1 Minute Trading Strategy in Forex

Every trader eventually comes to realize that the market is fractal. In other words, price movements over longer timescales resemble those on shorter ones. This leads to the development of scalping strategies. The 1-minute timeframe is the smallest accessible timeframe, and many traders frequently use it to make some fast profits. Let us learn more about 1 Minute Trading Strategy in Forex to join the team of quick profit achievers.

1 Minute Trading Strategy in Forex: Introduction

It can be very challenging to find a trading strategy that gives you a competitive advantage because there are so many things to take into account. However, the 1-minute scalping method can be right for you if you like quick action and the possibility of quick profits.

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What is a 1 Minute Trading Strategy in Forex?

The goal of the 1-Minute Scalping Strategy, as its name imcplies, is to make modest, rapid profits by taking advantage of the sudden price swings that occur inside this brief window. It is a specialized trading approach that focuses on the 1-minute time frame.

In general, scalping entails risks and problems as a trading method. Since the technique entails taking and maintaining positions fast, it calls for a great deal of concentration and focus. A proficient scalper can execute several trades within a single day to reach a pre-established profit target. They frequently execute hundreds of trades in one day. This requires a trader to maintain composure under pressure, which can be mentally exhausting. Because of the frequent number of trades performed, the technique may also result in higher trading costs, and market noise can have a substantial negative influence on profitability.

Scalpers study the markets on short timeframes since they usually search for minor price fluctuations. Though opinions on its effectiveness are divided, the one-minute interval is the shortest known trading period. While some contend it’s not lengthy enough to rely on, others counter that it may be used to generate rapid money. In any case, the goal of 1-minute scalping is to identify particular trading signals and chart patterns to seize those brief price fluctuations.

How Does 1 Minute Trading Strategy in Forex Work?

One particular method within the larger scalping strategy utilized in day trading is called “1-minute scalping.” Using 1-minute time frame charts to guide trading decisions and carry out deals is known as 1-minute scalping. This approach places a lot of emphasis on quick movements. The goal is to benefit from small price swings, just like with general scalping, by taking advantage of the high frequency and volatility of market movements that are visible over such a short period. Moving averages, stochastic oscillators, MACD (moving average convergence divergence), and RSI (relative strength index) are examples of technical analysis indicators that traders employ to find possible entry and exit opportunities within the minute-by-minute movements of the market.

The focus is on identifying short-term patterns, market breakthroughs, or market reversals that may result in small, fast gains. Because of the fast-paced nature of this approach, traders must properly manage risk by adhering to a clear set of trading rules, which should include predetermined profit targets and stop-loss orders. Because 1-minute scalping relies heavily on quick execution, it works best in markets with narrow spreads and strong liquidity, such as large-cap stocks or the most significant currency pairings in the FX market.

Additionally, traders using this approach should think about the effect of transaction costs because a high volume of transactions can quickly add up to significant fees, which could reduce the narrow profit margins that scalping is intended to achieve. Therefore, to be successful at 1-minute scalping, one must possess not only a thorough understanding of technical analysis and market dynamics but also competent risk management and the capacity to function in a volatile, rapidly changing environment.

About Entry and Exit Points

The most crucial aspect of applying this method is determining the trend. Once that’s done, we can look for our trade opportunity. We’ll take a downtrend as an example for this discussion.

This is the process for identifying an entry. We instantly put a SELL order when the first candle closes before the 50 EMA whenever the price retraces/pulls back to either the 50 or the 100 EMA and then rallies to continue the trend.

While there are other approaches to trade management, the simplest and most successful one is to set a preset target profit at a risk-reward ratio of 1.5.

So where should your stop loss be placed? To do this, set the stop loss below the swing low (in an uptrend) or above the swing high (in a downtrend). As an alternative, you might trail your stop loss as long as the price is still moving in your direction if you have more time to observe price activity. You may ride the trend for a long time in this fashion.

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Best Indicators for 1-Minute Scalping

Several critical indicators are essential for making timely and well-informed trading decisions while using 1-minute scalping strategies. The goal of these momentum technical indicators is to secure small, steady profits by capturing the quick price swings typical of this short timeframe. Now let’s explore the best indicators for the 1-minute scalping strategy.

Exponential Moving Average (EMA) and Simple Moving Average (SMA)

These are key indications for scalping trend identification. Using equal weight for each price, the SMA determines the average price for a given period. On the other hand, Exponential Moving Averages are more sensitive to fresh market information since they place greater weight on recent prices. To determine trend directions, a popular method combines the 50-day and 100-day EMAs. The 8, 13, and 21 EMA strategy is another well-liked method.

