There is a broad range of trading techniques and methods within the Forex world. Forex Scalping is one such approach, and it’s one of the most popular used by traders.
Forex Scalping isn’t always easy, and it requires both experience and patience to execute a good quality Forex Scalping trade. In this guide we’ll tell you a bit more about what Forex Scalping is and what you need to know before you get started.
Forex Scalping in a Nutshell
Forex Scalping is concerned with the tiny price movements that occur between two currencies within a short period of time, multiple times a day, in a typical trading session.
Because the movements are so small, some traders won’t pay any attention to them. However, if done correctly, Forex Scalping can be a lucrative trading strategy.
Within a few seconds, currency prices can move a few ‘pips’, which is a movement of a fraction of a percent of a quoted currency.
For example, a movement of 5 pips on a stake of $50,000 would amount to a gain of $25.
Making $25 on a currency trade might not seem like very much. However, making enough of these fast-paced trades over the course of a day can add up to a much larger sum.
What You Need to Know
There are a few factors you need to take into consideration if you’re considering getting into Forex Scalping.
-
- First, because the margins are so small, you need to make much larger trades than other types of trading in order to make this a worthwhile trading strategy. As such, it’s worth bearing in mind that you may be taking on more risk than other trading strategies, as you have greater exposure to a single trade. Make sure you’re comfortable with the risks involved.
- Second, although in Forex Scalping you may be in and out of a position in a matter of seconds, that doesn’t necessarily mean you’ll be able to make lots of trades every hour. Scalping requires patience — you may have to wait carefully, watching price movements from second to second for an hour or more, before the right circumstances arise for you to make a trade.
- Third, while Forex Scalping is legal, that doesn’t mean it will be possible wherever you’re trading. Some forex brokers and trading platforms do not allow or have the functionality for high-speed trading of this kind, so make sure your trading platform can cater for you before you start trading.
Finally, Forex Scalping is an acquired skill. You won’t be able to execute high-quality, split-second trading decisions without a bit of practice first, so be prepared for failure before you’ve built up enough experience to do Forex Scalping like a pro.
Final Thoughts
Forex Scalping is a popular form of trading, and many traders have made a success of it. But that doesn’t mean it’s easy. Don’t forget that it requires a lot of patience, concentration, and experience before you can become a pro.
About Author
