Traders, especially those starting out, are often looking for Forex strategies that will extend the scope of the things they can do from their trading platform. It is also common for traders to look for new ways to trade. Today we will answer the question 'what is scalping in Forex?' and will also provide an overview on the best tips and tricks when it comes to scalping currencies online.
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we begin, we would like to point out that this article will be most useful for traders that already have some knowledge of the market, as we are not going to focus on the basics. We will instead focus on scalping, its application and the best and worst practices.
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Scalping is a type of day trading style. As we all know, Forex is the most liquid and the most volatile market, hence while many traders are bearing through minor price fluctuations to get a gain of some 100-200 pips per their trade, there is a whole army of Forex scalpers trying to squeeze every possible opportunity out of these small fluctuations in the foreign exchange quotes.
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In other words, scalping the Forex market is simply taking advantage of the minor changes in the price of an asset, usually performed over a very short period of time.
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Scalping is quite a popular style for many traders, as it creates a lot of opportunities within the same day. It's popularity is largely down to the fact that the chances of getting an entry signal are rather high. During the scalping process a trader usually does not expect to gain more than 10 pips and lose more than 7 pips per trade, including the spread.
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Usually scalping is done with substantially high volumes, which is why many of these traders are not following the common 2% risk management rule, but are trading much higher volumes during their FX scalping sessions.
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Now we have an understanding of the fundamentals of scalping, let's take a closer look at its practical application. In general, most traders scalp currency pairs using a time frame between 1-15 minutes, yet the 15 minute time frame doesn't tend to be as popular. Both 1 minute and 5 minute scalping timeframes are the most common.