Friday, April 22, 2016

What is Scalping in Forex Trading

We’ve previously discussed about the different types of forex orders in our past articles. This time, we will talk about the different types of trading strategies, and we will start with what most traders call as “scalping”.

First of all, what is scalping? Scalping is a trading strategy used by traders to make many small profits in a short amount of time. The purpose of this strategy is to place as many orders as you can and reap a small profit from each of it. Basically, a scalp trader would place a buy (or sell) order for a certain currency pair and then quickly sell (or buy) them even at a small price change for a profit. These small profits can accumulate into large gains if a strict “exit strategy is implemented to avoid large losses.

Scalping might be the best trading strategy for you if:
  • You prefer fast trading
  • You’re okay with focusing on your technical analysis for several hours at a time
  • You are impatient and you don’t like waiting for a long time to see some profit
  • You can think and decide quickly
  • You love instant profits (or losses)
  • You’re a risk taker

However, if:
  • You easily get confused in fast moving situations
  • You can’t focus for hours to your trading charts
  • You prefer to make bigger profits through fewer amount of trades
  • You want to take your time to fully examine what’s going on in the market

Then this trading strategy might not work for you. It is best to assess yourself first and determine what type of trading are you most comfortable with. That is why it is important to hone your trading strategies on a demo account first before going for the real thing to avoid unnecessary losses.

Learn more about the forex market and further understand what is forex by reading our educational forex blogs. See who the best forex brokers are, visit to find out!

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