Scalping is a trading strategy that requires a trader to make multiple trades daily with the intent of capturing pips. The mission is to be involved in as many trades as possible, then, profiting for only a few points each. If you’re the kind of trader who usually holds a position in a trade for not over a minute, or for a relatively short period, you may be a scalper.
What Awaits a Scalper?
Scalping revolves around the concept that the majority of forex patterns are rather predictable; they often stay in a similar zone during the initial stage. Regardless whether the streak will continue, a scalper plans to exit a trade after a brief time. The strategy, therefore, is best for short-term traders. You can say that it is also for realistic traders who are not interested in watching the unpredictable fate of trades.
On that note, scalping is a strategy that a number of newbie and experienced traders prefer to use. It follows the idea of taking the upper hand when it comes to using leverage, along with the ability to make multiple short-term trades. If a trader were to make thousands of trades daily, for instance, he would be earning thousands of points daily, too.
A Roster of Advantages
A primary advantage of scalping is that it is an effective trading strategy even for a newbie trader. The technique is simply to enter trades at the beginning, then, set exit points not long after. Granted the subject knows the first thing about making a trade, he can profit.
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Other advantages of scalping:
The Drawback
Scalping, however, is not for all traders. For the most effective results, you must be willing to invest time, energy, and of course, funds. Familiarity with the structure of the forex market can also be useful since you will be monitoring trades simultaneously. Only if you have the resources to make at least hundreds of trades daily, the trading strategy seems ideal.
Reference: Technical Points shared by Mr. Michael, A Forex analyst from MTrading India.