Acquaintance with the financial market gives all the beginners an understanding that in order to trade successfully and increase their funds, they need to choose one or several efficient strategies that suit their trading styles. When studying this method, many will surely face the question of what scalping in Forex is and whether it is worth using. In this article, we will try to figure it out.
Scalping is often referred to as pipsing by professionals, but the essence of these two terms remains the same. Scalping is a popular model of behavior in the financial market, which allows you to make money on small price fluctuations within short time periods. Accordingly, those who follow this way of trading are called scalpers.
The idea behind such a behavioral strategy is that the trader closes the trade almost as soon as it becomes profitable. It allows you to do over a hundred trades within a single day. This approach implies that the trader needs to act within strict boundaries, not deviating from the chosen strategy, otherwise one losing trade can absorb all the profit from dozens of winning ones.
When considering what scalping on Forex is and whether you should use it, it is important to take into account the benefits of such a model of behavior in the financial market:
It is worth noting that when scalping, traders most often use high leverage of up to 1:1000. This allows them to maximize the profit that each trade generates.
To fully understand what scalping in Forex is, we should not forget that even the most effective model of behavior in the financial market has its downsides and disadvantages. In particular, when choosing scalping, you may face a number of challenges:
Remember that it is important for traders who choose scalping to use platforms that allow you to instantly open and close trades. The slightest delay can lead to losses or reduced profits.
After understanding what scalping in Forex is, many beginners are enthusiastic about making a deposit to some brokerage account and starting to trade in the financial market, randomly opening positions. Most face a margin call, in which case the broker automatically closes all trades.
To avoid this, you should prepare your behavioral strategy beforehand and test it on a demo account. Only following strict rules for entering the market and closing a trade can make a scalper successful.
If you have learned what scalping on Forex is, and understand that it is best used during long-term consolidations, but are afraid of not coping with constant stress, you should pay attention to automated trading systems. Algorithmic do not get tired, are not subject to emotional factors, and always trade within strict guidelines, which is crucially important for scalping.