Many people want to make money through scalping in overseas forex trading
"The method seems complicated."
"Isn't overseas forex trading disadvantageous because of the wide spreads?"
Many people have these kinds of anxieties
In reality, with the right strategy and by choosing the right overseas forex broker, it is entirely possible to accumulate profits efficiently in a short amount of time .
This article provides a detailed explanation of a highly reproducible scalping method, outlining key points and precautions for success
Furthermore, we've included a comparison chart of accounts best suited for scalping
This content will be useful not only for those who want to start scalping, but also for traders who are already practicing it
Contents
- 1 Three scalping techniques you can use in overseas forex trading
- 2 Key points for success in scalping with overseas forex trading
- 2.1 Use a low-spread overseas forex account that is approved for scalping
- 2.2 Higher timeframe trend following
- 2.3 Limit risk with a small amount of capital
- 2.4 Increase either your win rate or your risk-reward ratio
- 2.5 Beginners should take advantage of bonuses
- 2.6 We will also consider CFD instruments with high volatility
- 3 There are five important points to keep in mind when scalping in overseas forex trading
- 3.1 In some cases, scalping is indirectly prohibited
- 3.2 When using EAs for scalping, be careful of hedging across multiple accounts
- 3.3 Withdraw funds to adjust your account balance
- 3.4 Pay attention to economic indicators, leverage restrictions at the start of the week and the weekend
- 3.5 The cashback will significantly reduce costs
- 4 List of recommended accounts for scalping in overseas forex trading
- 5 Frequently Asked Questions about Scalping Techniques in Overseas Forex Trading
Three scalping techniques you can use in overseas forex trading
There are various scalping techniques that aim to capture small price movements in a short period of time, but here we will explain three techniques that are particularly reproducible and easy for beginners to intermediate traders to implement
These are simple strategies that utilize the fundamental principles of the market, and by following the correct procedures, you can aim for stable profits
Buy-on-dips and sell-on-rallies strategies using 1-hour horizontal lines
Horizontal lines drawn on the 1-hour chart represent price levels that are watched by many traders
A scalping strategy that involves taking positions in the direction of the trend on the 5-minute and 1-minute charts based on horizontal lines on the 1-hour chart is called the "buy on dips and sell on rallies using horizontal lines on the 1-hour chart."
The specific trading procedure for the "buy on dips and sell on rallies using horizontal lines on the 1-hour chart" is as follows:
- Draw horizontal lines at major highs and lows on the 1-hour chart
- Confirm the trend direction (buy on dips if it's rising, sell on rallies if it's falling)
- Look for reversal signals in candlesticks near horizontal lines on 1-minute or 5-minute charts
- Enter the trade once a rebound is confirmed, and set your stop-loss outside of the recent high and low
- Profit-taking decisions are based on recent price movements and risk-reward ratios
Now, let's explain the trading method using an actual USD/JPY chart
Buy-on-dips and sell-on-rallies strategies using 1-hour horizontal lines
Draw horizontal lines at major highs and lows on the 1-hour chart
First, draw horizontal lines on the 1-hour chart at the most recent high and low
In this 1-hour chart of USD/JPY, we can draw horizontal lines as shown above, and since the price is trading below the recent low, we can determine that it is in a "downtrend" and will look for a sell-off opportunity on the 5-minute chart
Enter at the horizontal line on the 1-hour chart
Let's look at the 5-minute chart when the price retraces to the horizontal support line on the 1-hour chart
The upward trend in price movement weakened when it reached a horizontal support levelI will enter a short position after confirming a bearish candlestick that negates the recent upward movement
Set your stop-loss at the most recent high on the 5-minute chart, and your take-profit level at the starting point of the upward movement on the 5-minute chart (the starting point of the upward movement that created a retracement high on the 1-hour chart)
Waiting for stop-loss and take-profit orders to be executed
Once you've set your stop-loss and take-profit orders, all you have to do is wait for one of them to be executed
By following the trend direction on the shorter 5-minute timeframe in line with the trend direction on the higher timeframe 1-hour timeframe , you can reliably aim for profits through scalping based on the larger market trend.
