Simply its a forex trading strategy used by forex traders to make profits within a short movement of currency pairs.
21 May 2021 05:24 PM
What is scalping?
Simply its a forex trading strategy used by forex traders to make profits within a short movement of currency pairs. It is one of the common trading strategies for traders when a trader is earning money with scalping strategy, we called them scalpers. This technique is for those traders who want to get some quick profits. When a trader opens a position for a few seconds or minutes and closes the trade by taking a small profit, that is scalping.
Forex scalping is a great way to trade without falling into big risks. Most of the scalpers are keeping a small risk in their trades and capturing small amounts of profits. A small currency pair movement could earn a good number of profits by opening a large position in a high leverage account. Forex scalping is best for ECN accounts than other normal accounts. The maximum brokers keep ECN accounts with high leverage, spreads, and fees opportunity for traders, but it needs a big number of deposits to kick start trading.
How does scalping work?
This technique is so simple for traders, but it could be manual or automated. If you are looking for manual scalping, you have to sit in front of your computer screen. Manual scalpers are trading for 4/5 hours daily. Some of them are also trading for 2/3 hours as they want. On the other hand, automatic scalping is like magic, and you have to build a trading robot for automatic scalping. There are MQL-5 language is used to build these types of robots. You don't need to waste your time on scalping when you set instructions for your robot. The robot will sell or buy the currency pair as per your previous instructions. The robot will start the trade automatically and close it as the responsibility.
Most scalpers use higher leverage in trading for scalping because high leverage can open a bigger position of trades in small capital. That's why scalpers need a broker who is offering higher leverage.
Lets have an example of a pure scalping trade. Suppose you have opened a position. Let's have an example of a pure scalping trade; suppose you have opened a position where you are using a 10:1 leverage. Imagine that you have $10,000 in your account, and you have opened a trade with the leverage; it means you are trading 100,000 dollars with this leverage. If you are trading with four pips risk, you will lose $50 per trade, which is the maximum risk. But, if you can make profits as 1.25 std lots, you will earn $100 profits from the movement. That's why scalpers are looking for high-leverage brokers.