Junichi's Scalping Classroom | Episode 3 Building Your Own Personal Scalping Style ① [Junichi FX]

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Junichi FX. AFX scalping trader, FX mental advisor, FX coaching, financial planner, insurance agency, and management consultant among many roles. Trading with a target of 1000 pips per month focusing on price action-based scalping.

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※This article is a republication and editing of an article from FX Strategy.com, December 2018 issue. Please note that the market information written here may differ from current market conditions.

In the second part, I discussed the basics and philosophy of scalping, the importance of a simple trading style, examples of preparation before trading and practice methods, and other foundational content. This time, as you actually start scalping, I would like to describe how to build a scalping style that suits you.

There are two main types of scalping

In broad terms, scalping can be divided into two types. One is the short-term trade that targets only the areas with high edge drawn from patterns or waveform analysis, as I discussed last time. The other is price action trading, which targets specific price movements such as large moves, exaggerated responses to sudden moves (overshoot), and rebounds/accelerations around support and resistance.

Compared with short-term trading, price action occurs less frequently, but with experience and skill, you can curate trades to achieve a win rate exceeding 90%. Also, because the win rate is high, you can trade with larger lot sizes than usual, creating big opportunities when they appear (to be discussed later). In scalping, you build a style based on these two methods, using one or both as the core.

Building a basic style

① Decide the currency pair.

USD/JPY: Contains the most information, price moves are relatively calm and easier to predict. Large moves are difficult to target, but trading is easiest here. Edge is easier to exit when it deteriorates.

EUR/USD and GBP/USD: Have a steady information flow, price moves are relatively straightforward, but beware of falses and sudden moves. You can target large price moves, but price moves are fast and quick judgment is required.

Crosses (EUR/JPY, GBP/JPY, etc.): Often synthetically calculated as USD pairs in the interbank market, so clear advantages may be hard to gain from direct technical indicators alone. To confirm edge, you need broader context including USD/USD pairs and consider noise; different skills from USD/USD are required. Scalping opportunities are relatively common and allow targeting large moves, but there are quirks unique to synthetic crosses and frequent false signals, so beginners are not recommended.

② Decide the timeframes for trend judgment and entry, the technical indicators to use, and other axes for executing trades, and formalize the rules.

③ In the final stage of building the style, practice and verify with the minimum lot size repeatedly, aiming for a trading timing (patterns) that yields at least 50% win rate in short-term trades and over 60% in price action trades, as a near-term goal and to make it your own.

In scalping, where risk-reward is not always fixed, prioritizing win rate is important. There is no need to overthink; find your own strong pattern!