What Is Scalping In Forex?

fx-millennium

What Is Scalping In Forex?

If you’re a trader looking for an environment that’s fast and full of excitement, then you should consider scalping! Scalping is a popular short-term trading strategy where you make more than one small trade on currency pairs from small price movements to profit throughout the day. At most, these trades get held onto for a period of a few seconds to a few minutes, letting you benefit from price fluctuations.

 

A pip (percentage in point) in the forex market is another name for a currency’s smallest price movement, which you’ll use to measure profits and losses. A scalper’s main goal is to get small amounts of pips throughout the busiest times of the day, as many times as possible. Phew, that’s a lot! But don’t get discouraged. I’m here to take you through the process of scalping!

What’s the Deal With Scalping?

Scalpers can benefit from all the small movements, as they happen more often than the larger ones, even when markets are calm. If you’re considering scalping, you’ll get the opportunity to make small profits from placing a few hundred trades every day.

Unfortunately, you’ll have to have high concentration and strong focus skills, as you’ll need to be giving your attention to handling the demanding and fast trades. Expect to watch the charts hours on end! Look, I get it. Not everyone can be staring at the screen all day, but it is what it is!

The ultimate goal of scalping is to make small wins over a longer period, so don’t expect to make big profits right away. Scalping comes with a lot of patience and time so that you can reap the rewards!

To be successful with scalping in forex, you need to choose high volatility currency pairs. This will give you more opportunities to trade so that you can get results from quick gains within a fast-paced market.

If you choose to trade with less volatile pairs, it could take longer for the rates to move. So, instead of having trades that last 5-10 minutes, you’re looking at trades that’ll last 30 minutes or more.

 

what is scalping in forex

How Do You Know if Scalping is Right For You?

You must be wondering if scalping is for you. Scalping is only a good idea if you have the right personality and risk tolerance for it. Well, let’s look at a few characteristics of someone who would be great at scalping:

You enjoy the excitement and speed that comes with trading

  • You have no problem staying focused and watching your charts throughout the day, often for several hours
  • You don’t have any trouble changing direction and can think quickly on your feet
  • You can get your fingers to move quickly!
  • You hate waiting too long for trades

How Do You Know if Scalping is Not For You

Scalping is not for everyone, but how do you know if it’s not for you? Let’s look at a few characteristics of people who would most likely not enjoy scalping:

Fast trades stress you out

  • You prefer to get higher gains from fewer trades
  • You don’t have the time to watch over charts for hours on end
  • You enjoy analyzing the market

 

What You Should Know Before You Start Scalping

There are a few things you need to know before you choose to start scalping.

Only trade the most liquid pairs

The most liquid pairs are GBP/USD, EUR/USD, USD/CHF, and USD/JPY. These currency pairs have the highest trading volumes and offer the tightest spreads. You’ll want tight spreads seeing as you’ll be entering the market often. If you’re new to trading, I recommend that you start with one pair and slowly move your way up to more pairs until you’re comfortable with scalping.

 

  • Only trade when it’s the busiest time of the day

The most liquid (or busiest) time of the day is when sessions overlap. This usually happens between 2:00 am and 4:00 am and again between 8:00 am and 12:00 pm EST. Another way to know the best times is to look out for when trading sessions start in London, Asia, and North America.

 

Focus on one pair first

Scalping can get pretty intense, so I suggest you start by focusing on one pair to be successful. You’re shooting yourself into the foot if you try more than one pair at the same time when you’re still a beginner. Only once you’ve gotten the hang of scalping, I would suggest you try it with two pairs, and so it goes on.

Bad news is never good for you!

There’s so much volatility happening in the market, and it often comes from bad news reports, such as government data that gets released. This is dangerous for scalpers because you can experience price jumps in the opposite direction of what you were hoping for!

Practice with a demo account

It’s never a good idea to start something that you know nothing about. I can’t stress this enough – practice first before you try scalping live! Trading platforms usually come with demo accounts for you to practice on, and the practicing gets done on a live platform, but only with virtual money. You’ll get peace of mind if you lose money knowing it’s not real cash.

Manage your risk

The number one rule of trading is to never trade with money you can’t afford to lose! There are people, especially beginners, who think they will make money quickly and end up losing everything they put in. Be smart and don’t do that! Instead, start small so that you won’t feel it as much if there’s a loss. And don’t trade with your emotions! Making decisions with your feelings will only get you in trouble with you making bad decisions. Don’t think with your heart – think with your head.

Final Thoughts

Scalping is risky and takes a specific personality type to reap the benefits and make good profits. Don’t be too shocked when you start for the first time – the speed of this trading strategy can get overwhelming !

Keep practicing on a demo account if you feel uncomfortable or unsure of yourself, and remember to never trade with more than you can afford to lose. There are simple rules to follow, and you can be successful if you’re not afraid of thinking on your feet.

 

 

logo grad

THE RUMPLED ONE

The rumppled one

Can Dropshipping Make As Much Money As Forex Trading?

Can Dropshipping Make As Much Money As Forex Trading?Can Drop Shipping Make As Much Money As Forex Trading?   The problem with this mind set is weather or not you can make more money drop shipping or with forex is. It's a debate that's being discussed...

Can You Get Rich By Trading Forex?

Can You Get Rich By Trading Forex?Can You Get Rich By Trading Forex?     I get this question at least ten times a month if not more, especially from those looking to trade (for profit) in the financial markets. I've been trading for about 15 years,...

How To Read A Forex Chart

How To Read A Forex Chart.How To Read A Forex Chart   One of the reasons people fail at trading they need to look back at who taught them to begin with. You see the reason 97% fail is plain and simple the information out there and that is the truth. I...

Why Do I Keep Losing Money Trading Forex?

Why Do I Keep Losing Money Trading Forex?Why Do I Keep Losing Money Trading Forex?   Why do i keep losing money trading forex is a question we hear on a weekly basis. If you have been trading for an extended period of time it's more than likely that you...

Can You Buy And Hold Currencies?

Can You Buy And Hold Currencies?Can You Buy And Hold Currencies?   Can You Buy And Hold Currencies like a stock? Does it Happen? Yes! You can buy and hold currencies the same way that you would stocks or other assets. If the currency has a $1 USD value,...

Should You Start Trading?

Should You Start Trading?Should You Start Trading? I get asked this almost weekly by folks learning about trading. "How do I get started?" "Should I start trading?" "What does it take to trade?". Anyone who is new to the trading game has questions about what...

Should You Trade Everyday?

Should You Trade Everyday?Should You Trade Everyday? If you are new to forex and wonder if you should trade everyday, The answer is no. There are benefits and drawbacks to trading every day. The markets in forex tend to range a lot. In other words, price...

Why Forex Trading Is Bad

Why Forex Trading Is BadWhy forex trading is bad, should not be the question here. The question should be, how can trading in the capital markets help you? The reasons people forex trading is bad are many and varied. The following are some of the most...

How Not To Fall For A Forex Scam

How Not To Fall For A Forex ScamHow Not To Fall For A Forex Scam? What Is Forex? The forex market is a global market that lets you trade currencies. You can go long (buy) or short (sell). In other words, one currency's value goes up while the other...

Do Automated Forex Trading Systems Work?

Do Automated Forex Trading Systems Work?Do Automated Forex Trading Systems Work? In this blog post, we will answer the question: Do automated forex trading systems work? It might surprise you to know that I am here to tell you that they do not. The reason...
U.S. Government Required Disclaimer – Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.