What is Forex Scalping?
If you have been searching for Forex Strategies then you might have heard Forex Scalping a few times. So let’s get to know exactly what is Forex Scalping? Scalping is a trading strategy that Forex traders use to quickly buy a currency pair and hold it for a short time. The scalpers do many trades and earn little profit every time.
Traders who scalps use between 5 and 10 pips per transaction and repeat this process throughout the day. A transaction using a high leverage and only a few pips at a time will result in the accumulation of profits, especially if the transactions are profitable and repeated several times throughout the day. Remember that for every standard lot, the average value of a pip is about $10; therefore, for each 5 pip, the trader earns $50 each time. 10 times a day ends up with $500 profit!
The scalping process is fast; therefore, if you want to concentrate on the 1 or 5 minute charts, if you react quickly, if you accept too much stop losses without any regrets, the Scalping Trading Strategy will give you an edge over the market. But if you are the type of person who analyzes his/her decisions over and over again and consider all aspects, perhaps Forex Scalping is not a good choice for you.
Because forex scalping is trading in very high speed manner, it’s very important for you to have the lowest spread (the difference between the selling rate at the purchase price), high liquidity, and fast execution of orders. For this reason, you are advised to use ECN accounts due to high transaction speeds and low floating spreads. The remarkable aspect of ECN accounts is the lack of trading desks; because of high liquidity, the best rates are immediately offered to traders.
Forex Scalping important notes
If you are considering forex scalping strategy for your trading routine, You might want to first read the following notes carefully.
Try to focus on a pair of currencies.
Scalping is a difficult task, and if you concentrate all your energy on a pair, you have a better chance of success.
Always consider the spread
Because you often enter the market, spreads are considered to be very important factors in your overall profit. To do this, select Brooker with the lowest spread (preferably in an ECN account)
Only trade the pairs of currencies with the most liquidity
Pair of currencies such as EUR / USD, GBP / USD, USD / CHF, GBP / JPY, EUR / JPY and USD / JPY have the highest trading volume. Since you are frequently entering the market, it is best to trade with the most common pairs of currencies.
Do not seek revenge on the market
If you do not concentrate for any reason, do not scalping; the cold, the bad day, the stress, and factors like this usually affect the quality of your trade. If you have consistently lost your trading, stop trading and reinstate. Bargain open mindedly!
Manage your capital properly
This applies to any kind of business; adherence to capital management practices is very important, especially for you, which deals a lot during the day.
It is a misconception that scalp traders are rash and generally loser. One way to combat this misconception is to turn the scalping business into a mechanical process. In other words, before accessing the charts, write down all your decisions, including entry, exit, trading volume per lot basis, leverage, and other factors. Many scalpers put 1% or less of their account balance in a risky position! If you want to scalp forex, you should be ready in all respects.