Scalping forex is a way of profiting from short term trades, dodging in and out of the market very fast to cream off a few pips profit each time. It can be a good way to make money with forex trading but there are some negative points.
Firstly it is important to think about why you want to try scalping. Some people find it less stressful to know that all of their trades will be closed by the end of the day. The outcome is known, for better or worse.
This may seem like a good reason for a beginner to get into scalping but in fact it is not. Their motivation would be based on fear. It would be better for a beginner who feels that way to learn to handle the stress rather than escaping it.
For example, starting with very small trades, they could adopt a longer term strategy until they were used to leaving a trade open while they were away from the computer or sleeping.
Of course, it is important to have a stop loss to restrict possible losses and a limit order to exit the trade at the desired profit level automatically.
Other people find scalping more stressful because it requires quick decisions. This should not be a problem if the trading plan is very clear.
There is almost no decision to take if your plan covers all eventualities. You only have to follow the plan.
So the important thing is whether you are able to follow a plan exactly, under pressure, or whether you start to diverge from it because of panic or confusion. Again the answer to this is to start with very small trades.
Scalping does have one disadvantage for beginners who want to start out with, say, a micro account. This is that most of the brokers who offer micro accounts are market makers, and most market makers do not like their clients scalping forex.
This is because they put up their own funds to meet the trader’s order in the first instance and then cover their losses in the open market if the balance of all of their clients’ orders requires it. So sometimes when you win, you are taking the broker’s money.
Therefore, understandably, they do not like scalpers and will probably close your account with a polite note if you are very successful.
This means that you need to shop around for a broker who will accept the strategy. You can ask around in forex forums to see which brokers are being used by other scalping forex traders.
Many of the forex robots or expert advisors use scalping strategies. This takes much of the stress out of trading because you do not sit and watch while the market moves.
It also cuts out any temptation to close trades early or leave them running longer than you should. A scalping forex robot will do exactly what you set it up to do any time that it is connected.
