Scalping strategies in Forex trading are getting more and more popular, as time goes by. Scalping is not about trying to spot and ride long-term trends, or even smaller trends, but rather it is about making many short-term trades.
Scalping usually involves opening positions and closing them within minutes. Forex scalping strategies are quick and scalping Forex traders must be quick and rely on their instincts a lot, rather than trying to analyze the Forex market and its state or condition. These strategies don’t focus on making a lot of money, but rather more modest yet more frequent profits.
One advantage of scalping, is that you can limit your risk. If you look for long-term trends, you will most likely risk more money on your positions, since you will be placing fewer of them. However with scalping, because you place so many orders, each order is only worth a small amount of capital. So if you lose, you only lose a very small percentage of your total Forex trading account’s capital.
However, if you want to make profits with scalping strategies in Forex trading, you will need be very knowledgeable of the currency market. Scalping is fast and instinctual – you don’t want to be messing around or hesitating at all. If you have no knowledge of the market for currencies, you will most probably struggle when trying to scalp the market.
Scalping the FX market is ideal for more experienced Forex traders too, since it requires a lot of discipline, as many beginner scalpers run their trades when they go wrong. Losses are inevitable in the Forex market, no matter what your trading strategy is. Ensure that you have discipline, if you want to make money from scalping in Forex trading.
Scalpers are more attracted to lower levels of volatility. If you want to make money scalping in the currency market, look for currency pairs that have less volatile prices. You might want to consider avoiding the most active market times. High volatility can wipe out scalpers with speed, so it is best avoided.
Although scalpers do not prefer to be in highly volatile markets, they do like highly liquid markets. High liquidity means that more money is circulating, so this will allow for smaller currency pair price fluctuations, meaning scalpers will be able to benefit and make more modest profits – these are the types of profits that they are looking for.
Even beginners can try scalping, however it is not generally recommended or advisable. Once you have gained some experience from trading in the live FX market, you might then consider giving scalping a go. There are other factors of scalping that you must also take into account, for example you will need a Forex broker that can fill your orders quickly. If you are scalping and your broker fails to fill your orders quickly, it could mean the difference between a profit and a loss. If you are going to try scalping the market for currencies, only consider brokers that can deliver speedy order filling.
In conclusion, scalping strategies in Forex trading can be very profitable. However, they are more ideal for the more experienced traders and investors in the Forex market.