As a beginner, you may have heard of scalping, which is one of the most powerful trading strategies in the Forex industry. However, for newbie traders, this strategy is the riskiest one because without having adequate knowledge, anybody can lose a massive amount of money. Yet, many of these new traders are very interested in this strategy. Here, we will disclose a complete guide to FX scalping.
What is Forex scalping?
As mentioned earlier, this is a trading style used in the CFD industry. It is a strategy in which you must apply advanced knowledge of technical analysis. In this currency exchange market, there are other business plans like – day trading, position trading, swing trading, and so on. In scalping, traders in the Mena zone have to retain the bought currency for a short duration (a few seconds to a few minutes). Investors need to make their decisions quickly because they don’t have enough time to analyze the graph. The aim of this strategy is to make profit within a short period. Being a new scalper, always choose a broker like Saxo bank group as they provide the best possible trade environment and execution. A faulty trading platform can result in big losses so never scalp with an average broker.
Why is scalping so potential?
Some people believe that this business style can be potential as one can earn a good amount of profit from here. Since the currency exchange industry is highly volatile and fluctuates at every moment, the situation becomes easier for them. This is what the scalpers wait for. They only enter the industry after spotting a sharp movement. A few pip movements are enough to bring profits to these guys.
It can also be said that the scalpers take the benefits of those small movements, which the position traders are unable to do. In addition to this, the strategy provides investors with many chances to enter a trade within the same day.
Many people say that those who have good knowledge in utilizing the technical indicators can easily make money from this style. Technical analysts can quickly find out the turn, the steepness of a slope, the possible movement, the approaching market, and the ideal spots to enter or close a trade.
Scalping and beginners
Professionals strictly forbid newbies from using two trading strategies – scalping and day trading. Both of these are the same, except for the duration. Day traders execute their trades within the same day, but scalpers have to execute that within a few minutes. These strategies are risky for novices because they need to gain concrete knowledge of the technical indicators. It should be their full-time job because they have to stay focused on the graph.
One more problem that is prevalent among the beginners is – these guys are extremely emotional at the beginning. So, they can hardly cope up with the losses. This can be another reason for the prohibition.
How can a newbie start scalping?
If you want to start as a newbie, there are several things that you must consider –
The timeframe of this trading style varies from 1 minute to 15 minutes (maximum). But people rarely wait 15 minutes to execute their trades. The standard duration is 1 to 5 minutes.
Volatility and currency pair
It is not the volatility that a scalper should focus on. He should also look at the price of the currency pair. Look for those pairs, which are cheaper.
Without these signals, scalping can’t be imagined. You must learn these indicators and analyzing tools to enhance efficacy. Some of the best technical analyzing tools are exponential and simple moving average, momentum, crossovers, convergence, and divergence, etc. Try to spot the entry and exit points by utilizing these tools.
These are the basic guidelines for novices to start their Forex careers as a scalper. By learning it, this strategy can be slowly become more comfortable for them.