By: Terry Allen
Forex Scalping is a trading strategy that has gained popularity over recent years primarily because the design of many Forex robots is based upon its concepts. Many novices favor it as well because they are drawn to the fast action of scalping believing that they can become rich from its sheer speed of operation.
The big question is: can you really achieve success using this strategy? When you attempt to scalp Forex you are aiming to perform many trades and target small profits every time.
One of the main concepts of this trading method is that you will try to reduce your risk exposure by ensuring that the duration of each of your trades is always very short.
You must also not try to implement this strategy during times of high volatility especially when major Fundamental data releases are scheduled. Instead, you should attempt to detect trading periods that are exceptionally calm.
Many proponents of scalping aim to trade during 4:00 pm EST and 8:00 pm EST daily when Forex is practically asleep. This is because countries such as the USA, Canada, Eurozone and Britain do not post new economic data during this period.
Trades can be completed extremely quickly even in a matter of seconds sometimes. Scalpers also try to target profits equaling about two to three times the spread of the currency pair they are trading.
However, although there may be benefits, there are certainly many problems associated with this trading method. For instance, if you do not know what you are doing, then you are practically trading market noise, which cannot be healthy for your equity.
As you will be using extremely low time-frames, you cannot depend on their associated statistics because they will be of poor quality and totally unreliable.
You certainly will not be searching for any long-term price formations such as trends. In addition, you will definitely subject yourself to high levels of mental stress if you plan to monitor all your very short-term trades.
This is because you will have to make many very fast trading decisions if you intend to activate numerous buying and selling opportunities in short trading sessions.
Normal Forex trading can induce high levels of tension, but does not compare with what you could subject yourself through scalping. Your main problem emulates from the fact that should you keep stumbling because you cannot maintain high levels of quality trading decisions, then you could place your equity under a lot of pressure.
If your errors start to mount up, then you may attempt extreme measures to correct your declining status. You cannot even fall-back on any technical tools to help you because they are practically useless when utilized with extremely short time-frames.
Instead, you may attempt to increase your profits by using more leverage, but this practice is extremely dangerous as you will be exposing your equity to extreme levels of risk.
Perhaps your best bet is to try to locate a mentor who has already mastered this strategy. Interested in checking our scalping forex brokers reviews?