What is Forex Scalping
I presume you know how to use the trading platform and you have read all the material about Forex and you have used Demo account to get the hang of how to use the Forex Trading platform.
Scalping is opening and closing a position in seconds the shorter the period the less exposure to risk.
Most brokerage firms do not like scalpers! Many brokers making money trading against their clients through their dealing
desks “it is legal in the Foreign Exchange market” (Forex)
When scalping Forex, a trader will hold a currency for seconds or minutes before they resell at a profit. The trader is playing with the spreads to bring in money where others fail to spot a small market move.
All successful forex scalpers base their strategies on information about the market they trade in. because of the level of knowledge and nerve you need to succeed you would not find new traders adapting scalping methods. Also you do not find traders holding positions overnight.
Scalping is based on Time, Liquidity, and Volatility
Forex Scalpers look for small moves in their favor; they aim to make several trades a day with the objective of accruing several small profits each time they trade.
It is based on observation that most of the price movements go in the trader direction for seconds or minutes before it goes its trend direction!
Forex Scalpers think that they can double their account balance every month if they make an average of 15 to 20 pips a day.
It is true! But what about the risk of Forex scalping?
It seems profitable method and I used it myself and I am still using it.
While it seems profitable method when scalping the price movements, the spread you pay on opening a trade makes the risk reward more risky than the long term trading.
Example – if your broker charges you 3pips spread for opening a position and your target are 10pips stop Loss; the price has to move to 13 pips to take the profit, 10 pips your stop loss and three pips spread.
Another risk you will find in the foreign exchange market (Forex), if you have one large loss!! That will eliminate many small
gains.
You really need a very good exit strategy in scalping.
You need low spreads
You need to use a good platform (one of the most common is Meta Trader 4 it is made by Russian company).
You need to invest time and energy
You need to have the education, training, time, psychological stamina and money.
It is easier to use Forex Robots or trading algorithms, they are automated and they are an account management service that operates like a professional trader and money manager. Forex Robots have no emotions so I think they do better than humans in the foreign exchange market.
Forex (the foreign exchange market) is high risk investment
Forex may not be suitable for all investors. It is possible that you could sustain a loss of some or all of your investment.
You should not invest money that you cannot afford to lose.
Be aware of all risks and if you are not sure seek an advice of a
Money manager “Money managers are very expensive”!
Written By: Adma Dababneh
