Forex Scalping - A Very Popular Way To Trade Forex
Forex Scalping is one of the most popular ways of trading in the forex market
, along with Swing Trading and Day trading. There are millions of traders who do only scalping. That is because...1. A scalping trade normally lasts for only few minutes. So, you can open a trade, make quick little profit, and then close the trade immediately.
2. You have the potential of placing multiple trades a day. Since you are targeting only a few pips per trade, there are multiple times you can place a trade. Also, you can use the scalping techniques on multiple currency pairs.
Still, you have to keep in mind that scalping can be risky also. Here it is why...
Scalping is about making a small profit on each trade but, as per good trading principles, it requires some realistic stop loss value to protect against the scenario of a trade going in the opposite direction. So, the risk per trade is high, but the reward is low.
Infact, there are certain trading systems that require a 50 pip stop loss for 10 pip profit. So, imagine you have 4 profitable trades and 1 trade with a loss, which is an 80% success rate, still you would end up losing 10 pips after 5 such trades. Such systems should always be avoided.
At the same time, you also need to consider your own trading psychology. Are you mentally ready for scalping? Do you like to place trades immediately or are you the kind of person who likes to take time to understand the market and also requires some time to make a trade? How fast is your broker in accepting trades? This is important since if the broker takes even 10-15 second to place a trade, the trade opportunity in some cases may slip away.
This brings up the next point - that any scalping system or software should be highly accurate and should give clear cut signals about when to open a trade and when to close a trade, since you do not have chance to second guess in scalping. If you are late, even by a minute, then the entire scalping opportunity may simply go away and the trade cannot be placed.
The final point to be considered when selecting a scalping software or system is that it should be very easy to understand and use, and there should be a good level of customer support available to assist in case of any questions. This is highly important since if the forex trader is not confident about the trading system or software, the probability of trade ending in a loss is high.
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