Forex Scalping

What is Forex Scalping?Scalping can also be called a quick trading. It is a method where traders allow their positions to last only for a matter of seconds, to a full minute and rarely longer than that.The purpose of scalping is making small profits while exposing a trading account to a very limited risk, which is due to a quick open/close trading mode.Tips and FactsThe only way to make small account big in a short period of time is through the use of really high leverage. But wait... do not jump of the cliff right away. Start with reasonable leverage for scalping, for example 20:1 or at most 50:1, then move on as you see scalping skills improve.The only way to trade with high leverage without risking blowing up an entire account in only 10-15 trades is by trading with a tight stop loss.It is wise to decide on the size of the trading lot and exposed risk in advance.Do a simple math: calculate the worst possible situation, e.g. 10 consecutive losses in a row; then see if your account will survive and if there be something left to move on.Although Forex is active 24/7, not every hour is suitable for scalping.No scalper wants to sit in front of the monitor for numerous hours bored and disappointed with the “sleeping” price as it literally moves nowhere.Another thing to keep in mind is spread which brokers charge for different currencies.The higher the spread the harder it will be to collect desired pips(because once trading position is opened, trader must cover spread cost – earn pips for broker first – and only then collect own pips).Another factor to consider is an average daily range of the price for chosen currency.The wider it is the more realistic is an opportunity to profit from price moves.One of the scalpers’ favorite currency pair is EUR/USD with its low spread and good daily price range.Once in the trade, scalpers should manage trading risks by:1) moving stops to break-even as soon as situation permits;2) taking profits at a logical levels: at round market price numbers: 00, 10, 20, 50 etc., at previous support/resistance levels, at Fibonacci levels etc. 3) getting out of the trade if the price freezes for longer time than expected.Scalp-trading is very demanding and requires a lot of concentration, constant monitoring of the price and very quick decision making. Also, short time frames used in scalping strategies, require a good grasp of trading complemented with sound technical analysis skills. It is not a place where beginners feel very comfortable as it demands from traders a good chunk of experience.