About forex scalping in currency trading transactions

On October 30, 2010 | By | In Techniques

In Forex Trading, the only way to enlarge a small account in a short period of time is using a very great leverage. This is generally called “scalping”. You do not have to hurry to reach high leverages as of a 200:1, better begin with a reasonable leverage for scalping by 30:1 or more than 60:1, then go on proportionally as your abilities and skills in scalping improve. However, first do not forget to test your talent in scalping using a DEMO account. The only way to do transactions with high leverages without losing everything in 11-12 transactions, is using a “stop loss” option. Transactions without stop loss could empty and block your account in a very short time. It is good to think in advance about the amount you want to invest in your transactions and the risk that you will be exposed on. You can make a simple calculation to predict if after 10 consecutive loss transactions your account will be terminated or not.

forex scalping tradingAlthough the Forex trading market is available 24/24, not all hours are suitable for scalping. No scalper wants to stay in front of the monitor for hours, bored that prices have not important movements.

Scalpers hunt the liquid market, and volatile currency transactions for several sessions are important and i.e. London, New York, Sydney and Tokyo. For an effective way to transact, a scalper must learn the behaviour of certain currency pairs and to determine the most active sessions, even certain hours when they might catch high movements in prices.

Many details must be taken into consideration, and many of them may be different for different currency’s pairs, according to the broker. As the spread is greater with both, will be more difficult for a scalper to pursue profits. Another factor to be considered, is the average daily change of price for a certain currency. As the price movement is greater, the opportunity to profit-making is greater too. One of the preferred currency’s pairs for a scalper is EUR/USD, since it has a little spread.

This kind of transactions needs a lot of concentration and a permanent monitoring on the prices’ developments, and a very high rapidity in decision-making as well. Technical analysis is necessary and used in scalping strategies, so the experience of the scalper counts very much, that’s why beginners are not so comfortable in this way of trading. Many beginners will tend to gain a very large profit and to lose all their capital suddenly. Each transaction must not exceed 5 percent to 10 percent of your account and do not forget to take in considerations the spread of broker too. When an open transaction is closed, the broker will deduct his spread from your profits. If in a transaction, you have earned a few pips you could not even undercover the broker spread, then practically you won’t earn nothing and may have a loss.

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