Forex scalping is regularly purchasing and selling currency pairs in forex exchange trades. These trades are frequently held for a few seconds to a few minutes.
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How does forex scalping work?
Scalping is similar to day trading in that positions are never carried over to the next trading period. While a trader may only take a position once or twice a day, scalping is quick and active, trading numerous times every session.
The high-velocity moves that attract certain scalpers occur around the release of economic data and news.
The most miniature exchange a price movement currency pair can take is a percentage in point (pip). Scalpers try to pip five to ten times from each trade they make and repeat this process over and over throughout the day.
How to set up for scalping
To properly set up as a scalper, you need solid access to market makers and a platform that allows quick buying and selling. The platform usually has the buy and sell buttons for each currency pair to initiate or exit a position.
Pick a broker
You must read and comprehend the broker agreement, as well as your respective responsibilities. Keep an eye on the margin requirements and what the broker will do if your trades go south. Ask brokers’ representatives questions, study the fine print in the brokers’ agreement, and keep copies of all documents.
The brokers’ platform
There is no space for error, so get familiar with the broker’s trading interface. Open a practice account and practice until you feel comfortable using it.
Scalpers aim to trade only the most liquid marketplaces. Even though the forex markets trade 24 hours a day, the volume varies. When two large forex trading centers are trading, this is the best time to liquify.
To guarantee that your trades are executed at the intended levels, you must grasp your broker’s trading terms. Some brokers may only guarantee execution during slow market periods. Others may offer no assurance at all. This is crucial to avoid slippage.
In trading, redundancy means having many ways to enter and exit trades. To avoid disaster, make sure your internet connection is fast and have a backup plan. Having a direct line to the dealing agent and identifying yourself quickly is a plus.
Choosing a charting time frame
It is crucial to have a system that you can follow almost automatically to execute trades. Scalping does not allow for in-depth study, so you need a system you can rely on.
The best forex pairs to trade
The best forex pairs for scalping are the pairs that trade in the highest volume. In this section, I list the top ten forex pairs you can choose from:
In short, scalping may be an option for retail forex traders. However, a forex scalper needs a more significant deposit to handle the level of leverage required to make the short and small trades worthwhile.
Scalping is very fast-paced, and if you like the action and like to focus on one or two-minute charts, then scalping is for you.