WHAT IS SCALPING AND HOW SCALPING WORKS IN THE FOREX MARKET?
The Forex market is another form of the foreign exchange market. It is the process of exchanging a currency into other currency for several reasons, might be for trading, or tour. According to some recent reports from the Bank for International institutes, the turnover of the Forex market is currently at more than $5.1 trillion.
In the next section, we will see the basics of the Forex market including the elements of it. Therefore, you would know how overall activity in this market occurs and how you can make a benefit from the foreign exchange market.
From the investor’s point of view, scalping is a term used to mean skimming for a small profit on a daily basis. Traders do that by being In and Out position several times a day. Scalping in trading is carried out based on a set of real-time analysis.
The trader is holding the currency for a very short period of time and buy and sell it to make a small profit. Trade is placed based on signal driving from the technical analysis.
The analysis based on multiple signal system, that creates buying and selling decision and where and all the points are in the same direction.
Forex looks at a large number of trades, in a very small time to get in a small profit in each trade.
Charts and Pips in Scalping
Scalping is not like the day trading. In a scalping you open it in a position and then close it during the current reading session. In scalping trailer do not carry the trading position to the next day.
Traders can trade once or twice, even a few times in a day, it is much frequent and takes multiple trades during one particular session.
What kind of Personality requires Scalping
Every personality does not sweet sculpting. You should have a kind of risk-taking personality for this kind of trading.
This kind of traders has to sit for a long in front of a computer. They enjoy intense engagement during the session.
In scalping, you don’t get much time to think. You have to pull the trigger without thinking much. That is the key quality for sculpting.
If the market moves against you, then you can at least save two to three pips by sculpting.
Set up for Scalping
Starting a scalping requires that you have a good knowledge and reliable access to the market with a platform which can help you in very fast buying and selling.
The platform generally has a buy button and sell button for every currency pair so that Trader can quickly use the button and take their exit and entry in the exact time they wanted.
In the liquid market, the execution process might take place within a fraction of second.
Choosing a right Broker for Scalping
Forex market is a international platform which is largely unregulated, government is giving its efforts to introduce legislations which will help to regulate OTC market.
As a trader, it is your responsibility to make Research and understand the proper management of the broker. You also have to pay attention to how much margin is needed and what will be the broker’s responsibility if the position goes against you. That also means the auto liquidation of your balance if you take high leverage.
You should verify this by asking questions to the broker’s representative and make sure that you have a proper document of it.
The Platform of broker in Scalping
To be a professional scalper you must be very familiar with the trading platform which is offered by your broker. Different platforms are offered by different brokers.
So you should open a demo account and practice on that platform until you are comfortable with it. As you want to scalp, there should not be any room for confusion.
By mistake, if you press the sell button instead of the buy you will incur a big loss so you have to be very careful about it.
Liquidity in Scalping
In scalping business you want to trade in the liquid market. This kind of market are based on currency pare like EUR/USD or USD/JPY.
Depending on the demand of the currency pair, certain currency are much more liqiud than other.
Though the forex market is open 24 hours a day, so the valium is very big each day.
Perfect Execution of scalping
The scalping trader needs to be sure that they can take themselves out at the time they needed.
So you have to be sure about the terms and conditions of your broker. Some broker might put some limitations if the market is not moving fast.
Redundancy means the practice of saving yourself in catastrophe. By using redundancy in trading it means the ability to enter and exit in more than one possible way. You have to make sure that your internet connection is as fast as possible.
You should know what you will do if your internet connection goes down. You should have a direct phone number to the dealing dashboard and you have to identify yourself very fast.
All these factors are very important to understand when you are trying to be a scalper.
Retail Sales and Fundamental
Retail sales report indicates the total amount of revenue receipt from all retail stores in a particular period in a given country. this kind of report is useful in a border time frame.
But the revision of the advanced reports of retail saying can create significant volatility for the traders. the sales report can be useful to compare the output of a publicly-traded company.
Choosing a Charting Time Frame for Scalping
For executing trade over and over again, you should have a system to follow automatically. As in scalping, you do not get time enough for in-depth analysis.
You should have developed a system so that you can use it automatically with full confidence. To be a scalper you need to follow short-term charts.
How to Prepare for Scalping
#1 Get a Sense of Direction
It is very wise and helpful to trade with a trend especially when you are trading as a beginner. It is better to develop a daily and weekly time frame to trade.
#2 Prepare Your own Trading Chart
Forex trading system can be of various kind either manual or auto. Traders look for the right signals and interpretation if it is time to buy or sell or it is automated signals. The timely technical analysis makes a real tool for forex scalping.
Try to set up a one minute and ten-minute chart. Using the 10-minute chart try to understand if the market is trading properly.
After that use the one-minute time frame to actually enter and exit your trades.
In another way try to stop your loss very quickly and try to take profit, when you have 7 to 10 pips. There are many other trading systems that you can use for profitable trading.
So before you follow the above process, it is better to use a demo account to keep a proper record of all trades both winning and losing.
This is the best way to manage your trades which will make you a profitable trader.