Here we learn that traders involved in Forex trading markets engage in different kinds of trading styles depending more on their own trading temperament. While some of them resort to Swing trading style, the rest prefer day-trading where they can close their trades the same day, doesn’t matter profit or loss.
Day trading again has its bifurcations where you can trade either with the trend or against the trend. This is done after finding resistance and support levels to the trend and then, taking positions. However, identification of the support and resistance levels facilitates you with another form of trading and that is called Forex scalping. We gonna learn a bit about Forex scalping strategies in this article but lets first understand what scalping means.
Forex scalping means taking a position at a defined entry but no clear profit target where the positions are closed in less than two minutes of opening with even the slightest of profits. In other terms, Forex scalping strategies call for closing the trade at either top of two minutes or at a five-pip profit, whichever comes first. Of course it may vary also if somebody has a boundary-based scalping method but mostly traders prefer working only with the pivot points which has only a limited potential, i.e. as mentioned above, just five pips. It also requires keeping glued with the market screen all day, which can very taxing to your eyes.
How they do this is that they identify small trends that started from the start of the day. After that, Forex scalping strategies calls for identification of the crucial points in the trend. I.e. the support and the resistance levels. Scalpers deploy their own preferred indicators which could be Fibonacci or pivot points to find these points for trading. Then, the job becomes simple as every time when either of these points shows up, they take a position with the assumption that the real trend will continue. They wait for a minute or two and as soon as the position turns into profits, they immediately close it without waiting for any fixed profit target to come.
However, traders using forex trading strategies also use Channels and trend lines to find their entries. Unlike Pivot points or Fibonacci series, these indicators suggest the trading range boundaries, so the positions are taken at the boundaries the moment they come, and are immediately closed.
Forex scalping is one of the main business units for all the major day-trading financial institutions as Forex scalping strategies spread the financial risk over the entire trading portfolio and minimizes the chances of finding a complete loss. Hence, they employ experienced day-trading scalpers who have their own forex scalping strategies and fund them with the company capital required for trading. The scalpers not only get handsome salaries but are also paid a substantial share in the profits they make.
However, this employments calls for gaining scalping experience at home first and to do that, you need a broker account of your own. Its Important here to learn that NOT ALL brokers allow you to trade and profit by using Forex scalping strategies. You must read their terms and conditions carefully and find out from your broker in advance if you are allowed to scalp the markets on their platform. If not allowed and you do it still, the broker can refuse to pay you your profits. To ensure that you benefit from your trading, make sure that your trading style meets all the requirements of the broker and then it is up to you whether you make a swing investor or a cool-cool trader with his cool Forex scalping strategies.
Recommended Broker Allowing Scalping: