The Science of Scalping

The Science of Scalping

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The science of scalping is a trading strategy which is essentially very quick in and out trading where the scalper steadily increases the balance of his account. Scalping traders only keep an open position for a few seconds or up to a few minutes. There is a very fine line between scalping and day trading suffice to say that scalping is the risky side to day trading.

Scalping is highly risky because the scalper is only in the trade for a short time and because they want to make a lot of money they use a high leverage so that just a few pips maybe a 1 to 5 pip profit gives them a reasonable monetary profit. In addition scalpers have a number of trades open at the same time and during the day could easily accomplish more than 50 trades. This is why it’s risky. When trades go with you it's good but when the market goes against you with many high leveraged trades open you can take a heavy beating.

Not all forex brokers support trades that are open for a few minutes as they cannot move fast enough to turn a profit so you have to make sure your broker supports such practices otherwise they will first warn you and then close your account.

Of course scalping is not an exact science but there are some strategies which can give you winning trades. As with all strategies you must lay down the rules you are going to follow and stick with them. First of all scalping cannot be done away from the computer. You can’t open a position then go and make a cup of tea. You may find that when you return you have lost a lot more than your thirst. When trades are open stay glued to your screen. Secondly, decide on the loss you are willing to put up with. Don’t forget that you don’t have much time to put in stops so you have to have your finger on the trigger at all times. Thirdly, decide how many pips profit you want before you close out the trade. If the profit rises above the number you have decided on don’t wait, close the trade because it can easily go 5 pips against you before you know it.

source: www.etoro.com