Scalping for quick small profits is a popular Forex trading strategy, demanding huge discipline and concentration. Professional forex scalpers make between 10 and 100 trades each day. If a position goes against them, they go out quickly rather than keep it and hoping it will turn around. A Forex scalping system aims to make 5-15 pips per trade. The broker reviews come useful there.
- The goal of a Forex scalper is to buy or sell a currency pair at the bid or ask price and then get out of the trade quickly when they are in the result of a few pips.
- Using this strategy to extract a small number of pips to the market at a time, can easily compound in big gains as long as a strict exit strategy is used to avoid losing trades absorbing all the profits.
The Forex Scalpers
Usually, Forex scalpers use the 1 min, 5 min and hourly charts to find trades that can earn them a small profit. As the Forex scalper is only interested in making a few pips per transaction, it is very important to use a broker with small spreads and instant trades execution.
Some tips to improve your chances of succeeding as a Forex scalper are:
- Make sure you know when the news that is relevant to your currency pair is going to be released.
- Save previous days Open, up, down and close.
- Study basic candle patterns so that you can recognize them when they occur.
- Draw in the main trend lines, pivot points and support and resistance on the daily and hourly charts of your currency pair.
- Determine the major trend of the day, bullish or bearish, trading the long-term trend will give trades more chances to succeed.
- Adjust your stop to break even if you are 10 pips in profit.
- If the business takes time to become profitable or you do not feel comfortable with it, go out.
One advantage of Forex scalping is that small targets of 5-15 pips are easier to accomplish. One of the difficulties traders have is when the trend reverses during an exchange because Forex scalping is in the trades only for a short period of time, it’s not as likely to happen. Many people have been successful with Forex scalping, so it is proof that this can be a good Forex trading method. A disadvantage is that the risk of the rewarding ratio can be very low. As the profit per trade is so low, trade at a loss can wipe out all the winnings for a day. This means that it is particularly important to define and pass a stop loss.
There are several traps that new traders fall into when they start Forex scalping. They can become addicted to making random profits, especially if they are successful first. This can result in the operator taking trades increasingly risky and not sticking to their plan. Another trap is trying to compensate for yesterday’s losses. Traders often think about how they can make money that they have lost a previous day, which tends to obscure their judgment and can lead to emotional trades that are doomed to fail.