What Is Scalping?

Another well-known and also very frequently used Forex strategy is scalping. Scalping is characterized by the rapid purchase and sale of foreign exchange.

Scalping enjoys increasing popularity

Scalping is a trading technique that is becoming more and more popular, with an upward trend. The problem is that due to the increasing popularity more and more traders take notice of it, try scalping but fail at it. Therefore, scalping is then simply left to the left. But this is a pity, because with this technique a good ratio of profit and risk can be achieved. This means that profitable returns are possible at low risk. Always provided, of course, that this technique is really well mastered by the trader. The principle of this technique is that the trader does not speculate on a big profit with one trade, but makes as many small trades as possible, which all bring smaller profits.

Scalping in practice

The scalper recognizes after the technical analysis which price will rise in the next minutes. He buys the currency pair and sets a tight stop loss of ten pips. Now the rate actually rises by the five pips expected by the scalper, the spread is two pips, so the trader has a profit of three pips and he closes the position right away. The scalper repeats the whole thing several hundred times on some days.