What Is Forex Scalping?
Scalping is a day trading strategy that involves opening and closing trades within a short period of time. Scalping is different from other types of day trading strategies in terms of holding periods and market analysis.
With most day trading strategies, trades can be held even for a couple of hours within the same trading day, with traders analyzing the market using both fundamental and technical analysis methods. But with scalping, trades are held for a few seconds or a few minutes; and scalpers almost exclusively use technical analysis methods because of the short holding periods of their trades.
This doesn't mean forex scalping is an exact science. However, the nature of this trading strategy is such that you can ebb and flow in sync with market fluctuations. Doing this successfully allows you to make small profits from a lot of trades. Indeed, this is the core principle that drives scalping. Your aim isn't to make a large amount of profit from a single trade. Instead, you're aiming to take advantage of small market movements in order to scalp small profits from a large number of positions.
Forex scalping works on the basis that traders make multiple moves in a single day. This is possible because forex prices are based on small movements known as pips (i.e. digits after the decimal point). Scalping isn't as effective in other types of trading because prices don't move as frequently or significantly. However, in forex, there are micro-movements (i.e. pip movements) all the time. This is what scalpers focus on.
Is Forex Scalping a Suitable Style For Me?
Deciding whether scalping is a suitable trading style for you, will largely depend on how much time you are willing to dedicate to trading. Forex scalping requires constant analysis and the placement of multiple orders, which can end up being as demanding as a full-time job. Furthermore, there are only a few hours a day when you can scalp currency pairs.
After time availability, the next most important thing is being able to think on your feet.
For a Forex scalping strategy to be profitable, you must quickly predict where the market will go, and then open and close positions within a matter of seconds. When making these trading forecasts, keep in mind that herd psychology is integral to market movements. For learn more, what kind of forex scalping suitable for you click here..
HOW DO YOU SCALP?
You scalp by selecting a pair of currencies with similar buying and selling prices. Forex scalpers react quickly to fluctuations in the exchange rate, and take their profits just as fast. In short, you buy today and you sell today.
The best currency pairings to scalp are usually USD to EUR, USD to JPY and USD to GBP. This is because they generally have the highest trade volumes. By paying attention to trends and signals in a particular pair of currencies, you can start to judge when it's best to 'take' (the profit) or 'exit' (the trade).
Pros and Cons of FOREX Scalping
Pros
One of the biggest advantages of Forex scalping is that it allows you to place several trades per day. Many people like to stay constantly involved in the market. Most scalpers place many trades over the course of the day and this can be very exciting to the trader.
Another advantage of this strategy is that you can bring in small, regular profits. With other trading strategies, it can take days or weeks, before you ever close a profitable trade. With a good stopping strategy, you can bring in money every single day. Individuals who are trying to live off of their Forex trading might prefer this method because it is consistent.
Cons
One of the big potential disadvantages of this strategy is that it can be very difficult to predict what the market will do on a minute to minute basis. While some people can follow the trend and make profit over the long-term, it can be more difficult to accurately say what will happen within the next five minutes. Many experts believe that it is impossible to use technical indicators in order to consistently be profitable with short-term scalping trades.
Which forex instruments are best for scalping?
Just about any currency pair or commodity CFD is great for scalping the markets. Each of these financial instruments can behave differently under different circumstances.
It is up to the trader to understand how each of these instruments behaves and then pick a select few.
One of the key things to be successful with forex scalping is to stick with currency pairs or commodities that you are familiar with.
For example, crude oil CFDs can be volatile during the weekly crude oil inventory report. Likewise, the JPY can gain volatility during times of market panic.
What Type of Brokers Is suitable for Forex Scalping?
Being a DD or NDD broker doesn't necessarily make a broker fit for one style of trading.
In general, ECN and STP brokers have better spreads, however, there are DD brokers with fixed spreads that have lower spreads than many NDD brokers
Just make sure that they are regulated so you don't stumble upon the mentioned problems. If you have big problems with them, the best solution is to change your broker.
Forex scalping can be a great way to play the markets and ride the fluctuations currency pairs are known for. It's not a risk-free trading strategy and you have to be a certain type of person to attempt it. However, if you're someone that thrives on pressure and doesn't mind jumping from position to position in search of incremental profits, scalping is fantastic.
You can learn more about forex scalping, forex trading strategies at forex forum.
