What is Forex Scalping? A beginner’s guide to trading
Hello Trader! Today we are going to look at one of the most popular forms of trading: Scalping, and especially explained to the world of currencies.
Do you know what it is?
Scalping is a trading technique in which the aim is to make a small profit from short term price movements, because although it is not recommended for long term investments, but it can be a viable strategy for day trading and other fast paced markets.
Forex trading involves making a large number of small trades to make the maximum profit in the global currency market, and involves establishing a buy/sell price range.
When the market moves into your price range, you buy and sell the exact amount of currencies you are interested in trading.
Factors to remember about scalping: There are factors that condition the viability of scalping.
There are factors that condition the viability of trading a currency, such as the world market, the value of other currencies, or even the political situation of the country.
But there are two factors in particular that you should take into account when doing your pre-analysis:
Liquidity: the most suitable environment for scalping can be found in markets with high liquidity.
Volatility: In markets with adequate volatility, is where we will find the micro-trends that will allow us to follow the price.
A very volatile market will cause us to stop loss very often, while in a market with low volatility we will not find the right environment to trade small trends.
The benefits of Forex Scalping are the way many currencies vary in value and affect each other. Depending on many news and macro-environment factors, a currency can change in value in a matter of minutes, and this is where an experienced trader can see a good opportunity to trade.
The disadvantages of scalping
Scalping can be exciting for some people, but it requires a heightened sense of patience and knowing when to enter and exit a trade. Otherwise, a very sudden reversal, such as immediately after a new news release about a corporate breakout, could wipe out your investment.
How to trade Forex as a Scalper:
First things first: Identify your target and your target position, so you have your strategy well organised.
Identify your short term objectives and a minimum and maximum market price at which you want to trade. To do this you will need to use technical analysis to tell you exactly which points you should be interested in.
Calculate how much you want to trade and under what trading ranges.
And finally, take action when you see the right time.
For scalping you will need an online broker that offers the lowest possible bid/ask spread and fast trade execution.
If you are thinking of scalping Forex, we recommend joining NAGA, which offers a $10,000 DEMO account so you can test your trading skills before investing real money.
In addition, you can earn money by helping others earn money by sharing your trades. Discover the benefits of social trading: https://canaltrader.com/copy-trading/.
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