Forex Scalping Trading Strategy
A detail about the forex market that many people don’t know about is that it has no physical exchange, and therefore not bound by rules or laws from a government or regulatory agency. This leaves the forex market open to different forex strategies. One trading system is called scalping, where the forex trader profits from a price change that happens soon after you enter into a trade, or the trade begins to make a profit. If you know what you’re doing, scalping can be very profitable, if you have an exit strategy. As easy as it is to make money while scalping, one failed transaction can wipe out an entire day of profits.
As unpredictable as trading in foreign currency can be, it’s important that you find ways to make money that doesn’t rely on traditional forex trading systems. A good forex trading strategy offers more than opportunity to those willing to take the time to learn and perfect the scalping system. Once you have a forex trading system in place, make sure you don’t lose more than you make, and you should have no problem making a daily profit. Make sure you increase your gains and limit your losses over time. It’s vital that you understand the forex trading system of scalping and make it work in your favor.
The first forex trading strategy, called the Primary Style of scalping, occurs when the trader (or scalper) participates in many trades each day. These scalps can be as little as ten or more than hundreds of trades each day. This forex trading strategy requires you to rely on shorter periods such as one-minute intervals, which allows you to see the action as it unfolds. Dealing in these short periods means that you must have astute decision-making capabilities as well as a timely entry and exit into the forex market. Many scalpers who use this trading system also utilize a direct-access broker to guarantee instantaneous action when the market stays it’s warranted.
If you’re trading in the forex market but make use of a timeframe other than the one used in the Primary forex trading system, consider scalping only as a complementary forex trading strategy. This supplementary approach relies more on you exploiting trends where you find them, rather than making a system where none exists. If you normally deal with a longer timeframe for trading, and the market is irregular, exploit the trends you see within that shorter timeframe. This gives you the opportunity to make smaller profits when you wouldn’t typically make any profits.
Many forex brokerage firms frown upon certain forex trading strategies in general, but scalping in particular. Although these forex strategies are frowned upon they aren’t illegal, and both the primary and supplementary systems can give way to high profits. The major concern for you when implementing this trading strategy is how to execute a precise exit strategy. Exiting the market at the wrong time can easily wipe out all your profits for a whole day. If you have your doubts about using a forex trading strategy like scalping, make sure you understand the basic risk to reward ratio, in addition to how you can make scalping work for you. Strict obedience to your exit strategy as well as a cautious eye on trends within the foreign currency market, will allow you to trade in foreign currency with relative ease.
Source by Andrew Daigle