All Forex traders know that to profit overall in a currency market that sees around $5tn in trades made each day, you need a solid trading method. Having this kind of solid and effective strategy in place will benefit you in a number of ways.
Firstly, it will make it much quicker and easier to spot trading opportunities on the charts as you have the conditions to look for down in writing. Secondly, it will build discipline into your trading journey as you will be following a predefined method when trading. This is also very good for giving you the edge needed to profit overall – by finding an effective strategy and sticking to it (even when you have a few losing trades!), you will be setting yourself up for long-term investing success.
Of course, this means that choosing a trading method to begin with is key. Scalping is one strategy that many still do not know about – but is it one worth considering?
Scalping in FX – a popular method to use
The scalping method has actually been used in FX circles for quite some time. It is just not as well-known or widely used as something like a strategy that follows the trend, for example. If you have not come across this method before, then do not worry – it is pretty simple and quick to pick up.
In simple terms, this method sees you open trades for short periods and then close them again quickly when you are in profit. This could be from any currency pair, but as this is a rapid-fire strategy, you would need one that has some movement in the market itself. Scalping is done on the shorter timeframe charts – usually anything up to five minutes. Most people who use this method will only hold their open trade for around one minute before liquidating it though.
It is worth checking out a more detailed guide to forex scalping if you think that this method may be for you. These more in-depth guides can show you exactly how to go about it and also a host of other vital features to know about.
Why use the scalping strategy?
Of course, the big question you may ask is what makes this the method to use above all others? Here are some great advantages that scalping gives to traders:
- It is simple to use – one thing that many people like about scalping is that it is very easy to learn and very easy to put into practice. There is no need to digest a complex set of rules, to spend hours analysing charts, or to learn how to use complex chart indicators. You simply find a pair that looks suitable for scalping, open the trade you think will win, and then manually close it down within a few minutes to make money.
- It can be less risky – one thing that all successful traders know is that the longer you are exposed to the market, the more risk you are taking on. If you trade on longer timeframes, a sudden big market move can wipe you out in seconds – often for large amounts. Scalping avoids this by only exposing you to the market for a few minutes. This means that you are protected from the rampant volatility that other longer-term traders have to contend with. Scalping also usually involves opening smaller-size trades – this is great for reducing risk as you lose less if it does not work out.
- It can be more exciting – we all know that emotion can be dangerous in FX trading, and you do not want to get too over-excited. However, you also need to find a trading method that you enjoy using and does give some fun when investing your money. Many traders like to scalp as it is fast-moving and gives them a real feeling of being at the heart of the action. While not for everyone, scalping can be the best strategy for those who find opening trades up for days too dull.
- Scalping can also be less stressful – all traders who use this method will close any open positions at the end of their session and then forget about trading until the next day. With no open positions overnight to worry about, there is no stress around what the FX market is doing or what effect it will have on them. For this reason, scalping can often be a less stressful way to trade.
Scalping is an effective strategy to consider
As the above shows, this trading method is certainly one to think about. As with all trading decisions on the major financial markets though, it must be remembered that whether to use it will be a personal choice. By finding out more about it and if you will be able to use it successfully, you will be able to add it to your trading arsenal.