What is scalping in Forex?

25 Oct 2018

What is scalping in Forex?

Scalping is fast, exciting and stimulating at the same time. It is a trading style that usually refers to holding an asset for only a few seconds or a few minutes at most.

In trading, scalping means buying and selling positions several times in the same day generating a small profit. Traders see scalping opportunities when looking for extreme prices in the market. When scalping, we can buy at a lower price and sell it at a higher price or vice versa. We prefer to sell mainly premium assets, but we can also sell futures in low category IV environments to keep us active.

The most important aspect of scalping is liquidity. We will not focus on a position that is not liquid since our goal is to enter and exit our operations several times in a day. Guaranteeing liquidity also ensures that we are obtaining the best possible price when entering and leaving operations. Scalping is purely subjective, and there is no guideline as to when to enter and exit trading. We trade with very little money when scalping and accept profits when they arrive. We believe that negotiating too much and being greedy are easy ways to lose money quickly by implementing this technique.

Is Scalping Right for You?

The main goal of Forex scalpers is to trade in very small amounts as many times as they can along the busiest hours of the day. Because scalpers basically have to be glued to graphics, this style is best suited for those who can devote several hours of attention to their operations. Scalping requires intense focus and quick thinking to succeed. It is not for those who seek to obtain great profits all the time, but for those who like to obtain small benefits to obtain a general long-term benefit.

You can be a Forex scalper if you have the following qualities:

  • You like fast trading and emotions
  • You do not mind being concentrated in your graphics for several hours a day
  • You are an impatient person who does not like to wait too long
  • You can think fast and turn the wheel or change the direction quickly

You may NOT be a Forex scalper if:

  • You stress easily in fast moving environments
  • You can not devote several hours of undivided attention to your graphics
  • Prefer to trade less with higher profits
  • He likes to take his time to analyze the general image of the market

Some things to consider if you decide to venture into the scalping:

Exchange only the most liquid pairs. Such pairs as EUR/USD, GBP/USD, USD/CHF, USD/JPY  offer the tightest spreads because they tend to have the highest trading volume. You want your spreads to be as tight as possible since you will enter the market frequently.

Trade only during the busiest hours of the day. The most liquid hours of the day are during the overlays of the session. See the hours of trading hours.

Be sure to pay attention to the spread. Because it enters the market frequently, spreads will be an important factor in your overall earnings. Make sure your goals have at least double your margin so you can count how many times the market moves against you.

Try to focus on a pair first. The scalping is very intense. If you can put all your energy into a pair, you will have more chances of being successful. Trying to have several pairs of scalping simultaneously as a rookie will be almost a suicidal act. If you start to get used to the pace of things, you can start by adding another pair and see how it works.  

Minimize the risks. Do not forget that currency trading involves risks regardless of the style you choose. Before risking your own capital it is better that you gain experience, practice scalping on our demo account.

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