My Money Blog

Forex Scalping

Posted on 24. May, 2009 by Casper in FAPturbo, Forex

Using high leverage is the only way to make a small account grow big in s short period of time. But before your start your scalping journey with a very high leverage please continue reading.

A common mistake for scalper beginners trading high leverage accounts is the tendency to trade with full capital to maximize profits. This also means maximizing the risks, and many new scalper accounts reaches zero fast because of this.
A scalper must learn to calculate the size of the positions opened, to make sure
the account is not wiped out with a single loosing trade

The problem with high leverage is of course the high risk. To prevent your entire account is killed by a few bad trades, it is important that you trade with a tight stop loss. If you trade without a stop loss your investment will be gone in no time.

Decide in advance.

Do some simple math in advance on your lot size and exposed risk. Calculate the worst possible scenario, like 5 or 10 consecutive losses, and check if your account can survive such a loss.
(I know  10 consecutive losses doesn’t happen to often, but it can happen!)

Suitable hours for scalping.

The Forex market is open 24 hours a day 5 days a week, but not all hours are suitable for using scalping strategies. Since no-one wants to sit and watch the monitor for hours and hours waiting for
as the prices are moving nowhere, a scalper needs to learn the behaviour of the currency pairs. To trade effectively, a scalper most be able to define the most active session when the market is most
volatile.

Spreads when Scalping.

Spreads plays a huge part when using scalper strategies. Brokers have different spreads, and a scalper must operate with low spreads (the fapturbo forex robot, does not open scalper trades if the spreads is higher than 5, with default settings).
A trader most of course cover the the spread cost, so the higher spread the harder it is to gain the desired pips. Logically it works the other way also; the low spreads means easier scalping profit.

Each time a scalper opens a new trade, the cost of the spread is paid to the broker. Let’s say you open 10 new trades with an average spread of 3. This means you need to gain 30 pips to break even on those spreads.
One long term trade would only cost you 3 pips. The cost of trading is 10 times as high!

Scalping requires much concentration, constant price-monitoring and the ability to make decisions instantly.

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Tags: Forex, Scalping