Forex scalping – an extensive guide on how to scalp Forex
The forex scalping strategy is considered to be extensively used by traders who like to play it safe in the forex market. This strategy is indeed great for risk management as it is very practical. Scalpers spend less time exposing themselves to the risks that otherwise cripple other kinds of forex traders. Scalping involves creating many trades that are spread over the market and which produce big profits when taken cumulatively. There are various scalping strategies that can be used. As reported by Admiral Markets, there can either be long or short positions when making orders with the scalping strategy. In order to apply forex scalping strategies successfully, you need to understand how scalping works.
Great Awareness Is Required To Be A Scalper
Unlike other forms of trading that followed the momentum and trends of the market, scalping is more dependent on what moves the trader initiates. For this reason, a lot more keenness is required on the part of the trader. Day traders usually close only a few trades in a typical day. This is not the case with scalpers who can close more than a hundred trades. Scalping is thus quite an intricate way to trade. It is not as difficult as many would assume, however. There are some great tools that are designed to specifically increase yields when scalping. The only thing required when scalping is to learn the core methods of the practice that have been tried and tested.
How To Scalp Correctly
Scalpers need to know how to deploy their strategies correctly in order to make profits in the forex business. Scalping correctly involves some using some simple skills that make the management of assets easy. There are three different stages involved in scalping. These are:
- Preparation stage
- Trading stage
- Closing stage
Basically, the preparation stage is what matters most for the strategy to work. Preparation includes gathering all the necessary tools, skills and technologies to ensure that the trading stage will be smooth. The trading stage is all about making moves and following up on the trades until they are ready to be closed. As the name suggests, a scalper exits the trade at the closing stage. Since scalping involves high volumes of trade within a short amount of time, the preparation stage needs to take the most time.
Scalping is also more about what happens outside the trading process. In order be an efficient scalper, you need to roll out a plan that is backed by a good research. In general, for you to be successful in the trade, you need to:
- Identify the best currencies
- Identify the best time to scalp
- Choose the right broker
The scalping strategies commonly used in the market are range, breakout and trend scalping. As each of their names suggests, these strategies focus on the conditions in the market to determine what a trader should do.
Employing Technology When Scalping
A key factor that is uniquely common in the scalping world is technology. The specific kind of technology used in scalping is automating technology. As expected, a strategy that involves a huge volume of trade must definitely have a number of tasks that are repetitive. Automation thus comes in to remove the agony of repetitive tasks and in the process makes trading more efficient.
While automation does not entirely remove all the manual aspects of scalping, it goes a long way in saving the time of traders. Several automated scalping systems have been developed in recent times and it is recommended to use them in the business. A great advantage that comes with automation is that the systems available can be customized to address the needs of each individual trader. Technology is thus invaluable if you are in the forex market as a scalper.
Should you consider scalping over other forms of forex trading?
With such a contentious strategy like scalping, many traders are forced to ask themselves hard questions regarding their forex trading choices. Is it wise to choose scalping over day trading, for instance? The simple answer is – not necessarily. Scalping is a strategy which is probably suited for people who have found it to be the best way to avoid forex risks. Scalping is an involved but a fairly safe way to trade in the risky forex business. The strategy is recommended for people who are ready to learn about the process and who are not bothered by automation.