By: Chaley Warady
Many experienced Forex traders cringe at the thought of Forex scalping, or Forex short term trading. There are hordes of articles online that will list the dangers of this form of trading and they all guarantee that your Forex account will be wiped out in a matter of seconds if one chooses to trade at such a brisk rate. The experience can be compared to skydiving without a parachute. It can be very thrilling as long as you don't think about the end.
There are numerous Forex scalpers out there and, particularly concerning those that are successful, will swear by their method of trading Forex. Like any other method of trading, Forex short term trading can be profitable if it's done smart. The first thing to consider is temperament. You would think, by the nature of scalping in the Forex market, that a laid back person shouldn't dive into these waters. The opposite is actually true. The nervous, jittery, hypersensitive trader should stay away from Forex short term trading. He'll only get himself into trouble.
Steady is the key
Probably more than any other form of trading, Forex short term trading needs discipline. It involves a large amount of shortly timed trades and the word 'shortly' is the operative term here. If the Forex trader hangs onto a position he has scalped on the losing side because he is sure the market is going to turn, a week's worth of profit can disappear in a matter of seconds. A scalper must remain practically robotic in his trading, devoid of emotion, because it's the accumulated profit he is after. He is going to sustain losses as well as profits, but it should average out to the plus side if the Forex short term trading is done correctly.
Quantities of the trade are just as important. If the trader varies the quantities and tries to “make up” a loss by (as the blackjack player would put it) doubling down, or even worse, randomly changing quantities, it won't be long until said trader is out of money and asking someone if they'd like fries with that. A level maintenance of quantity must be maintained.
Types of traders
There are different types of strategies and all of them should be studied. Among them are range scalping, breakout scalping, and trend scalping. All of them are applicable depending on the nature of the market. There will be price patterns and situations in which the scalper will have a decided edge over the position trader. In all cases, the role is not recommended for the weak of heart. And it takes Forex short term trading dedication. You can not walk away from your screen and vary the number of hours dedicated to the practice. Habits like that lessen the odds of profits.
There is no shortcut to trading Forex. Every trading method, no matter what it is, takes research and testing. The beauty of scalping is that it does not have to follow trends or market activity. There are certain markets that are more prone to it, because perhaps more so than other kinds of trading, Forex short term trading relies heavily on market saturation. The Forex trader is counting on appropriate bid/asks and he needs someone to be always on the other side of the trade.