Thank You
Scalping is a day trading strategy that involves opening and closing trades within a short period of time. Scalping is different from other types of day trading strategies in terms of holding periods and market analysis.
With most day trading strategies, trades can be held even for a couple of hours within the same trading day, with traders analyzing the market using both fundamental and technical analysis methods. But with scalping, trades are held for a few seconds or a few minutes; and scalpers almost exclusively use technical analysis methods because of the short holding periods of their trades.
This doesn't mean forex scalping is an exact science. However, the nature of this trading strategy is such that you can ebb and flow in sync with market fluctuations. Doing this successfully allows you to make small profits from a lot of trades. Indeed, this is the core principle that drives scalping. Your aim isn't to make a large amount of profit from a single trade. Instead, you're aiming to take advantage of small market movements in order to scalp small profits from a large number of positions.
Forex scalping works on the basis that traders make multiple moves in a single day. This is possible because forex prices are based on small movements known as pips (i.e. digits after the decimal point). Scalping isn't as effective in other types of trading because prices don't move as frequently or significantly. However, in forex, there are micro-movements (i.e. pip movements) all the time. This is what scalpers focus on.
Is Forex Scalping a Suitable Style For Me?
Deciding whether scalping is a suitable trading style for you, will largely depend on how much time you are willing to dedicate to trading. Forex scalping requires constant analysis and the placement of multiple orders, which can end up being as demanding as a full-time job. Furthermore, there are only a few hours a day when you can scalp currency pairs.
After time availability, the next most important thing is being able to think on your feet.
For a Forex scalping strategy to be profitable, you must quickly predict where the market will go, and then open and close positions within a matter of seconds. When making these trading forecasts, keep in mind that herd psychology is integral to market movements. For learn more, what kind of forex scalping suitable for you click here..
HOW DO YOU SCALP?
You scalp by selecting a pair of currencies with similar buying and selling prices. Forex scalpers react quickly to fluctuations in the exchange rate, and take their profits just as fast. In short, you buy today and you sell today.
The best currency pairings to scalp are usually USD to EUR, USD to JPY and USD to GBP. This is because they generally have the highest trade volumes. By paying attention to trends and signals in a particular pair of currencies, you can start to judge when it's best to 'take' (the profit) or 'exit' (the trade).
Pros and Cons of FOREX Scalping
Pros
One of the biggest advantages of Forex scalping is that it allows you to place several trades per day. Many people like to stay constantly involved in the market. Most scalpers place many trades over the course of the day and this can be very exciting to the trader.
Another advantage of this strategy is that you can bring in small, regular profits. With other trading strategies, it can take days or weeks, before you ever close a profitable trade. With a good stopping strategy, you can bring in money every single day. Individuals who are trying to live off of their Forex trading might prefer this method because it is consistent.
Cons
One of the big potential disadvantages of this strategy is that it can be very difficult to predict what the market will do on a minute to minute basis. While some people can follow the trend and make profit over the long-term, it can be more difficult to accurately say what will happen within the next five minutes. Many experts believe that it is impossible to use technical indicators in order to consistently be profitable with short-term scalping trades.
Which forex instruments are best for scalping?
Just about any currency pair or commodity CFD is great for scalping the markets. Each of these financial instruments can behave differently under different circumstances.
It is up to the trader to understand how each of these instruments behaves and then pick a select few.
One of the key things to be successful with forex scalping is to stick with currency pairs or commodities that you are familiar with.
For example, crude oil CFDs can be volatile during the weekly crude oil inventory report. Likewise, the JPY can gain volatility during times of market panic.
What Type of Brokers Is suitable for Forex Scalping?
Being a DD or NDD broker doesn't necessarily make a broker fit for one style of trading.
In general, ECN and STP brokers have better spreads, however, there are DD brokers with fixed spreads that have lower spreads than many NDD brokers
Just make sure that they are regulated so you don't stumble upon the mentioned problems. If you have big problems with them, the best solution is to change your broker.
Forex scalping can be a great way to play the markets and ride the fluctuations currency pairs are known for. It's not a risk-free trading strategy and you have to be a certain type of person to attempt it. However, if you're someone that thrives on pressure and doesn't mind jumping from position to position in search of incremental profits, scalping is fantastic.
You can learn more about forex scalping, forex trading strategies at forex forum.
Thank You