Scalping is very common, especially in recent times, a kind of Forex trading strategy, which is of great interest of market beginners.
Why beginners are so interested in it? Well, it should be noted that this method is not a thought-out strategy of Forex, and to use no need to have harsh and giant experience and deep knowledge of the Forex market mechanisms.
Thus, it is most convenient just for beginners. But experienced traders, who have long and firmly formed their own niche in the market, try to avoid the method of scalping since it carries huge and sometimes unreasonable risks. Risks, that they easily overcome by using sharpened personally developed trading strategies.
So, what is the essence of scalping in the Forex market? This is an intraday method by which trader opens a big number of orders for a short time. Often, just for a couple of seconds. The point is that to get any income, even in one or two points. That is why it is called scalping - they like taking the slice of the very surface.
But, for that to use it even for a beginner, you still need to fulfill several conditions. As we know, the Forex market never gives us the opportunity to win without risks, but following some conditions, you can slightly reduce these risks.
First, it’s your Forex broker. It is important to choose one that will be favorable when scalping. The broker usually makes is profit either from a fixed percentage of the transaction or from a permanent fixed payment. And the lower the first and the second, the better for you. For example, PaxForex has a very liberal approach to scalping and it gets only spread as a profit.
Secondly, and perhaps this is the most fundamental. You need a currency pair that has enormous liquidity, like EURUSD, for example. Without this it will be impossible to implement conceived method.
Third, let's not forget about the fact that only one type of scalping can be used successfully in the Forex. It is when there is an opportunity to continuous monitoring of the state of the currency exchange. So you need uninterrupted access to online quotes.
Fourth, you have to correctly set up your "Stop Loss" order. It must minimize the losses that are sure to be at such a volatile game with a scalping method.
Fifth, in addition to the liquidity it is necessary to take into account also the volatility. It must not be too abrupt. Otherwise, even a short session may unexpectedly lead to significant losses, and scalping loses its value.
In conclusion, it is worth noting that for the start in Forex market, scalping is one of the most suitable options. However, if you are a long time in the Forex trading and already can safely call yourself an experienced trader, then you easily understand all the cons of this method. Often, it is a significant and uncontrollable risk that discourages long-time traders from scalping.