The Best Scalping Strategies - Part 2 - EUR/GBP

When it comes to a successful Forex Scalping strategy we need a currency pair that is reliably range bound and lends it self well to scalping. As we have seen in part 1 of this series- not all currencies are automatically scalp-able. As a matter of fact most are not. Most of the Majors: EUR/USD, GBP/USD, USD/CHF are too wild a ride to take the risk. The notable exception is the USD/JPY - which even though it is a major currency pair is still scalpable - why that is so and what the advantages are, we will discuss in Part 3 of our Scalping Strategy series.

But back to the EUR/GBP - the currencies involved are of course the Euro and the British Pound. Since we are again talking about two currencies from the same Economic region there is stability built into the relationship that is one of the main characteristics of this currency pair.
Even though the British Pound was affected heavily by the economic crisis worldwide and in some ways more so apparently than the more stable Euro from a Forex scalping strategy point of view the EUR/GBP is one of our most trusted allies and together with the EUR/CHF the backbone of any successful scalping strategy.
In scalping we are looking for three things:

1. Rangebound - so the losses and risk stay small
2. but not dead - so we do get many daily small entries
3. Stable economies behind the currencies - so geopolitical news don't blow up in our faces

The EUR/GBP offers all three and is therefore a "two-thumbs-way-up" trade recommendation for an automatic Forex scalping trading system.

The Best Scalping Strategies - Part 1 - EUR/CHF

Even the best scalping strategies will only work with a few currency pairs. Many currency pairs will never yield - try as hard as you may - to scalping - ever.

What is scalping really: according to Investopedia Forex Scalping is: "A Forex Trading Strategy that attempts to make many profits on small price changes. The main goal is to buy/sell a currency pair at the bid/ask price and then quickly sell it a few pips higher/lower for a small profit. Many small profits can easily compound into large gains if a strict exit strategy is used."

Of course scalping is much easier and safer with a currency pair that is range bound. A currency pair that is extremely volatile will cause too many wild fluctuations and cause too many stop losses.

The EUR/CHF Cross is one the best currencies for a forex scalping strategy.

Why does the EUR/CHF lend itself to scalping so well?

1. It is a tightly range bound currency pair.
2. The EUR/CHF is a currency cross - since it does not have the USD as part of its pairing. The main global currency fluctuations are in regards to the US Dollar, the world's "Reserve" currency.
3. Since both currencies share the same economic region they are strongly related and keep a tight equilibrium. It is really hard to think that the Swiss economy would prosper when the rest of Europe goes through an economic downturn and vice versa. This tight knit relationship leads to extra stability in this pair - something we really appreciate in a forex scalping strategy.
4. Interest rates are not very different between Switzerland and the Euro zone, also contributing to a tight range year in, year out. Even though the days of wild and uninhibited carry trade may be over, a big difference in interest rates in a currency pair creates an overall trend and enlarges daily, monthly and yearly ranges. The GBP/JPY, for example, is a wild ride on most trading days, while the EUR/CHF, in comparison, is almost sleep inducing.
5. The one thing that WILL move the Swiss Franc is geopolitical turmoil. More than any other currency the Swiss Franc is knows as a safe haven - or the gold currency. Most investors when fearing wild market swings will run to the Swiss Franc for cover. This currency was backed by gold to 40% at one time and between the Swiss neutrality and general status as a beacon of fiscal prudence this is where people will turn at times of instability and fear.

The EUR/CHF has been a reliable profit maker with our forex expert advisor scalping programs. The losses are very rare, the gains are steady and reliable, as maybe only the Swiss can produce?

This should be a permanent part of anybody's portfolio of automated trading strategies .