaning that if you are experiencing a shooting market (rapid price changes) then your trade might fail to be entered (can be frustrating at times). Unfortunately FXCM seems to me to be one of those.

There are many brokers to choose from. Just to name a few more here are some others: GFTforex, XpressTrade, CMSforex, FXsolutions, etc… (like I said, there are others. Google “forex broker”, or look through trading magazines if you want to find more.)

There are more issues to be aware of in choosing a Forex broker, but what I’ve covered here present some of the most important considerations. Generally speaking, stick with the bigger, more popular brokers. Before dedicating your funds to any in particular it is wise to get demo accounts with several that you might use to give them a test drive. Initially it is best to use one broker (FXCM or RefcoFX is a good choice for your first account), but later (once you’ve gained some experience) get some more real accounts with other brokers so that you can take advantage of the stuff that is better with them.

FXCM isn’t the absolute best broker in the world – nor is any broker in my opinion (they aren’t my primary broker, but I wouldn’t recommend my primary broker to novice traders as they are one of the more “complicated” ones). They all have their strengths & weaknesses. I have selected FXCM to be the broker that all the examples of this eBook use simply because it would be difficult and confusing to write this eBook trying to explain the examples with multiple broker variables. I had to pick one, and FXCM is the one I went with. It is (in my personal opinion) the easiest and best choice for a novice trader to start trading with, and so that is also why I am using FXCM as the broker for all the examples of this eBook. They are, for scalp trading techniques, one of the better, and easiest to work with brokers.

If you are one of those people that insist on finding what you prefer then feel free to test out the demo versions of a bunch of brokers, but if you are willing to just take my recommendation then go with FXCM (or RefcoFX) to start with. At the time of this writing it is the broker I would most recommend to the average & beginner trader, however if I later change my mind I’ll be sure to provide my latest recommendation within the online resources section.

Additional Tip: Most brokers don’t always honor your stop orders during extreme volatility such as around Fundamental Announcements. At the time of this writing there is a broker that is currently honoring stops even in those volatile times, and in the eBook “Forex Sailing” I’ll tell you who they are.

CHARTS

For Forex Scalping you’ll need charts providing a live data feed from the same Forex broker you are trading with (very important!). If you are trading with FXCM then use charts provided by FXCM, if you are trading with RefcoFX then use charts provided by RefcoFX (use this logic for whatever broker you are trading with). It is important that you use charts using a live data feed from the same broker you trade with because there can be slight discrepancies between brokers than can negatively affect your trading.

For the purpose of scalping it is fine to use the free charts provided by your broker as the free charts should have everything you need to scalp with. It is however a good idea to subscribe to a paid version of your favorite charts as you’ll have some more flexibility (i.e. having multiple charts open simultaneously).

The chart view you’ll be using most for scalping is the one-minute candle view over 24 hours. Simply zoom in until you can clearly see the individual candles. You will be using other views such as hourly and five-minute candles for other purposes.

PRACTICE ACCOUNT

I would strongly recommend that before you start scalp trading with real money (even if you are already an experienced Forex trader) that you first get a demo account with the broker you intend to trade real money with to practice. I STRONGLY URGE YOU to practice scalping in your demo account for at least a month (accomplishing a minimum of 20 trades, but more is better) before trading with real money. Remember, if you can’t make money in a demo account you won’t magically become successful just by transitioning to real money.

After you have succeeded in a demo account next trade a small amount of real money in a mini account to continue practicing (as your psychology will change as a result of trading real vs. fake money) before gradually moving up to trading with the full account size you intend to be trading.

BROKER SPREADS & TRADABLE CURRENCIES

Because of the nature of scalping (going for the smallest possible trade typically using an initial stop of just 10 pips) you need to trade only on the currency pairs with the smallest pip spread. Here is a screen shot taken of FXCM’s spreads at the time of this writing (applicable to both mini and regular trading accounts).

As you can see their fixed spreads range from 3 pips (on EUR/USD & EUR/GBP) all the way up to 15 pips (on EUR/AUD & GBP/CHF).

It is best to stick with the currency pairs that are just 3 or 4 pips (I’ll explain why shortly). Too bad that GBP/USD has a 5 pip spread as it is generally my favorite currency pair to trade, but generally speaking it is best to stay away from the pairs with 5 pip spreads, and absolutely don’t trade the higher spread currency pairs.

Thus for the above mentioned reasons (at the time of this writing as brokers may change spreads in the future) currently for FXCM the currency pairs that are tradable with these scalping techniques are:

Scalpable Currency Pairs
EUR/USD
EUR/GBP
USD/JPY
EUR/JPY
AUD/USD
NZD/USD

Why only trade these currency pairs? Allow me to explain. Later in this eBook I will elaborate upon stops used in these trading methods, but I’ll simply state here that generally you will initially be using 10 pip stops. What this really means is that the market only has to move 10 pips less your spread against you to get you stopped out. EUR/USD & EUR/GBP has a 3 pip spread thus the market needs to only move 7 pips against your direction from point of entry for you to lose your full 10 pips. Thus the odds of you scoring a 10 pip gain are actually 30% against you from the start. The other currency pairs listed above have a 4 pip spread, thus the market needs only go 6 pips against you on a 10 pip stop for you to lose out (40% against you from the start). The currency pairs with a 5 pip spread can still be traded in special circumstances, but in general it is best to shy away from these for what should now be obvious reasons. All the other currency pairs with higher spreads are absolutely not traded.