Trend following using Bollinger Bands
Bollinger Bands are an indicator that visualizes the range of price fluctuations
When the trend is strong, the bands expand, making it easier to identify short-term buying opportunities on dips and selling opportunities on rallies
The specific trading procedure for the "trend-following method using Bollinger Bands" is as follows:
- Displaying Bollinger Bands (±2σ) on a 5-minute chart
- In an uptrend, check whether the price moves along the upper limit of the band
- Enter a buy position when the price pulls back to near the center line of the band (moving average)
- In a downtrend, conversely, if the price retraces back to the center line, enter a sell position
- Stop-loss orders are placed at points outside the band where the price is moving against the trend, and profit targets are set at a price range of 1 to 2 times the stop-loss
Now, let's explain the trading method using an actual USD/JPY chart
Trend following strategy using Bollinger Bands
Add Bollinger Bands to the chart
First, let's add Bollinger Bands to the chart
This method uses a 20-period Simple Moving Average (SMA) and ±2σ Bollinger Bands
Basically, these values are the default settings on all trading platforms, so there's no need to change them
Waiting for the 20SMA to end and the band walk
In this 5-minute chart of the USD/JPY pair, the price has fallen below the 20-period Simple Moving Average (SMA), so a band walk to occur, where the price movement follows the lower limit of the band .
Enter the market on a pullback or retracement after a band walk
A "band walk" was observed, where the market price moved along the lower limit of the band
Next, we'll enter a trade by looking for a sell-off opportunity after the price has rebounded to the 20-period Simple Moving Average (SMA)
Stop-loss orders are set above the recent high, and profit-taking orders are held over as long as the band walk continues. Profits are closed with market orders at the low of a higher timeframe or when the band walk ends on the 5-minute chart
Payment at the end of Bandwalk
If you want to close your position at the end of a band walk, you will need to place a market order to close it immediately
Because the timing of settlements can be critical, you need to concentrate and keep your eyes on the charts, but it's easy to make money quickly and efficiently by taking advantage of a strong trend
Targeting trend reversals on the 1-minute chart using RSI + MACD
RSI is an indicator that measures whether a market is overbought or oversold, while MACD is an indicator that can be used to determine trend reversals
By combining the two, you can accurately identify reversal points on the 1-minute chart
The specific trading procedure for the "RSI + MACD trend reversal targeting method on the 1-minute chart" is as follows:
- Set RSI (14) and MACD on the 1-minute chart
- An RSI above 70 indicates an overbought condition, while one below 30 indicates an oversold condition
- After the RSI reached extreme levels, a golden cross and dead cross were confirmed in the MACD
- Enter a trade based on a signal match (sell if the price is overbought → death cross)
- Stop-loss orders should be based on recent highs and lows, while profit-taking should be done in small increments (around 5-10 pips) to ensure steady gains
Now, let's explain the trading strategy using an actual 1-minute USD/JPY chart
A strategy using RSI + MACD to target trend reversals on the 1-minute chart
Added RSI and MACD to the chart
First, let's add RSI and MACD to the chart
You do not need to change any of these values from their default settings
RSI reached 70%
Generally, RSI generates signals earlier than MACD
In this 1-minute chart of the USD/JPY pair, the RSI has exceeded 70%, generating an "overbought" signal
MACD has a death cross
After the RSI reached 70%, the MACD formed a death cross, indicating that a downtrend had begun
Based on the overbought condition indicated by the RSI and the reversal of the downtrend indicated by the MACD, we can conclude that the direction is bearish and will take a short position
I set the stop-loss at the most recent high and the take-profit level at 10 pips
Profit-taking and stop-loss
In trading strategies using 1-minute charts, the potential price range is often limited, so we aim to improve the strategy to increase the win rate of trades and build up profits accordingly
