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Tips For Effective Forex Scalping
Written by: PaxForex analytics dept - Friday, 21 March 2014 0 comments
Fоrex scаlping is a pоpular quick trаding method invоlving swift оpening and clоsing of trаdе pоsitions. In this mеthоd thе trаdеrs keep their pоsitions open only for a few seconds or at the most 2-3 minutes. A majority of scаpers hold their positions for as short as one minute.
The bаsic idea behind scalping is to make small chunks of profit consistently and thereby increase the overall profit. The swift opening and closing of the trade exposes the trading account to lower levels of risk. Scalping is done with huge аmount of funds. So, even a mild pip movement creаtes significant profits.
Following are the tips, tricks & necessities for effective Forex scalping:
1. A professional scalper needs to have a broker, who provides the best automated processing platform and allows scalping.
2. The scalper needs to be very attentive, patient and meticulous person. He should clearly absorb the value of reaping small profits to transform into larger proportions. Patience is the key aspect in scalping. This type of trading would not gel with rash and highly excited individuals.
3. A conventional scalper has to open and close hundreds of positions during a day. He has to keep a very strict stop-loss to ensure that the losses are capped. The scalper has to give equal importance to all his positions and can't afford to be slack at any moment.
4.Forex scalpers are only concerned about the shorts bursts of unpredictability. They need to understand the market behavior at a micro level so that they can take advantage of even the slightest fluctuations to realize their
5. Successful Forex scalpers need solid focus and tremendous devotion. They need to possess strong dedication and ability to stand by their plans religiously.
6. Forex scalpers need to realize that not all currencies are best suited for scalping. They need to choose the ones where scalping is painless and rewarding.
7. Scalping Forex is not encouraging at all the times. Scalpers need to find out the correct times that would allow them to take fruitful positions and convert them into sizable profits.
Forex scalpers devise various strategies that help them in scalping. Every scalper has his own strategy and technique to generate profits. There are different price models and price formation patterns that make scalping more lucrative.
a) Breakout Scalping - some scalpers verify various breakouts to carry their trade. Breakouts can happen due to some macro-economic, policy or domestic business news that provides a new direction to the market. Technical breakouts happen when the currency price closes above the specific resistance price.
b) Range Scalping - some scalpers believe that a specific market range is best fit for scalping. These scalpers choose to operate within that range.
c) Trend Scalping - some scalpers analyze the overall trend and then participate in scalping Forex. Trends are generally unstable and many scalpers like to follow the trend with strict stop-loss to minimize the risk of heavy loss.
Forex scalping is not suitable for everyone. Only those who understand the market movements quickly and perform rapid trading by following the rigorous principles of discipline, focus and patience succeed in their endeavor.