A strategy of scalping is very popular among Currency traders. It is applied by traders who make the profit from the rate fluctuations during one day. Usually the time between the position opening and closing is very short and may be only few minutes. Therefore the profits achieved from these traders are low too, but the total earning achieved by the high number of trades can be high enough. Some traders may do up to 200 positions a day.
It is evident that not all of these trades are profitable, the aim is to reach the profit in total, that is quite possible. While making scalping the stop-loss order is set closer to the price of position opening in order to guarantee the diminishing of losses if the market changes its direction.
All online traders know about the volatility of the currency market. Even the rate within one day moves on a certain cycle with its ups and downs. If during one day the average price change is about fifty pips, the difference between the minimum and maximum prices will have much greater value. Once you catch a small trend, you will have a chance to significantly increase your profit.
Beginner traders often get a false impression of the great opportunity to increase their investment as there is an opportunity of reinvestment. Unfortunately this first opinion may be wrong as without any proven strategy, this strategy is doomed to failure. First of all you need to know on how you place the stop-loss orders. Because if you place it too close to the price of opening, it increases the risk of losses in the market during the volatility even if you can forcast the direction of trend correctly. In order to diminish this risk, we recommend you to avoid placing the stop loss if you do scalping. But you must always be in front of the computer and watch your trades. In case of a quick movement against you and there is no vivid marks to roll back to initial levels in the next few hours, you must close the trades, otherwise you may lose all. More than that, if you have a large deposit and trade without the stop loss, your total balance may be lost and you will get a margin call.
The other reason of the beginners’ failure might be in the emotional side and the tension that arises when dealing with real money. We recommend all beginners to try scalping trading on a demo account first, since there is virtual money there is no fear of loss.
Every scalping trader must be careful while selecting a Forex broker to trade with. Not all Singapore brokers allow scalping. We recommend you to review the best Singapore Forex brokers list and join the broker that meets the needs of your trading technique.
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Tags: Forex Trading, scalping, scalping trading, singapore brokers, singapore forex brokers