To increase the risk-reward ratio, take profits not at a fixed price range,While it's possible to widen the price range by using the highs and lows of higher timeframes, this increases the position holding period and raises the risk of being caught in a market reversal
Key points for success in scalping with overseas forex trading
To consistently profit from scalping in overseas forex trading, it's essential to have multiple elements in place, including a proper trading environment and effective money management
- Use a low-spread overseas forex account that is approved for scalping
- Higher timeframe trend following
- Limit risk with a small amount of capital
- Increase either your win rate or your risk-reward ratio
- Beginners should take advantage of bonuses
- We will also consider CFD instruments with high volatility
By being mindful of these points, you can increase the reproducibility of your short-term trades and more efficiently accumulate profits
Use a low-spread overseas forex account that is approved for scalping
In overseas forex trading, assuming you choose a broker that officially allows scalping, narrow spreads and high execution speed will greatly influence your results
| Company Name Account Type | USD/JPY | EURUSD | GBPUSD | AUDUSD | XAUUSD |
|---|---|---|---|---|---|
| Exness Zero Go | 0.45 pips （0.1+0.35） | 0.45 pips （0.1+0.35） | 0.65 pips （0.2+0.45） | 0.6 pips （0.1+0.5） | 0.8 pips （0+0.8） |
| Axi Elite Account | 0.675 pips （0.5+0.175） | 0.575 pips （0.4+0.175） | 0.875 pips （0.7+0.175） | 0.475 pips （0.3+0.175） | 1.35 pips （1.0+0.125） |
| Axiory Nano Spread Account | 0.7 pips （0.4+0.3） | 0.6 pips （0.3+0.3） | 0.6 pips （0.3+0.3） | 0.7 pips （0.4+0.3） | 1.9 pips （1.5+0.3） |
| ThreeTrader Raw Zero Account | 0.7 pips （0.5+0.2） | 0.6 pips （0.4+0.2） | 1.0 pips （0.8+0.2） | 0.5 pips （0.3+0.2） | 1.0 pips （1.0+0） |
| TitanFX Blade Account | 1.15 pips （0.8+0.35） | 0.95 pips （0.6+0.35） | 1.35 pips （1.0+0.35） | 0.75 pips （0.4+0.35） | 2.63 pips （2.6+0.03） |
For example, many overseas FX accounts that use the ECN system directly connected to financial institutions have average spreads of less than 1 pip, making them suitable for scalping, which involves frequent trading
Furthermore, it's important to consider whether the platform is suitable for scalping overall, including factors like execution speed
Regarding overseas forex spreads, we have compiled a comparison table of spreads from various companies based on our own measurements and published it in Overseas Forex Spread and Fee Comparison List
Higher timeframe trend following
Scalping is primarily based on short timeframes such as 1-minute or 5-minute charts, but it is crucial to always check higher timeframes when deciding on the direction of entry
The advantages of focusing on trend following on higher timeframes include the following:
- This helps you avoid making entries against the trend
- It can reduce noise in short timeframes
- You can choose entries that are likely to move in the direction of profit
For example, if an uptrend is clearly visible on the 1-hour or 4-hour chart, prioritizing buying on dips on shorter timeframes can increase your chances of success
Limit risk with a small amount of capital
Because scalping involves frequent trades, beginners tend to have unstable win rates and are prone to losing their capital quickly
Therefore, instead of investing a large sum of money all at once, it is important to start with a small amount to limit the risk.
With overseas forex trading, you can use high leverage, making it possible to gain experience while trading even with a small amount of capital
Increase either your win rate or your risk-reward ratio
In scalping, the number of trades is high, making it difficult to perfectly maximize both the win rate and the risk-reward ratio. However, if either one is stable, you can accumulate profits
For example, with a strategy that has a win rate of over 80%, you can steadily increase your profits even if the profit margin per trade is small.
Conversely, even with a win rate of around 40-50%, if the risk-reward ratio is 2:1 or higher, the profit margin from wins will be larger than the profit from losses, resulting in an overall positive return.
