In the foreign exchange market, various strategies are used by participants in order to make the most profit they can get. While others use legitimate ways to increase their chances in the competitive forex market, some may use some sneaky alleys to snag whatever they can. However, strategies are strategies.
One strategy is scalping. Scalping is probably in the gray areas when talking about legitimacy. Some consider it valid while some deem it unlawful.
What is Scalping?
Forex scalping is a forex trading strategy, which can also be referred to as quick trading. A scalper would hold his position open for only a relatively short period of time (usually not longer than a minute). Holding a position for longer than one minute would be considered as regular trading.
Forex traders make small profits with scalping. This strategy would lessen the risk for the trader because of the very limited timeframe of his open position. Scalpers normally would not take big risks even when there is a chance for a bigger profit. Smaller but more frequent profits are the way to go. With this in mind, not every trader is suited for this kind of forex strategy.
But why would forex brokers allow scalping, you ask? Why would they, indeed? The brokers would be the one to suffer from losses from the scalpers. But, there are many different brokers out there and their systems are not the same. The brokers with better-performing automated systems would sustain less damage (if any) compared to those with slower processing systems.
The interaction between a trader and a market maker is only as good as the broker’s processing system. The time it would take to process orders would affect profits and losses. A forex broker would normally not object to a scalper’s strategy when their automated systems are reliable and fast.
A trader who wished to use the scalping strategy needs to find the right broker. There are various forex brokers for scalping (head on to www.amarkets.com for a list of forex brokers) which can suit an individual.
Forex traders who have no prior knowledge on scalping can easily learn from various helpful resources on the internet
The scalping strategy is not for the undetermined. A forex scalper may need to open and close a lot of positions in order to gain more profit. A normal trading day may involve more than a hundred positions, all opened and closed within a limited time.
So, before heading on to forex brokers for scalping, do a little research for tips and tricks on the scalping strategy. Learn the ways of the scalper.