Forex scalping strategy is a popular method based on the fast opening and closing of positions. The term “fast” refers to the timeframe of about 3-5 minutes at most, while the majority of scalpers maintain their positions for less than one minute. The popularity of scalping comes from a believed safety and is widely used by the beginners of forex. Many traders theorize that since the scalpers maintain their positions for a short time compared to regular traders, the market exposure is short and consequently, the risk of large losses resulting from strong market moves is smaller.What is then the difference between forex scalping strategy and betting on roulette?
Scalpers assume (and this assumption is often correct) that if a certain trend exists, it will continue for a short period of time. In mathematics this operation is called extrapolation. It is a process of constructing new data points outside a set of known data points. This is exactly what happens in Forex trading. It is known that the results of extrapolation are often meaningful, and are subject to greate uncertainty. Extrapolation may include human experience to project, extend, or expand known data into an area not known or previously experienced so as to arrive at a conjectural knowledge of the unknown (for instance a driver extrapolates road conditions beyond his sight while driving).In this sense scalping is similar to driving. A typical scalper cares only about the bid-ask spread, while concepts like trend, or range are not very significant. Scalpers ignore many market phenomena, because they concern only with the brief periods of volatility created by them the market
This forex strategy is not for every trader. However, it is a good starting point for beginners of forex.The returns generated in each position are not large,. The profits are made as gains when each closed small positions are combined.
Scalpers do not take large risks, which means that they are willing to forgo great profit opportunities in return for the safety of small, but frequent gains. Consequently, the scalper needs to be a patient, diligent individual who is willing to wait as the fruits of his patients translate into the profits. An impulsive, excited trader who seeks instant gratification and aims to “make it big” with each consecutive trade is unlikely to achieve anything but frustration while using this strategy. Scalping also demands a lot more attention from the trader compared to other styles such as swing-trading, or trend following.
A typical scalper opens and closes tens, and in some cases, hundreds positions in a single trading day. This strategy may appear to be a formidable task at first sight, but scalping can be an interesting and even fun once the forex trader is comfortable with this method. Still, this scheme demands attentiveness and focus. Scalper does not need to be equipped with great talents. Practice and commitment to achieve the goal are indispensable if a trader has serious intentions.
Scalping is time-consuming. Many of the forex beginners use the trading as an additional income, and would not like to dedicate five six hours every day to the practice.
Automated trading systems have been developed, and they are being sold with rather incredible claims all over the web. We do not advise our readers to make such forex strategies to work for them. However, if you design your own automated systems for trading with some guidance from seasoned experts and self-education through practice it may shorten the time which must be dedicated to trading while still being able to use scalping techniques.Finally, scalpers should always keep the importance of consistency in trade sizes while using their favored method. Using erratic trade sizes while scalping is the best way to wipe your account in no time
Scalping forex strategy is based on the principle that profitable trades will cover the losses of failing ones in due time, but if you pick position sizes randomly, the rules of probability dictate that sooner or later an oversized, leveraged loss crashes all the hard work of a whole day. Thus, the scalper must make sure that he pursues a predefined strategy with attention, patience and consistent trade sizes. This is just the beginning, of course, but without a good beginning we would diminish our odds of success, or at least reduce our profit potential.