PIP PADDING

In my previous eBook “Forex Surfing” I extensively discussed the importance of adding pips to entry orders (in the section titled “Broker’s Pip Spread”). In some respects you won’t need to worry about this for most scalping purposes, but it is still important to be aware of especially if you’ll be using entry orders. In this eBook I won’t be discussing this topic at all, but I strongly urge you to reread that section from within “Forex Surfing”.

OVERVIEW OF THE TECHNIQUES

Here is a general overview of what scalping is like. I’ll talk in generalities here but will certainly go into specifics later in this eBook. This section is just to give you a taste for how a typical trade goes.

You watch your charts for specific market conditions to occur. Once you see a potential opportunity you begin to watch your charts very closely for the right moment to act. Once the desired circumstance occurs you pounce to enter a trade. Your trade is entered with a stop set at 10 pips below your entry price.

If all goes poorly (it happens often when scalping) you’ll lose your 10 pips. If things go well (as you hope) then ultimately the market will move in your direction (it might have first dipped back a bit before proceeding). Once it moves sufficiently far you promptly replace your stop to your entry price to prevent a loss. Now you are in a “free trade” so hopefully you can make a profit without any further risk. Hopefully the market doesn’t pull back to stop you out, and once it moves sufficiently far enough you again replace your stop so that you are now secured with a 5 pip profit.

What comes next will depend on current market factors, and you’ll have to make a judgment call about how you will proceed with the trade.

If by your assessment of what you see on your charts you think that the market is about to pull back you could simply exit the trade at the current market price to get the most profits out of the small market movement.

Alternately, if you believe that the market may retrace a little but is likely to resume in a micro trend then you might choose to remain in the trade, trailing your stops as taught in “Forex Surfing” and either exiting by getting stopped out for a nice profit or by scalping your exit (explained later in this eBook) at the appropriate time for an even greater profit. The advantage of letting your trade run (when appropriate) is that you can potentially score some very significant pips in a single session.

STOP FREQUENCY

You’ve probably guessed by now that getting stopped out is common when scalping. It can get aggravating at times so you need to be mentally prepared for experiencing frequent stops. Sometimes I swear it’s like I’m psychic or something for setting my stops to the exact pip to get stopped out just before the market dramatically turns around and soars into the profit zone. When you first start scalping you’ll likely find that these stops may drain you emotionally but after a experiencing them quite a few times you’ll learn to not get upset by getting stopped out for loss.

You need to develop the skill of ascertaining when to enter a trade that will likely go in your favor. Then the objective is to quickly move up your stops to reduce loss and then to secure a profit ASAP. Often you’ll be stopped out or will voluntarily exit for small 5 pip profits. What you strive to do is to be cunning and when appropriate leave the trade enough breathing room (not suffocating it by trailing your stops too closely) to potentially catch some larger pips (for scalping I consider anything over 20 pips to be a large trade – scoring 100 pips on a single trade is spectacular).

When looking at risk/reward ratios it soon becomes apparent that on trades that exit with a 5 pip profit your risk/reward is 2:1. Obviously this isn’t desirable. If all you feel you can capture is 5 pips (or you simply get stopped out for 5 pips) then let that be good enough, but what you need to strive for are sufficient amounts of larger trades (20+ pips) to account for the bulk of your profits. Needless to say that some days will be better than others (and some days you’ll even end up a net loser).

EQUITY MANAGEMENT

I won’t stress the importance of equity management principles here as I have written sufficiently about this subject in my other eBooks. I strongly encourage you to reread those sections in the other eBooks and be sure to adhere to the guidelines presented.

In scalping it is best to maintain a maximum risk of 2% on any single trade, however when starting off it would be even better to reduce it to just 1% at least initially while you are still learning. If you are following the “Forex Freedom” plan your risk levels will be higher, and the justification for this is explained in my eBook “Forex Sailing”.

To help you quantify this here is a chart of how many lots you could trade depending on how much you have in your trading account. If you have already figured out how many lots you can trade doing “Forex Surfing” techniques (2% at 20 pip stops) then simply use the same amount of lots as it’ll automatically maintain the proper proportion for your 1% since you are trading with typically half the stop size.

This chart shows appropriate lots amounts (based on the 10 pip stop) against various margin account sizes. Keep in mind that once your account surpasses $100k you should scale your maximum down to 1% to even 0.25% (not shown) when you reach a million to preserve your equity from substantial drawdowns. This chart shows the maximum “Amount(K)” you can trade based on the 10 pip stop. Remember, 10K = 1 mini lot, and 100K = 1 regular lot (or 10 mini lots).

