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What is Forex Scalping?
Forex Scalping is a short term trading method which generally only lasts a few minutes. Traders who opt to be scalpers will thus open positions and close shortly after, such as after five minutes. Sometimes the timeframe is only in seconds! Hence this trading style is often described as being instantaneous.
The main aim of scalping is to gain small profits over and over again within a short period of time. Hence scalpers manage to carry out several operations during a day.
To make a profit it is important to operate in a methodical manner. The trader will need to make a good stop loss instruction in each operation. It is crucial to understand that this is a rather high risk method, and it is recommended that traders who use this technique have good knowledge of the market accompanied by a high level of technological assistance.
It is also important to note that since scalping is carried out in very short time intervals, a trader needs to be able to make quick analysis and decision making. All the systems and tools utilised by scalpers should be as swift as possible. Conservative traders tend to stay away from scalping due to its hectic nature.
The best times to trade for scalping are the open, midway and the period just before the close. It is also best to stick to assets that have high liquidity, such as stocks and currencies that have a high turnover.
Being a scalper is not that easy. One needs to have very good emotional control and exceptional mental agility. Other important traits include the ability to act quickly and make decisions rapidly. A good scalper will also need to be analytical and disciplined.
Scalpers stick to markets that are:
- Highly liquid. Good examples include EUR/USD, GBP/USD, DAX30, Dow Jones, SP500 and Gold.
- Good level of volatility. Scalpers will need to find micro trends which enable them to follow the price. Hence a highly volatile market is not ideal as the stop loss might be reached very quickly and often, whereas a market that has a low volatility is not good either.
Scalpers require an online broker that is able to offer the lowest possible spreads as well as a fast and reliable execution of operations. Some brokers do not support scalping, so you may wish to consider this as they might close your account if they see that you are consistently opening and closing positions over a short period of time.
The main aim of scalping is to gain small profits over and over again within a short period of time. Hence scalpers manage to carry out several operations during a day.
To make a profit it is important to operate in a methodical manner. The trader will need to make a good stop loss instruction in each operation. It is crucial to understand that this is a rather high risk method, and it is recommended that traders who use this technique have good knowledge of the market accompanied by a high level of technological assistance.
It is also important to note that since scalping is carried out in very short time intervals, a trader needs to be able to make quick analysis and decision making. All the systems and tools utilised by scalpers should be as swift as possible. Conservative traders tend to stay away from scalping due to its hectic nature.
The best times to trade for scalping are the open, midway and the period just before the close. It is also best to stick to assets that have high liquidity, such as stocks and currencies that have a high turnover.
Being a scalper is not that easy. One needs to have very good emotional control and exceptional mental agility. Other important traits include the ability to act quickly and make decisions rapidly. A good scalper will also need to be analytical and disciplined.
Scalpers stick to markets that are:
- Highly liquid. Good examples include EUR/USD, GBP/USD, DAX30, Dow Jones, SP500 and Gold.
- Good level of volatility. Scalpers will need to find micro trends which enable them to follow the price. Hence a highly volatile market is not ideal as the stop loss might be reached very quickly and often, whereas a market that has a low volatility is not good either.
Scalpers require an online broker that is able to offer the lowest possible spreads as well as a fast and reliable execution of operations. Some brokers do not support scalping, so you may wish to consider this as they might close your account if they see that you are consistently opening and closing positions over a short period of time.