Stochastic Oscillator

This momentum indicator is essential for determining whether the market is overbought or oversold. It functions on a scale from 0 to 100, where values above 80 signify overbought conditions and values below 20 indicate oversold ones. For predicting possible price reversals within a minute, this technique is useful.

Volume Weighted Average Price (VWAP)

VWAP, one of the most prominent indicators, determines the average value of an asset over a given period. The use of VWAP is to pinpoint places where an asset and market sentiment overlap, indicating prevalent bullish or bearish emotions for possible trades. A move below VWAP indicates a pessimistic feeling, whereas a move above VWAP indicates positive momentum.

Relative Strength Index (RSI)

The RSI is a prominent momentum indicator that measures the rate and change of price movements. It assists traders in determining the momentum of the market and taking advantage of minute-by-minute price fluctuations. It’s essential to the scalping approach since it offers perceptions of possible future moves.

Bollinger Bands

They determine if the market is overbought or oversold and evaluate market volatility. Depending on whether the market is in an uptrend or decline, traders using a 1-minute scalping method frequently search for price breaches of the Bollinger Bands as possible entry points.

Moving Average Convergence Divergence (MACD)

This indicator can be used to show shifts in the length, velocity, strength, and direction of a price trend in a company. To highlight buy and sell signals, the 9-day EMA is used as the signal line and the 26-day EMA is subtracted from the 12-day EMA.

Also Read: 9 Ways to Optimize Trading Strategy

Is it Possible to Make a Profit Using 1 Minute Scalping Strategy?

The 1-minute scalping approach can be quite profitable, but it’s important to understand its intricacies and the level of effort required. For example, the profitability of this approach is dependent on disciplined execution and a solid understanding of technical indicators. More importantly, a trader’s intuition and ability to spot incredibly brief price swings are critical components of the 1-minute scalping strategy’s success.

As a result, 1-minute scalping is only appropriate for certain traders. It works best for people who can make judgments quickly, manage stress well, and have an excellent sense of short-term market swings. Trading at the 1-minute timeframe may be difficult for newcomers or those used to longer-term trading methods.

However, to determine whether this is the best course of action for you, you must first give it a try. You should give it a shot if you feel comfortable in a fast-paced setting and you are a fairly self-aware person. Recall that the 1-minute scalping approach lets you remain neutral on the market and out of position for most of the trading day. Many people therefore feel much more at ease utilizing this trading approach.

However, there are some difficulties with the plan. Scalpers like to make lots of small profits, so it’s necessary to manage a lot of trades in a day. When compared to longer-term trading tactics, high-frequency trading has higher trading costs and carries a greater risk of small quick losses piling up quickly. The outcomes of trades can also be greatly impacted by market noise and volatility.

Overall, 1-minute scalping can be a profitable trading method, but it requires a specialized trader mentality, extreme focus, and an organized approach to risk management. Go for it if it’s what you want.

Advantage of 1 Minute Trading Strategy in Forex

There are many advantages when it comes to 1 Minute Trading Strategy in Forex. Some of them are listed here.

• There are no overnight risks because trade results are accessible in less than a minute.
• It offers you the freedom to carry on trading or make plans to recover losses.
• Because of the frequent, tiny market movements throughout the one-minute intervals, there is a higher chance of making money.
• Increased trading volumes enable the recovery of losses.
• Short-term market exposure lowers the likelihood of encountering unanticipated, unfavourable outcomes.
• It is easy to get relatively tiny movements. A greater supply and demand imbalance is necessary to ensure more significant price swings.
• An effective Forex scalping method can still present possibilities even in relatively quiet markets.
• Scalping is primarily motivated by the fact that small moves happen considerably more frequently than bigger ones.

Disadvantages of 1 Minute Trading Strategy in Forex

There are some disadvantages too when executing 1 Minute Trading Strategy in Forex. Some of them are listed below.

• Your ability to take risks and make quick decisions is continuously put to the test.
• Data analysis is difficult because of the amount of background noise introduced by the 1-minute time frame.
• If you’re not committed, you won’t have as much access to intricate algorithms and market data.
• Spreads and fees from many trades might reduce your gains or multiply your losses.
• A substantial deposit is required.
• A 1-minute scalper needs to have strong intuition, rapid reflexes, and strong mathematical skills.
• Adhering to a Forex scalping technique while keeping a healthy risk-to-reward ratio can be challenging.
• The one-minute scalping method takes a lot of time and could be stressful.
• Inexperienced scalpers may lose if they haven’t done adequate backtesting.
• There is a considerable possibility of successive losses.