If you excel at making big profits at the beginning of a trend, a low-win-rate, high-risk-reward strategy is recommended. Conversely, if you prefer smaller profits but minimize losses, honing your skills with a high-win-rate scalping technique is a good idea
Beginners should take advantage of bonuses
Many overseas forex brokers offer deposit bonuses and account opening bonuses
Especially for beginners, this is a valuable opportunity to gain practical experience without putting their own capital at significant risk
For example, if you deposit 50,000 yen and receive a 100% bonus, you will be able to trade with 100,000 yen, and your margin maintenance ratio will also be more flexible
For the latest information on overseas forex trading bonuses, please check Summary of the Latest Overseas Forex Bonuses
We will also consider CFD instruments with high volatility
Scalping is a type of trading that typically involves accumulating small price movements of a few pips,By choosing highly volatile stocks, you can efficiently aim for large price movements even in short-term trades
Gold (XAUUSD), crude oil (WTI), stock index CFDs, and Bitcoin (BTCUSD) in particular are characterized by their volatile price movements, which can easily generate profit opportunities in a short amount of time that would otherwise be greater than those offered by currency pairs
| Brand | Features |
|---|---|
| Gold (XAUUSD) | Frequent price fluctuations make it ideal for short-term trading |
| Crude oil (WTI, Brent) | It fluctuates greatly depending on supply and demand and economic indicators |
| Stock index CFDs | Responding sensitively to world affairs and news |
| Bitcoin (BTCUSD) | Large price fluctuations unique to cryptocurrencies |
However, because price fluctuations are large, the risk also increases, so it is essential to keep lot sizes small and strictly implement stop-loss orders
Once you become more familiar with trading, you can efficiently expand your profit opportunities by incorporating these CFD instruments in addition to currency pairs
With overseas forex brokers, you can also trade CFD instruments in the same account. The leverage and wide range of tradable instruments are favorable conditions, making it a recommended option for scalping
Overseas forex CFDs offer many attractive instruments such as the Nikkei 225, gold, and Bitcoin, and we have compiled a comprehensive explanation for beginners in our Complete Guide to Overseas Forex CFD Trading
There are five important points to keep in mind when scalping in overseas forex trading
When scalping in overseas forex trading, failing to understand the specific rules and risks involved can put you at a disadvantage
Here are five points that require particular attention
- In some cases, scalping is indirectly prohibited
- When using EAs for scalping, be careful of hedging across multiple accounts
- Withdraw funds to adjust your account balance
- Pay attention to economic indicators, leverage restrictions at the start of the week and the weekend
- The cashback will significantly reduce costs
Understanding these points before trading can help you avoid unexpected restrictions and disadvantages
In some cases, scalping is indirectly prohibited
Some overseas forex brokers, even if they don't officially state that "scalping is prohibited," may effectively restrict scalping through their execution conditions or trading rules
For example, rules like the following would effectively restrict scalping
- Minimum holding period (must be held for several minutes or more)
- Restrictions on the frequency of sudden orders
- Scalping is prohibited when using bonuses
Overlooking these conditions could lead to a situation where you unknowingly violate the terms of service
It is essential to always check the terms of service and verify in advance whether the broker welcomes scalping
When using EAs for scalping, be careful of hedging across multiple accounts
Scalping using automated trading systems (EAs) is effective because it can process orders quickly, but depending on how it is used, there is a risk of violating the terms of service
In particular, using multiple accounts or brokers to engage in hedging across multiple accounts often violates the terms of service
If hedging across multiple accounts as described below is discovered, penalties such as profit forfeiture or account freezing may be imposed
- Holding opposing positions simultaneously in multiple accounts
- Running multiple EAs (Expert Advisors) on the same stock across multiple accounts
- Arbitrage-type EA that utilizes price differences between multiple brokers
When using an Expert Advisor (EA) for scalping, it is generally recommended to use one EA and one account for each instrument
Withdraw funds to adjust your account balance
Because scalping involves frequent trading, your account balance may increase without you realizing it, potentially leading to leverage restrictions due to your account balance
The advantage of scalping in overseas forex trading is its high capital efficiency due to the high leverage
Therefore, once you start consistently winning through scalping in overseas forex trading, I recommend getting into the habit of making regular withdrawals.
Since the specific criteria for when leverage restrictions are imposed vary from company to company, it is important to check the leverage restriction rules based on account balance in advance
Pay attention to economic indicators, leverage restrictions at the start of the week and the weekend
Some overseas forex brokers may temporarily restrict leverage before and after the release of important economic indicators, or at the beginning and end of the week
This is to mitigate the risks associated with rapid price fluctuations. While leverage of 1,000 times is normally available, it may be limited to 50 times or 100 times at times like those described below.
- Before and after the release of important economic indicators such as US employment statistics and FOMC meetings
- Just before closing on the weekend or right after opening on Monday
- When geopolitical risks are on the rise
Basically, new positions opened during the relevant time period will be subject to leverage restrictions
Therefore, if you are considering scalping based on economic indicators, be sure to check in advance whether there are any leverage restrictions
The cashback will significantly reduce costs
Because scalping involves a high number of trades, costs such as spreads and fees tend to accumulate, directly impacting performance
An effective solution to this problem is to utilize cashback websites
By opening an account through a cashback program, a portion of the spread is refunded for each trade, significantly reducing your actual costs
For example, by using MoneyCharger, a portion of the costs incurred when trading with major overseas forex brokers will be automatically reimbursed.
