GBP/JPY Scalping Strategy

In this article, we will show traders a simple strategy that can be used to scalp pips from a ranging currency pair such as the GBP/JPY. This currency pair has a wide intraday range, so it is possible to get very good scalping opportunities when the right indicators are used.

Top UK Forex Brokers For Scalping

  1. XTB

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    XTB provides access to 70+ currency pairs with low spreads averaging around 1 pip on majors. The xStation platform offers an intuitive environment for forex traders with an excellent charting package encompassing 30+ indicators, plus a range of order types, catering to various strategies and risk management techniques.

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    Eightcap offers 50+ currency pairs in line with the industry average but trailing category leaders like CMC Markets with its 300+ currency pairs. However, Eightcap stands out with institutional-level spreads from 0.0 pips on major pairs like the EUR/USD, alongside low $3.50/side commissions. The broker also offers rich forex data to inform trading decisions, including key fundamentals, bullish/bearish indicators and a calendar that tracks key events in the foreign exchange market.

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    FXCC's key selling point is its forex trading conditions. ECN spreads come in as low as 0.0 pips during peak trading hours, while it supports a wider range of currency pairs than the majority of rivals with over 70 forex assets. Additionally, you have access to MT4, which was built specifically for forex trading and excels for its charting tools.

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    Pepperstone offers ultra-competitive forex spreads averaging 0.12 pips on EUR/USD in the Razor account, accompanied by a diverse portfolio comprising 100+ currency pairs - an extensive selection surpassing most competitors. Additionally, Pepperstone distinguishes itself by offering three currency indices (USDX, EURX, JPYX), not commonly found among alternative platforms. Pepperstone has now won our annual 'Best Forex Broker' award twice.

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    IBKR presents an extensive range of over 100 major, minor, and exotic forex pairs, surpassing the offerings of nearly all leading alternatives, though not CMC Markets. Forex trading occurs over multiple platforms and boasts institutional-grade spreads starting from 0.1 pips and 20 complex order types, including brackets, scale, and one-cancels-all (OCA) orders.

  6. XM

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    XM offers ultra low spreads across a wide range of forex assets with no re-quotes or hidden charges. Over 50 currency pairs are available, which is above the market average and is in line with one of our top award-winners, AvaTrade.

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    OANDA offers 68 currency pairs, which is above the industry average. You can speculate on majors, minors and exotics, with spreads from 0.8 pips on popular pairs. There are no commissions and leverage is available up to 1:200. Average execution speeds are fast based on tests, at 12 milliseconds.

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    IG offers an above-average suite of 80+ currency pairs on its proprietary web platform, mobile app or MetaTrader 4, with more advanced charts and forex analysis tools available on the ProRealTime software. Forex spreads are competitive based on tests, starting from 0.1 pips on majors like the EUR/USD.

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    FxPro offers 70+ currency pairs with ultra-fast execution speeds and tight spreads from 0.46 pips on EUR/USD. The range of forex assets outranks many rivals, including our award winner, AvaTrade. Various short-term forex strategies are permitted, including EA trading and hedging.

  10. Axi

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    Axi continues to offer a strong selection of 70+ currency pairs - more than many top brokers including award-winner AvaTrade, with only 50+. There are no restrictions on trading strategies including algo trading and scalping, which will serve both short-term and long-term traders.

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    Vantage offers 55+ currency pairs - above the industry average, so experienced traders can explore plenty of opportunities. Vantage's deep liquidity pool provides forex spreads from 0.0 pips in the ECN account, lower than many alternatives. There are also no commissions, deposit fees or hidden charges.

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    IC Markets maintains its commitment to providing exceptionally tight 0.0-pip forex spreads on major currency pairs such as EUR/USD. This makes it an excellent option if you are seeking superior execution, with an average of 35 milliseconds. Additionally, if you are a high-volume trader, you can benefit from rebates of up to $2.50 per forex lot.

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    FOREX.com continues to uphold its stature as a premier FX broker, offering over 80 currency pairs and boasting some of the most competitive fees in the industry. With EUR/USD spreads dipping as low as 0.0 and $5 commission per $100k, it stands out. Moreover, its SMART Signals help to identify price behaviors across numerous major currency markets.

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    DNA Markets continues to deliver an excellent environment for forex traders with 40+ currency pairs and low spreads from 0.0 pips on the EUR/USD during tests. The MetaTrader 4 platform, available on desktop, web and mobile, was also designed specifically for forex trading.

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    OspreyFX offers more than 50 major, minor and exotic currency pairs. Spreads start from just 0.1 pips on the EUR/USD and the broker provides a suite of forex trading education for beginners, including partnering with Forex Squad.

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    Trade 70+ major, minor and exotic forex pair CFDs with up to 1:1000 leverage, no commission fees and competitive spreads from 0.8 pips. FX trades can also be executed via the reliable and fast MetaTrader 5 software.

