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
-
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.
GBPUSD Spread EURUSD Spread GBPEUR Spread 0.4 0.1 0.4 Total Assets FCA Regulated Platforms 100+ Yes MT4, MT5, cTrader, TradingView, AutoChartist, DupliTrade, Quantower -
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.
GBPUSD Spread EURUSD Spread GBPEUR Spread 1.4 1.0 1.4 Total Assets FCA Regulated Platforms 70+ Yes xStation -
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.
GBPUSD Spread EURUSD Spread GBPEUR Spread 1.0 0.2 0.5 Total Assets FCA Regulated Platforms 70+ No MT4, MT5 -
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.
GBPUSD Spread EURUSD Spread GBPEUR Spread 0.5 0.0 0.5 Total Assets FCA Regulated Platforms 55+ Yes ProTrader, MT4, MT5, TradingView, DupliTrade -
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.
GBPUSD Spread EURUSD Spread GBPEUR Spread 0.23 0.02 0.27 Total Assets FCA Regulated Platforms 75 No MT4, MT5, cTrader, TradingView, TradingCentral, DupliTrade, Quantower -
FxPro offers 70+ currency pairs but no minors and stands out with its ultra-fast execution speeds and tight spreads averaging 0.45 pips on EUR/USD. Forex traders can also build test and deploy short-term trading strategies on the industry-leading MT4 software, with expert advisors (EAs) for algo trading.
GBPUSD Spread EURUSD Spread GBPEUR Spread 0.6 0.45 0.73 Total Assets FCA Regulated Platforms 70+ Yes FxPro Edge, MT4, MT5, cTrader, AutoChartist, TradingCentral, DupliTrade, Quantower -
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.
GBPUSD Spread EURUSD Spread GBPEUR Spread 0.9 0.8 0.9 Total Assets FCA Regulated Platforms 80+ Yes Web, ProRealTime, L2 Dealer, MT4, TradingView, AutoChartist, TradingCentral, ProRealTime -
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.
GBPUSD Spread EURUSD Spread GBPEUR Spread 1.3 1.2 1.4 Total Assets FCA Regulated Platforms 80+ Yes MT4, MT5, TradingView, eSignal, AutoChartist, TradingCentral -
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.
GBPUSD Spread EURUSD Spread GBPEUR Spread 0.1 0.0 0.1 Total Assets FCA Regulated Platforms 50+ Yes MT4, MT5, TradingView -
City Index is one of the most trusted forex brokers, providing an above-average selection of 80+ currency pairs alongside tight spreads from 0.7 pips, trading alerts, and terrific insights into FX markets, with 99.99% of trades successfully executed.
GBPUSD Spread EURUSD Spread GBPEUR Spread 1.1 0.8 1.0 Total Assets FCA Regulated Platforms 84 Yes Web Trader, MT4, TradingView, TradingCentral
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.