Scalping your Way to a Successful Forex Score
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What is it like to be a forex scalper
Warning – scalping isn’t for the faint of heart.
This fast-paced, thrilling way to trade forex will push your limits and test your ability to think quickly and raise your pulse rate.
Traders who engage in forex scalping hold onto their trades for as little as seconds and up to 3-5 minutes at most. The goal here is to grab small amounts of pips as many times as possible, generally during the busiest times in the market.
Lower Exposure in the Market
Advocates of the method argue that since scalpers are only holding their positions for a short period of time, they effectively limit their exposure. By holding on to positions for minutes or seconds, the possibility of losing big from major market moves is slim.
Glued to the Charts
Since scalpers make so many moves, they have to be constantly zeroed in on their charts during the trading time. This method of trading is only suitable for traders who can focus their undivided attention for several hours at a time.
If you have a tendency to let your mind wander or are easily distracted, scalping is probably not the best trading system for you. Scalpers need to be incredibly patient and thorough. There is no big, immediate windfall with this method, so traders who are successful with it recognize that future gains will come over time.
Compared to other forms of trading, scalping is perhaps the most attention-demanding. During the course of a trading day, a scalper will open and close tens or even hundreds of trades. Taking care to make sure that none of these trades suffer a big loss is an exhausting, comprehensive task.
The payoff in the Long Run
Traders looking to turn a profit quickly should be warned that scalping is not that type of system. Anyone looking for big returns from each trade will be disappointed and possibly frustrated with scalping.
Scalping is a trading system for those who like pulling in small trades over the long run in order to accumulate a solid overall profit.
Automating the Process
As we’ve noted a few times above, scalping is seriously demanding on traders. For traders who can’t devote the necessary time to the method, automated trading systems might be a good option to explore.
Just use caution.
A quick web search reveals many such systems offering incredible results for their users. While we can’t validate each and everyone, there’s a good chance many are bogus.
If you decide to use an automated system, it’s good if you can develop it yourself. There are many tutorials available for building these systems and experts are readily available to offer assistance and or guidance.
Consistent Position Sizes
Any potential scalpers need to be aware that fluctuations in trade sizes will lead to a quick downfall. The core idea of scalping is that profitable trades will cover losses over a long period of time. However, if you pick position sizes at random, it is inevitable that a big, leveraged loss will hit at one point or another leading to devastating losses for the portfolio.
Scalpers need to come to the trading day with a super tight strategy that devotes incredible attention and focus to making sure trades are consistent in size.
Two Different Ways to Scalp
This subheader is a bit misleading. There aren’t two different methods to apply the scalping technique, rather, two different ways to think of the process.
As a trader, the first way to think of scalping is by slow price changes which occur over a short period of time. This approach means you will benefit from slow price movements.
The other way to consider the method is as a trend follower, or a swing trader. With this approach, you’d still use very small, fast trades. In contrast to the first approach, this way encourages the trader to exploit quick and sharp movements, while also keeping the focus on the overall market trends.
If you like fast-paced, high energy, focus driven trading, scalping might be a good option for you. However, if you get stressed easily or have problems devoting 100% of your attention to your screen for a whole day, the method is probably not the best choice for you. Ultimately, it’s up to you to decide once you fully understand your strengths and weaknesses.
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