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    Trade 70 major, minor and exotic forex pairs with ultra-low ECN spreads and fast execution via the MT4 or MT5 platforms. There are also zero SL/TP limits and automated forex trading is well catered for.

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    Ingot Brokers offers forex trading on a modest suite of 30+ currency pairs with raw spreads on the MT5 platform. There are also no restrictions on short-term trading strategies, including hedging, scalping and the use of Expert Advisors (EAs).

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    FinPros offers 80+ forex pairs, which is one of the more diverse offerings available. Traders benefit from ultra-low latency, MT5 support and very tight spreads and low commissions on the RAW+ account.

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    ForexChief supports spot foreign exchange trading on all account types for 40+ major, minor and exotic currency pairs. Trading takes place on the leading MT4 and MT5 platforms, which offer dozens of in-built technical tools for short-term forex strategies.

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    AdroFx's strongest offering is its 60+ currency pairs, which can be traded with very high leverage up to 1:500. The broker also offers competitive forex spreads starting from 0.4 pips and charges no commission. Additionally, traders have access to MetaTrader 4, which was built for forex trading and offers excellent support for technical analysis and algo trading.

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    Trade 7 major, 21 minor and 29 exotic forex pairs with high leverage and a choice between STP or ECN accounts. Support is available around the clock and the TradeLocker forex software is provided.

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    I’m happy with Tradeview’s strong range of 60+ currency pairs spanning majors, minors and exotics with competitive spreads from 0 pips in the $1000 ILC account. Traders can choose from several platforms, but I was particularly impressed with the feature-rich Currenex platform which is designed specifically for currency trading.

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    Trade Nation offers over 30 of the most popular forex pairs with variable spreads. Traders can access a slick proprietary platform or MetaTrader 4, with real-time forex market updates and insights via 'Smart News'.

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    Traders can access a decent range of 60+ major, minor and exotic forex pairs through standard and ECN accounts with tight spreads from 0.5 and 0.0, respectively. Execution speeds are also faster than most competitors at 50ms, which will appeal to active forex traders.

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    RoboForex offers trading on 30+ currency pairs, trailing category leaders like Pepperstone with its 90+ forex assets. That said, the Prime and ECN accounts feature competitive average spreads of 0.1 pips on the EUR/USD. Additionally, with a minimum investment of $100, traders can utilize the CopyFX system to replicate the strategies of seasoned currency traders.

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    Swissquote offers trading on a huge range of forex assets, covering 80+ currency pairs. Spreads start from 1.3 pips with the Premium account and there are zero commissions. Micro, mini and standard lot sizes are available plus options contracts on major currencies.

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    SimpleFX provides a comprehensive selection of around 60 currency pairs, from majors like GBP/USD to exotics like CHF/PLN. Forex trading fees are competitive, averaging 0.9 pips on EUR/USD during testing, while MetaTrader 4, available on desktop, web and mobile, was built specifically for trading currencies online.

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    You can go long or short on over 50 forex pairs from majors to exotics, with competitive spreads as low as 0.1 pips. The broker offers the leading charting software, MetaTrader 4, which delivers a host of advanced features, including 9 timeframes and over 30 indicators.

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    Trade on 45+ majors, minors, crosses and exotics, with competitive pricing, ultra-fast execution and no requotes. Newer traders can access zero-commission trading. Experienced forex traders can operate with no trading restrictions and benefit from an ECN account and a VPS service.

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    Trade 50+ forex pairs via the MetaTrader 4 and MetaTrader 5 platforms with leverage up to 1:500, immediate execution, deep liquidity and tight spreads.

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    FP Markets stands out as an excellent option for forex traders, boasting a selection of over 70 currency pairs covering a wide range of currencies, especially since expanding its choice of exotics. With average spreads of just 0.1 on the EUR/USD in its Raw account, the broker provides competitive pricing for traders.

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    IronFX continues to offer a strong selection of 80 currency pairs. You can trade through the market-leading MT4 platform with a range of forex market research tools. That said, commission charges in the zero-spread accounts are high, starting from $13.50 per lot.

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    Trade 80+ major, minor and exotic forex pairs. This is a very competitive range of currency pairs with 50+ exotics to choose from, and traders will benefit from fast execution and support from extra features including a pip calculator. The MetaTrader 4 software was also designed for online forex trading.

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    Trade 45 major, minor and exotic forex pairs. This is an average range, but the broker offers attractive and very competitive tight floating spreads from 0.3. Useful features including a news feed set the broker apart from many rivals and can help plan forex strategies.

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    With 60+ currency pairs available, Dukascopy offers enough majors, minors and exotics to keep most forex traders happy. The broker also offers high leverage up to 1:100 – a good amount to see from a reputable and regulated broker. Currency traders have access to excellent software, including MT4 and JForex.

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    Speculate on popular currency pairs with flexible leverage up to 1:500 and zero-pip spreads in the GO Plus account. Commission-free trading is available with micro, mini and standard forex contract sizes.

