What is Forex Scalping That Makes Small Profits?

What is Forex Scalping That Makes Small Profits - Moniedism

There are many investment methods in Forex. Among them, we will introduce scalping, which narrows the trading interval and accumulates profits in seconds.

What is Scalping?

Scalping is one of the trading methods used in Forex. Scalping comes from "Skull," which means skull, which means "skinning the head" that Native Americans did. Scalping is an investment method that accumulates small pips by repeating transactions for a few seconds to a few minutes. 

Therefore, it is necessary to instantly determine the timing of holding a position and the timing of loss-cutting profit-taking and invest.

Also, during trading, you need time and concentration to keep an eye on the movement of the market by always sticking to the front of the PC. Therefore, it can be said that this is a trading method that is not suitable for people whose main business is busy.

Benefits of Scalping

The first benefit of scalping is that you can limit the risk. In scalping, the narrow loss cut reduces the risk of making a large loss at one time. Also, there is no risk of sudden market changes overnight. Since you concentrate on trading in a short time, you do not have to worry about sudden changes in the market while you are not watching the market.

Disadvantages of Scalping

The disadvantage of scalping is that you press the buy and sell buttons over and over again. This is due to the high difficulty of scalping.

Since you press the buy/sell button many times, you will not be able to make profits, but you will only lose money.

In addition, transaction costs such as spreads and slippage will have a large effect. Also, the speed of the internet must be fast.

Since it trades in a few seconds to a few minutes, it is disadvantageous if it is a slow line. Scalping also carries the risk of disconnecting the internet during trading.

Basics of scalping

In scalping, aim for several pips to 10 pips in one sale

In scalping, it is basic to aim for several pips to 10 pips in one sale. In scalping, it is basic to accumulate small profits by increasing leverage and repeating trading many times. Aiming for profit-taking of several pips to 10 pips, it is basic to set a loss cut of several pips.

Scalping chooses the right currency pair

In scalping, it is important to choose the right currency pair. Scalping requires some volatility because it deals with momentary price movements.

You need to choose a currency that is highly liquid. For example, a currency pair that combines dollars, pounds, euros, and yen.

Leverage technical in scalping

In scalping, it is a major premise to utilize technical skills. You don't have to be very fundamental because you trade in a very short period of time.

It is important to utilize the technical and find the right trading timing from the chart. In addition, the basis of scalping is to trade by combining the indexes that you are good at, based on the 1-minute or 5-minute bar.

Choose trading time for scalping

In scalping, you have to choose the trading time. As mentioned above, scalping requires some price movement in the market. Markets with high volatility are suitable for scalping.

Liquidity will increase from 16:00 London time, and liquidity will increase from 22:00 New York time, and price movements will become more active.

And it can be said that the scalping time is until 25:00 London Fix. There may be a transaction that dares to select the Tokyo market from 9:00, which is relatively slow and easy to predict market movements.

Asset management with scalping

Scalping is a difficult trading method that requires a certain amount of trading knowledge and experience because trading is repeated in a short time.

It also has the advantage that you can concentrate on trading in a short time and the risk of overnight is low. If you feel that scalping is right for you, then scalping is a good choice, and if you are good at trading loosely, swing trading is a good choice.

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