Forex scalping is a trading method based on making many trades that remain open for a short time. In a scalping strategy, positions are kept open for a maximum of 3 to 5 minutes, with the usual duration of operations being only 1 minute.
The popularity of Forex scalping is since it is perceived as a strategy that offers security to the trader. It is mainly due to the following:
A scalping strategy is based on making numerous short duration trades during specific market times. According to these premises, an operator who wants to develop this type of trading must have the following qualities:
A trader with a more expressive style or who seeks to obtain large profits in a short time and with few operations should not use this type of strategy.
As explained, a scalper has to be very organize about his trading decisions and what the market expects at the time. Due to the high number of operations, it is common for some functions to have losses. Still, the operator must bear in mind that the final profit of the strategy will be the result of the final sum of all the operations. Therefore, although scalping techniques are base on short-term operations, that does not mean that profits or losses are immediate.
Scalping is not only about taking advantage of news, economic events or price trends but also takes advantage of the basic structure and internal dynamics of Forex.
If you want to check if Forex scalping is a suitable strategy for your trading style, it is best to open a trial or demo account.
These accounts are free and allow you to implement different scalping strategies. All this is without any risk since it is not operate with real money.
As explained in the previous point, Forex scalping requires specific qualities from the trader. Likewise, to be successful with a Forex scalping strategy, the following is necessary:
To develop a scalping technique, the trader should focus on one or at most two currency pairs. Each currency pair has its features that characterize its behavior. To scalp, the trader must know perfectly what these traits are like to operate the couple correctly.
Therefore, to be successful in a scalping strategy, it is more advisable to focus on the operation of a pair than to try to cover several teams without knowing them in depth.
The chosen pair must be included within the so-call main currencies, such as, for example, the EUR USD or the GBP USD.
So-called exotic currency pairs are generally not suitable for scalping, as their unpredictable price jumps make it challenging to manage the risk of orders properly.
The choice of broker is one of the most critical decisions for the trader who wants to operate with this type of trading.
For an operator who opens one or two positions in a day, the spread is not such a relevant variable. If he is successful in his operations, the spread will still a minimal cost that will not put his profitability at risk.
In contrast, in a scalping strategy, the situation is entirely different. Since the trader will likely open dozens of positions in a short time, the spread will significantly impact the trader’s bottom line.
In a scalping strategy, technical analysis tools are use. In the brief periods that scalping uses, the fundamentals of the currency pair being trade have no effect on the price, or if they do, they are usually unpredictable in this time frame.
Therefore, the platforms offered by the broker must include a complete set of technical analysis tools and charts with a time scale of 1-2 minutes and up to 1 tick.
Forex scalping is a highly technical trading method that requires an efficient Forex broker who has been at the forefront of online trading for years. All of these features can found . the world’s leading Forex broker that puts at your disposal not only the best trading platforms but also offers excellent customer service.
Forex scalping is high-frequency trading that requires high market liquidity to ensure order execution at speed needed for the trader.
In addition, more liquidity will likely be obtain if scalping is carry out during the hours of the day when there is a higher trading volume. These hours correspond with when the London and New York markets are open.
A good scalping strategy must combine leverage with proper risk management. Since positions have a small profit margin. Power allows you to increase profitability. On the other hand, since using force can increase losses. It is essential to carry out good risk management, defining how to exit operations to minimize losses.
This risk management is done by defining a “stop-loss” for each position we open. The stop loss minimizes losses if the trade does not go well and limits such losses to the amount the trader can afford to lose on each business.
With the high frequency that scalping requires. It is necessary to have a system that allows you to operate almost automatically to open and close positions. As the high speed that scalping requires does not allow in-depth analysis of every trade, it is vital to have a system you can repeatedly use with a reasonable confidence level.
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