To receive new articles instantly Subscribe to updates.
What Is Forex Scalping and Pipsing?
Written by: PaxForex analytics dept - Friday, 18 March 2016 1 comments
These two terms are often heard on the forex market. Scalping and pipsing are kinds of trading strategies which are used by traders in order to make profits from the fluctuations of the currency courses within the day. Such orders are conducted in a very short period of time, sometimes even in several minutes. When you use this trading strategy your earnings from every order can be very small, but the whole profit can be high enough because of the big amount of the orders.
Pipsing is considered to be very short term trading, which usually lasts up to 2 minutes. Scalping – short term trading, which lasts 4-10 minute. But the principle of these strategies is the same. Forex traders can execute such kind of orders within all day and by the end of the day the level of 200 points may be reached. By fast order closing in case of negative market influence, scalpers (pipsers) try to reduce the losses, to have positive trading results. Wherein, the risk of losses is minimized.
Pipsing presupposes, that the trader is constantly on the market, which is a great apprehension; and being under constant pressure, a player is not able to make thoughtful and correct decisions. Secondly, having set a very low stop-loss level, one
can get losses at market noise, even when the tendency direction is correct, but the assessment of the bulls and bears' contra- strength is not exactly adequate. Defining the tendency direction movement for the nearest time is much more difficult, than guessing the tendency for the whole day.
Scalping, on the other hand, is a much more suitable approach to traditional forex trading than pipsing. In fact, scalpers also trade short positions but unlike pipsers, they use somewhat longer time frames, i.e. 1-5 minutes. The goal of scalping is not earning 1-5 pips (as in pipsing) but 5-10 pips that can easily offset any broker’s spread. To a beginner, scalping might appear as a forex goldmine where all you do is scalp pips and get easy profit.
According to statistics, there are as many profitable scalping transactions as there are losing ones. Essentially, scalping and pipsing are only a stage in becoming a professional trader. Every beginner tried scalping, every trader quit it sooner or later and switched to longer-term trading based on his or her own strategy. To sum up, we can say that scalping is rather simple and profitable, it can bring you some gains, as well as earn you more experience in trading and reading forex charts.