Sometimes, greed can drive you into losing your money while trying to make more profits. One of the best strategies traders uses to avoid this is the use of a forex scalping system. With this, you learn to be satisfied with the little gains that come at a time. When you gather these bits of profits over a long period, you would have made something tangible.
If, as a trader, you do not have the time to monitor your trade from your computer, the forex scalping system would be of great help. In this post, we shall take a look at the basics of forex scalping, setting up for scalping, and the best time to scalp.
Basics of Forex Scalping
Forex scalping is a trading method that centers on the smallest movements of a currency pairs/market. It involves buying or selling currencies, holding a position within a very short timeframe, and terminating it for a small profit.
A forex trader is not interested in a market’s direction of movement but takes advantage of very small movements that are ordinary in the market all through the day. It is possible to trade these slight movements of about 5 – 10 pips (percentage in point) several times during the same day of trading. Scalpers are full of smiles when all trades for the day are profitable. With the volume of repeated trading, it amounts to an increased cumulative profit.
A forex scalping system can be used manually or automatically. It can be manual if the trader checks and interprets signals for buying or selling. It is considered automated when the trader instructs the software what signals to checkout for and how best to interpret them. Forex scalpers choose real-time charts because of the timely nature of the technical analysis.
Setting up for Scalping
To be a scalper involves having excellent and reliable access to the market makers using a platform that supports very fast buying or selling.
Usually, the platform will have buttons for buying and selling each of the currency pairs. This is to enable the trader to hit the right button for either entering or exiting a position.
Get a Broker:
Forex market, being a large international market that is unregulated, requires a trader to do some researches. It is essential to understand the agreement of the broker, your responsibilities, and that of the broker.
Be sure to know the required margin and the broker’s reaction if positions go against you. Free feel to ask the broker’s representative questions while holding on to the agreement. The small print hides a whole lot of information, ensure you read it.
The Broker’s Platform:
Get used to your broker’s trading platform: this will help you avoid mistakes while trading. When you hit the sell button by error instead of the buy button, you may only benefit from your mistake if the market by chance goes south immediately.
But if this lucky chance does not happen, then it means you have made a costly mistake. Do not put real money into the trade if you have not practiced with the platform.
Scalpers are usually interested in the trade with the most liquid markets. These markets are generally in the major currency pairs, such as EUR/USD.
Based on the currency pair, some sessions may record more liquidity than others. The volume is usually not the same despite the forex markets trade for 24 hours daily.
Scalpers need to confirm that there would be an execution of their trades at the intended levels. When your placed order is executed a few pips away from the requested level, it is called Slippage.
By understanding the trading terms used by your broker, you will know if there are limits to their guaranteed executions.
Redundancy in Forex Scalping System involves practices of insuring or safeguarding yourself against ruin. Confirm if your internet connection is high-speed.
Have an option B if the internet drops. A lot of factors can ruin your trade. Always ensures the related factors are considered while you are in a position and need to make a change.
Choose a Time Frame for Charting:
In Forex Scalping System, you are not given time for an in-depth analysis. To execute trades repeatedly, you must have a system that you can confidently use frequently. You can make use of very short-term charts, such as one- or two- or five-minute charts.
Best time to Scalp
It is essential always to remember that scalping involves high-speed trading and needs lots of liquidity to enable speedy execution of trades. It is best to trade only the major currencies that have the highest liquidity, and when there is high volume. An example of such is when London and New York are trading.
Do not scalp if, for whatever reason, you do not feel relaxed and focused. Whenever you have a sequence of losses, you may need to stop trading and give yourself time to recuperate.
Note that forex scalping is not for everyone. It is only for those who;
1. Love fast trading
2. Are not bothered about focusing on their charts for long hours.
3. Cannot wait for long trades.
4. Can think quick and speedily change direction
Forex scalping is not for you if you prefer making fewer trades but with higher profits and also if you prefer taking your time in analyzing the general picture of the market.
The Bottom Line About Forex Scalping System
The forex market is large and liquid. Every forex scalper needs a higher deposit to control the total leverage he must take on to achieve meaningful short and small trades. Not everyone can find the Forex Scalping System fun. Those who enjoy fast-paced trading and can focus on one- or two-minute charts are good to go. If you have the nature of reacting fast and have no regret with quick losses of about two or three pips, you can consider scalping.
Traders who need time to analyze and think before making decisions are not suited to scalp trading. Scalping is usually fun when you’re gaining, but turns into a sad story when you start losing. Most times, a trader’s capital will be all gone in the process. To avoid such sad stories, you may need to trade small and with stops. Always place a stop at your maximum loss and allow it. Whenever you are stopped, feel okay to take the loss.
Learn to trade, even with the combination of other strategies. And you could easily find a lot of quality trading tools and forex metatrader indicators on this platform via this link, so use these to help yourself trade efficiently.