In trading styles like scalping, where hundreds of trades are made, this difference can lead to a significant difference in profits over the course of a year
here for a list of businesses that offer cashback through Moneycha.
List of recommended accounts for scalping in overseas forex trading
We've compiled a list of recommended accounts for scalping in overseas forex trading
◀You can scroll▶
| Company name | Maximum leverage | Effective spread | Stop level | Ordering method | Scalping restrictions |
|---|---|---|---|---|---|
| Exness Zero Account | Unlimited | Minimum 0.35pips | Stop level | Market execution | No restrictions |
| Axi Elite Account | 1,000 times | Minimum 0.175pips | 0 | NDD method | No restrictions |
| Axiory Nano Terra Account | 1,000 times | Minimum 0.3pips | 0 | NDD ECN method | No restrictions |
| ThreeTrader Raw Zero Account | 1,000 times | Minimum 0.2pips | 0 | NDD ECN method | There are no explicit restrictions |
| TitanFX Blade Account | 500 times | Minimum 0.35pips | 0 | NDD ECN method | No restrictions |
| XS.com Elite Account | 2,000 times | Minimum 0.4pips | 0 | NDD method | No restrictions |
| MYFXMarkets Elite Account | 500xrn | Minimum 0.3325pips | 0 | NDD method | No restrictions |
| Milton Markets Elite Account | 500 times | Minimum 0.4pips | 0 | NDD method | No restrictions |
| HFM Zero Account | 2,000 times | Minimum 0.3pips | 0 | NDD ECN method | There are no explicit restrictions |
| Vantage Trading ECN Account | 1,000 times | Minimum 0.3pips | 0 | NDD ECN method | No restrictions, but excessively frequent trading is not allowed |
For the best overseas forex accounts for scalping, please see our Comparison of Recommended Overseas Forex Accounts for
If you're looking for an overseas forex account with low spreads and high execution speed that offers no restrictions on scalping, please take a look at this
Frequently Asked Questions about Scalping Techniques in Overseas Forex Trading
Is scalping prohibited in overseas forex trading?
While some brokers restrict short-term settlements and high-frequency trading, many officially "authorize" scalping. Always check the terms and conditions and choose an account that explicitly states scalping is permitted
What timeframe is recommended for scalping?
While entries are primarily made using 1-minute and 5-minute charts, it's effective to check higher timeframes such as 1-hour and 4-hour charts to determine the direction of the trade
Is scalping possible with a small amount of capital?
Yes. Overseas forex trading allows you to use high leverage, so you can trade even with a small amount of capital. Especially for beginners, we recommend gaining experience while limiting risk with a small amount of capital
Are there any ways to reduce trading costs when scalping?
In addition to choosing a low-spread account, you can further reduce your effective trading costs by utilizing cashback sites like Money Charger
What stocks are recommended for scalping?
While major currency pairs (such as EURUSD and USDJPY) are the basics, highly volatile instruments like gold (XAUUSD), crude oil, stock indices, and Bitcoin are also suitable for scalping
Will scalping in overseas forex trading be disadvantageous in terms of taxes?
Profits from overseas forex trading are taxed as "miscellaneous income" under comprehensive taxation, which may result in a higher tax rate than domestic forex trading (separate taxation, flat rate of 20.315%). Those who accumulate profits particularly through scalping should consider filing a tax return or utilizing hometown tax donations
What indicators are recommended for scalping?
Moving averages, Bollinger Bands, RSI, and MACD are fundamental. Avoid excessive reliance on indicators on short timeframes, and it's more effective to use simple indicators as supplementary tools
Do you need a VPS?
If you're using an EA for automated scalping or ultra-short-term trading, using a VPS can help stabilize execution speed. It's not essential if you primarily do discretionary trading, but it's useful for those who are concerned about server latency
Is it possible for my account to be frozen if I engage in scalping with overseas forex brokers?
Accounts may be frozen if you violate the terms of service or engage in hedging across multiple accounts. However, scalping in accordance with the regular trading rules is generally not a problem
Is scalping in overseas forex trading possible with automated trading?
Yes, it is possible to perform scalping using EAs (Expert Advisors/automated trading tools). However, some brokers prohibit high-frequency orders and the use of multiple accounts, so it is essential to check with your broker beforehand
