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Forex Scalping Explained

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Understanding what is forex trading scalping

Scalping is a strategy, technique or method employed by forex traders to generate more profits. This involves a trader buying a currency pair, holding it for a short duration and selling it for a small profit. In the case of 90 percent of the trades, the time lapsed between opening and closing of the trade is never more than five minutes. Further, scalpers carry out hundreds of trades during the course of the trading session. While some trades generate profits, others result in losses.

However, the profit or loss associated with each trade will be very low ($0.01 or even less). At the end of the trading session, scalpers generally make a good amount of profit on aggregate basis because of positive contribution received from many of the individual petty trades. On average, total profits earned by a scalper ranges from $20 to as much as $300 or even more. However, the amount of profit that can be generated is not guaranteed. Sometimes, traders incur losses as well.

Why Forex Scalping ?

Traders employ scalping because it is a simple and safe technique. Further, losses are small and traders can easily absorb them. As scalpers trade very fast, their exposure to volatility in the market will be less. This means that sudden price changes and market trends will not trouble them. Further, forex scalpers are not faced with huge financial losses. This is because they employ techniques such as stop loss and take profit orders to keep themselves safe from the impact of sudden price changes. Actually, scalpers are not worried about market trends at all. They are more worried about the spread than anything else.

Who All Can Employ the Scalping Strategy?

Anyone can employ this strategy. There are no restrictions as to who can and who cannot. However, all traders who use the scalping strategy don't become successful. Actually, this technique is best suited for small traders and those who have a limited amount of money to invest. Large companies and experienced traders do not use this technique because they will be looking for huge gains from forex trading.

In order to become successful scalpers, the trader needs to be patient, prepared to do hard work and invest some time.

Patience is the most important quality that scalpers need to develop. Traders who think that they can become rich in a few months' time do not make good scalpers. Traders who are not happy with small profits also do not become good scalpers.

Preparedness to do hard work comes next. This is because scalping is simple, but not easy. It is a challenging task to execute hundreds of trades in a single day and for five days a week. It requires a lot of practice. It takes some time to get used to implementing the strategy effectively. Over time, traders will be able to handle it with ease.

Time is also an important factor. Traders need to invest up to five or six hours a day to learn scalping well. Automated scalpers may be good, but they are not as effective as humans on the job. This means that scalping must be done by traders themselves.

It is recommended that new traders start their career by learning scalping. This is because this forex trading strategy will prevent them from suffering huge financial losses even as they start off.

Source : FXDailyReport.com - Why Forex Brokers With Lowest Spreads Are Good For Scalping


This article was written by Forex Trading News for https://fxdailyreport.com/lowest-spreads-forex-brokers/ on .

This article published in collaboration with Scutify, the best app for traders and investors. Download the Scutify iOS App, the Scutify Android App or visit Scutify.com.

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