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    Trade on 60+ forex pairs with no commission and competitively tight spreads from 0.6 on major pairs such as EUR/USD. This is a good selection of forex pairs and excellent pricing for commission-free trading, well below the industry average.

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    ThinkMarkets offers 46 currency pairs, which is around the industry average. Forex traders can benefit from tight 0.0-pip spreads for EUR/USD during peak market hours. Additionally, the ThinkTrader proprietary platform offers an impressive 125+ technical indicators - ideal for complex forex strategies.

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    CMC presents an extensive array of 300+ forex pairs characterized by tight spreads and rapid executions, surpassing the offerings of many competitors in terms of currency diversity. Forex indices also present a fairly unique and holistic way to speculate on the value of key currencies like the USD, EUR and GBP.

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    FXTM offers a strong range of 60+ currency pairs - more than many competitors including AvaTrade. There’s also 6 currency indices for traders looking to diversify their forex portfolios. The brand’s ECN account offers competitively low spreads from 0 pips, with equally low commissions up to $2 per lot.

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    Fusion Markets offers an excellent selection of 90+ currency pairs, providing a range of short-term trading opportunities. It continues to excel for its ultra-tight spreads from 0.0 pips and exceptionally low commissions of $2.25 per side. You also get access to leading forex software in MetaTrader 4.

Indicators

The indicators used for this strategy are as follows:

a)    The pivot point calculator.

b)    MACD – using the default settings.

c)     The Laguerre custom indicator, which is actually two indicators in one. Laguerre 1 is used to determine trade entry points. Indicator settings are: Gamma – 0.60; levels – 0.15, 0.85, 0.45; bars – 9500; colour – blue.  Laguerre 2 (used for trade exit determination) is set as follows: Gamma – 0.80; levels – 0.15, 0.85, 0.45; bars – 9500; colour – red. Enable Fixed maximum (~1.05) and fixed minimum (~-0.05) in the Common tab under settings before attaching this indicator to the charts. The Laguerre indicators function to detect oversold/overbought areas of the market.

d)    StochHistogram – A modification of the original Stochastics oscillator to obtain a histogram. Default settings of 14,3,3 are used. The histogram is colour-coded, with a green coloured histogram signifying an uptrend and a red-coloured histogram indicating a downtrend.

e)    Bollinger bands – used with default settings.

f)     Exponential moving averages set at 200 day (Red) and 60day (Blue) levels to find support and resistance.

NB: Personal tests of this strategy has shown that it can also be used on other Yen crosses, but the GBPJPY gives the highest profit ratio as a result of its wide intraday price range. The USDJPY gives the lowest profits with this strategy.

Looking at this chart above which shows one long entry and two short entry setups, we can clearly see the following:

The MACD has to cross from positive to negative (short signal) and from negative to positive (long signal).

At the same time, the Stochastics Histogram must also cross from positive to negative (short signal) or from negative to positive (long signal), and both moves are indicated by the respective colour changes.

The Laguerre 1 and 2 must be trending upwards and must perform a cross at or below the 0.15 level, which represents an oversold region for a buy signal. For a sell signal, the Laguerre 1 and 2 must be trending downwards, and must cross at or above the 0.85 point, which represents an overbought region.

These parameters are not used in isolation. The relationship of the currency pair to the lines of the Bollinger band, as well as the positioning of market price relative to the pivot points must be considered. For a long signal, the market price must not only be above the daily pivot point, but must also cut, or has at least touched the lower Bollinger band. For a short signal, the market price must be below the daily pivot and the price action candle of the currency pair must also have touched or cut across the upper Bollinger band.

All these parameters must align together for the strategy to work. Given that the chart used for analysis and entry is the 5 minute chart, the trader can actually use this strategy to make money from the market several times in a trading day. Since there are always opportunities with this type of trade, the trader should not be tempted to force the market but should rather, be patient to ensure that every single parameter is met.

Strategy Modification

The Laguerre 1 and 2 indicators mimic the activity of the Stochastics oscillator in predicting overbought and oversold conditions. If the trader is unable to get access to the Laguerre1/2 indicators, he can substitute them with the Stochastics oscillator, and use points 25 and 75 as the borders for oversold and overbought market conditions respectively.

Here is another example below:

Long Trade Exits

 The following can be used as rules for long trade exits:

a) Both Laguerre indicators crossing at or above 0.85 (currency asset is overbought).

b) Price action approaches any of the resistance levels as defined by the autopivot calculator.

c) MACD indicator crosses from positive to negative, indicating a change in the trend.

d) Stochastics Histogram crosses from positive to negative, changes colour from green to red, again indicating a change in trend.

Long Trade Exits

 The following can be used as rules for long trade exits:

a) Both Laguerre indicators crossing at or above 0.15 (currency asset is oversold).

b) Price action approaches any of the support levels of S1, S2 or S3.

c) MACD indicator crosses from negative to positive, indicating a change in the trend.

d) Stochastics Histogram crosses from negative to positive or changes colour from red to green.

Used properly, you never have to fear trading the GBPJPY again.