Tips and Techniques to Bolster Forex Scalping
Forex Scalping is a popular strategy for pulling off rapid profits through a significantly higher number of short term forex transactions. It calls for abundant discipline and riveting concentration on the scalper’s part. Professional scalpers carry out on an average about 100 trades each day with the intent of making about 10 pips per trade.
A position should not be steadfastly stuck to when it starts going against you in the hope of a turn around, rather an early exit should be sought. A scalper in Forex scalping should exit the trade after registering a few pips of profit over and above the bid price for trading currency. One should adhere to a rigorous exit strategy to stave off trading losses that will consume the entire profit.
One should pose his trust on a broker who provide for low spreads and executes trade instantly. Alertness should be exhibited regarding release of news pertinent to the currency pair being traded. The previous trading day’s Open, High, Low and Close should be recorded prior to stepping in into a new day.
Elemental candlestick patterns should be studied to make it easy to recognize them when they pop up. Important trend lines, pivot points, support, and resistance relevant to the traded currency pair should be drawn on the daily and hourly charts.
The dominating trend of the day in terms of bull or bear should be determined to gain more success in the long term. The stop should be adjusted to break out even if there is smaller pip in profit. A trade that is long drawn or on which one has lost confidence should be shunned.
Forex scalping is conducive to achieving 5 to 15 pips easily per trade. Reversal in trends may pose some difficulty although it is highly unlikely. The risk to reward ratio in Forex scalping is fairly low which essentially means that the profits raked in painstakingly all through the day can be washed away in a single losing session. Hence, it is imperative to set and maneuver a stop loss.
There are traps galore for new traders to get ensnared. Addiction may set in if random profits are registered in the initial days. This may prompt the investor to take to risky trades frequently, thus diverting away from the stop plan. One should refrain from engaging in emotional trading in a vain attempt to make up for the losses incurred earlier during the trade.