Tips for 1-Minute Scalping

Let’s look more closely at how to scalp Forex now that you are aware of the basic principles of the technique.

Most Suitable Time Frame

The majority of traders typically use a time window of one to fifteen minutes to scalp currency pairs. While there is no “best” time frame for scalping, most Forex scalping methods tend to use the 15-minute timeframe the least. The most popular timeframes are one minute and five minutes.

It will depend on the time frame you choose and how much profit or loss you can accept per trade. A 5-minute scalp may likely give you a realistic aim of 10 pips every trade, whilst a 1-minute scalp would likely have you looking for a profit of about 5 pips per trade.

Choose Volatile Assets

It is essential to choose a volatile currency pair for the finest Forex scalping technique to increase the likelihood of seeing a high volume of moves.

That being said, when selecting a currency pair, volatility shouldn’t be your primary consideration. Additionally, you want to find a pair that is inexpensive to trade or the one that will give you the lowest spread. The spread will take 10% to 30% of a profitable scalper’s earnings. Consequently, naturally, you want this value to be as low as feasible.

Suitable Trading System

It will be necessary for you to create a Forex scalping trading plan using Forex scalping indicators. Following this, you must proceed with the trade if you receive an entrance signal and close it when the profit is at an appropriate amount or you see an exit signal. In scalping, controlling take-profit (TP) and stop-loss (SL) is also crucial.

It is straightforward, every second counts when it comes to trading, thus you cannot waste it. Naturally, you may establish stop-loss and take-profit levels after you’ve made a trade, but a lot of traders prefer to scalp manually, closing positions when they reach the target profit or the maximum allowable loss rather than using automated stop loss and take-profit levels.

Spread

Le. Assume that your trading account with a broker has no commissions and that the average spread on EUR/USD is 2 pip. A pip’s worth in a single lot of EUR/USD trading is USD 10. This indicates that by the time you opened a position, your direct expense would have been around USD 20.

This implies that to achieve your desired 5-pip gain each trade (USD 50), you would need to increase your initial beginning price by 7 pip (7 pip – 2 pip spread = 5 pip). That adds out to around 50% more pip. Because of this, you want to limit your scalping to the Forex pairings with the narrowest spreads.

Speed of Execution

Selecting the optimal execution system is a crucial component of being a profitable Forex scalper. The term “execution” describes the process by which your broker completes the trades you place.

That is the speed at which a trade is opened on the live market once you declare your intention to enter it. Because prices can move quickly in unpredictable markets, the opening price of your deal may differ from your initial plan. This can have a significant impact if you are depending on the small profits from Forex scalping.

This explains why using a Forex scalping method to achieve success might be challenging. You can discover the ideal way to enter the market, but if there is a dealing desk involved, the broker might reject your order. When you attempt to terminate your deal and the broker refuses to let you, things could grow much worse, which could occasionally be catastrophic for your trading account. For this reason, picking a broker that can support Forex scalping and provides STP or ECN execution is essential.

How to Choose a Broker for Scalping?

You might be shocked to hear that some brokers actively forbid scalping and won’t let you close deals that aren’t open for more than three minutes or so. Consequently, the first step in choosing a Forex scalping broker for your technique will be to rule out any brokers that do not allow Forex scalping trading methods.

You should normally stay away from all brokers that are unable to offer you an ECN or STP execution system because doing so will make it more difficult for you to scalp Forex using a dealing desk.

Once you’ve narrowed down your list of potential brokers, you should start examining the trading instruments and their prices offered by each broker. There are commissions paid to a lot of brokers. This isn’t inherently a bad thing; you simply need to account for the commission when figuring out which broker is the lowest. However, while choosing a broker that will allow you to scalp Forex, price shouldn’t be your first consideration.

Selecting a reputable broker is an essential first step for all traders, not only scalpers. When choosing your broker, there are several factors to take into account. The following are the most important ones:

• Competitive prices and spreads
• High-speed execution
• High-quality order execution
• Approved and controlled by reputable financial authorities, such as the Financial Conduct Authority (FCA)
• Funds secured by a reputable bank or banks
• Execution of the market without requotes
• Low rates of rejection and slippage
• High-quality liquidity providers with substantial liquidity
• Advanced instruments and platform choices
• Instruction and webinars
• A financial markets analysis

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1-Minute Trading Strategy in Forex: Conclusion

The Forex 1-minute scalping approach is a highly successful trading technique, much like scalping itself. But it’s crucial to realize that scalping requires a lot of effort. Scalpers get paid for their quantitative labour. Their potential revenues increase as they do better. Ultimately, your trading plan should align with your trading style, aptitude, and personality.