We welcome you to the speedy world of Forex scalping! It’s an exciting way to trade, allowing you to enter a trade and exit soon after for small, quick profits. As a scalper, you have to make decisions in less than a second or two. You don’t have time for depth analysis of all the factors that influence a trade.
You need simple, clear signals that you can spot instantly. This is where the unique appeal of candlestick patterns comes into play. Today’s guide will go through three candlestick patterns you can memorize and utilize in your Forex scalping, and have you be part of the scalping community!
What is Scalping?
To begin, let’s recall what scalping is. It’s a way of trading where you are going to make a great number of trades in one day, with each trade making only a very small profit (perhaps only a few pips).
Scalpers usually conduct their trading on very short timeframes, for example the 1 minute (M1) or 5 minute (M5) charts. Everything moves too fast for any intricate setup, so you are going to need to use some simple visual cues. These are the best scalping patterns to learn.
Pattern #1: The Engulfing Candle
The Engulfing Candle: This is one of the easiest and most effective candlestick patterns for forex scalping. An Engulfing Candle is one grand candle that entirely “swallows” or “engulfs” the previous smaller candle.
The Bullish Engulfing: This is when a big green candle (bullish) completely covers the previous small red candle (bearish).
- What this means: The buyers have suddenly taken complete control from the sellers.
- What you can do: this is a potential “buy” signal. This is one of the best quick entry forex signals.
The Bearish Engulfing: This is when a big red candle completely covers the previous small green candle (bullish).
- What this means: The sellers have just completely overwhelmed the buyers.
- What you can do: this is a potential “sell” signal.
Pattern #2: The Hammer & The Shooting Star
Both of these formations are similar to brother and sister. They are candles that are small in size and have a very long “wick” or “tail.” The extended wick tells us the market attempted to go one way but got pushed back strongly.
The Hammer: This candle has a small body on the top and an extended wick at the bottom. It looks like a hammer. It usually forms after a price drop.
- What It Means: The market pushed the price down, but a massive wave of buyers came in and pushed it back.
- What You Can Do: This is a potential buy signal.
The Shooting Star: This is just the opposite. The Shooting Star has a small body at the bottom and an extended wick on the top. It looks like a shooting star falling from the sky. It usually forms after a price increase.
- What It Means: The market pushed the price up, but sellers took over and pushed the price back down.
- What You Can Do: This is a potential sell signal.
These are great candlestick formations for forex scalping because you are able to see a clear battle and which side prevailed.
Pattern #3: The Doji
The Doji is among the most fascinating candles. A Doji has almost no body whatsoever. The open price and the close price will be virtually the same. It often looks like a cross or a plus-sign symbol.
- What does a Doji mean? A Doji means indecision. The buyers and sellers are in a perfect standstill situation. Neither side is having any success.
- How to use Doji: A Doji by itself does not mean much. However, if you see a Doji in conjunction with a long, strong trend, the Doji can be one powerful signal. It is an early sign that the trend is running out of steam and possibly about to reverse.
This makes the Doji a vital part of many M1 trading setups. It will assist in preparing you for the next movement. Learning these very simple candlestick patterns in forex scalping is a great place to begin.
The Right Broker for Fast Scalping
You can only use the best scalping formations if you have a great broker. Scalping relies on two main factors: super-low costs, and super-fast speed.
- If you’re a newbie wanting ease of access to a simple training ground, Capitalix and SmartSTP are good options.
- Scalping is about speed. Companies with more reliable execution platforms, like FX Road and Trade EU Global, should have you covered with all the speed you need for your M1 trading setups.
- To successfully profit from small moves, your costs must be very small – and ECN brokers are the best for keeping costs small. A better example of an ECN broker would be FirstECN that your scalper will love for the tighter spreads, likewise, CapPlace provides a similar professional environment.
- Likewise, the best scalpers will also take advantage of the latest tools. Flying under the radar are brokers, like SuxxessFx, Tradgrip and Algobi who are known for bringing brand new features to the public that could give you an edge.
Conclusion
You don’t need to be a genius to be a scalper. You just need to be fast, disciplined, and have a few simple tools. The three patterns we’ve covered the Engulfing Candle, the Hammer/Shooting Star, and the Doji are a great place to start.
They are easy to see, simple to understand, and can give you the confidence to act quickly. Master these basic candlestick patterns for forex scalping, and you’ll be well on your way. Remember to practice spotting them on a demo account first.
FAQs
- What are the best candlestick patterns for forex scalping?
The best ones are simple and show a clear shift in momentum. The Engulfing Candle, the Hammer, and the Shooting Star are three of the most popular and effective patterns for scalpers.
- What is the best timeframe for scalping?
Scalpers typically use very short timeframes, such as the 1-minute (M1) and 5-minute (M5) charts. This is where you will look for your M1 trading setups.
- What is a “Doji” candle?
A Doji is a candle with a very small or non-existent body, which shows indecision in the market. It can signal that a trend is losing steam and might be about to reverse.
- How do these patterns provide quick entry forex signals?
Patterns like the Engulfing Candle are so powerful because they show a very sudden and strong change in market sentiment. This allows a scalper to jump on a new, emerging trend very quickly.
- Do I need a special broker for scalping?
Yes, it’s highly recommended. You should choose a broker with very low spreads (like an ECN broker) and extremely fast execution. High costs or slow speeds can make scalping very difficult. Learning candlestick patterns for forex scalping is only half the battle.