FOREX Scalping


FOREX Scalping

Probably the most popular type of forex trading strategies can be considered as a forex scalping strategies.

There are several reasons for this:

1. Not require a large initial capital
2. Opportunity to obtain high profits
3. Active trading style
4. Short period in the position reduces the risk of loss

There are many definitions of scalping strategy. The most accurate definition of scalping strategy is receive a small profit (several pips) in a short period of time.

A little bit history….

Several years ago, the company Metaquotes from Russia has released MetaTrader terminal, and MetaTrader server. This has stimulated the creation of a large Number of brokerage companies with small capital and only one goal: force the trader to lose all deposit. MetaTrader server has all necessary tools for the destruction of any strategy. Such brokers can be compared to a casino. Advantage casino over the player is a large supply of money and time. For this reason scalping strategy which does not require large deposit and order remains open for a few minutes or seconds, give the trader an opportunity to win. To prevent the winning brokers decided to expand spreads and limit the distance (up to 10 pips) between Stop Loss, Take Profit and Pending Orders and price.

Factors affecting scalping

Liquidity – The liquidity of a market affects the execution time and as a consequence on performance of scalping.
Spread – scalper’s profit is commensurate with the spread. For this reason, any spread increasing may affects on performance.
Volatility – Unlike momentum traders, scalpers like stable or silent market. Imagine if its price does not move all day, scalpers can profit all, making hundreds or thousands of trades.
Time frame – Scalpers operate on a short time frames, like M1, M5 and M15. This maximizes the number of moves during the day that the scalper can use to make a profit.
Money management – usually 1 loss for scalping strategy can be 2 -10 times bigger than 1 profit. For this reason scalping strategy can have very strict money management never allowing a loss to accumulate.

Scalping types

There are many methods of scalping. The most popular method is the opening orders in on the low volatility market in the moment when price touch of the border of regression channel or support /resistance lines or High/ low level.

But I do not accidentally said at first about the scalping history of Factors affecting scalping.

Currently profitable scalping strategy can be created only by a professional who knows not only FOREX trading but also the work of brokerage companies as well as having extensive experience in programming. For example adding 3 lines of programming code allows force a dealer to make a mistake, can turn losing strategy in to a winning strategy.

For this reason for a successful scalping you need an expert adviser coded by a professional company and reliable broker.

Good luck!

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