Account Size 1% 2%
$300 <10K <10K
$1,000 10K 20K
$2,500 20K 50K
$5,000 50K 100K
$10,000 100K 200K
$25,000 250K 500K
$50,000 500K 1,000K
$100,000 1,000K 2,000K
$250,000 2,500K 5,000K
$500,000 5,000K 10,000K

KAMIKAZE SCALPERS

I think that is it worth mentioning here that there are people that I would label as “Kamikaze Scalpers”. This IS NOT something that I would endorse for you, but will mention it here because sooner or later you will be tempted to start thinking about it, and there are many people who do it.

Because scalping involves tiny trades (in duration and amplitude) many scalpers trade significantly larger amounts of lots (regular or mini) to leverage the tiny pip gains into more substantial profits. The “Kamikaze Scalpers” might thus be risking far more than the suggested 1% to 2% per trade. I urge you to consider against becoming a “Kamikaze Scalper” simply because the higher your risk percentage per trade the greater the risk that a draw-down series of loosing trades can significantly impact your trading account negatively and make it difficult to recover to a breakeven point.

Obviously one would only consider trading like this once one is extremely confident in their skills. Again, I recommend AGAINST you being a “Kamikaze Scalper” but if you decide to go against my advice (which from my experience people tend to do – and even I do from time to time) please absolutely limit yourself to 4%.

There is another breed of what I would also call a “Kamikaze Scalper”, that seems to have the mentality of “I’m sure I’m right”. What I’m about to explain to you here is something that I would ABSOLUTELY NOT recommend. I have spoken to several traders who do this and am aware that there are trading schools that teach this approach, and despite the fact that they claim to have overall good results with this method I’d still warn you to stay away from doing this.

The premise behind this second kamikaze method is that most often their assumptions of what direction the market will move in is correct but they believe (rightly so) that a tight stop will result in stopping them out before the market moves in their direction. What they often do is they’ll set their stop loss order to be 50+ pips away to allow enough wiggle room to happen, but they take their profits typically at around 5 pips. People who are very good at these methods claim to catch 20, 30, 50, sometimes even 100 (very rare & exceptional) successful trades in a row. What is the downside to this? Obviously one loss will wipe out a bunch of hard earned gains. To the people who employ such trading methods (you know who you are), if you have been trained to do so and as long as it works for you then feel free to continue, but for the rest of you reading this just simply DON’T!!!

Folks, don’t be a kamikaze trader. Play the game safe and you’ll last for the long term, but if you take big risks then you soon kill your career as a trader.

CURRENCY PAIR CHOICE

Above we listed the currency pairs you should limit yourself to scalping based on the criteria of their pip spreads. There are a few other factors that are worth looking at.

In my other eBooks I have repeatedly alluded to the fact that each currency pair exhibits it’s own personality. It is important to be familiar with the “personality” of the currency pair(s) you intend to trade so that you can develop an almost intuitive feel for how it tends to behave. The only way to cultivate this recognition is to study the charts of the currency pair for a while (at least a month). I can’t stress enough to you the importance of keeping your eyes on the charts to become familiar with the pair’s behavior.

At the time of this writing (remember that when you read this the Brokers might have already changed the spreads) there are two currency pairs that have a 3 pip spread; EUR/USD and EUR/GBP. Due to the fact that they have the lowest spread makes them the ideal candidate for scalp trading. There is however a significant difference between them that makes one more ideal than the other.

If you watch the charts of EUR/GBP you’ll quickly notice that it’s “personality” is that it usually moves by very small increments. In general I’d say that this pair is relatively stable (compare to most other pairs). Many times it seams to bounce around in very tight ranges, often within 5 pips. Looking at the one-minute charts it appears “fuzzy” due to frequent bouncing within a tiny range. This makes EUR/GBP difficult to scalp. There are a few instances when it is worth trading (like when either EUR or GBP has just released a Fundamental Announcement), but as a general rule (meaning there are exceptions) it is simply best to avoid scalping this pair.

EUR/USD also has a 3 pip spread, but it is far less “fuzzy” in comparison to EUR/GBP, and it tends to trend very nicely (even compared to the other pairs). For these reasons EUR/USD is by far the single best currency pair to scalp. Most of your scalping should be restricted to this currency pair.

What about the other pairs? You can certainly trade them too. Become familiar with the personalities of each one and you’ll soon discover that you have personal preferences for one or two pairs more so than the others. This becomes a matter of personal preference usually based on which one(s) appeal to you more and because you have “figured out” their behavior patterns enough to more consistently be profitable with those pairs.

So your primary scalping pair is EUR/USD, but pick a couple of the 4-pip-spread pairs to be your secondary scalping pairs. In certain circumstances (which will be elaborated upon later) you could scalp some of the 5-pip-spread pairs, but these won’t be part of your usual routine. In virtually all circumstance you should completely avoid scalping any of the larger-pip-spread pairs.

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