Forex scalping in the simplest manner refers to a quick entry and exit of the foreign exchange market. Although gains are bound to be small due to the short time in holding a position, high frequency of this sort of traffic is bound to result in substantial profit over time. Identification of this activity is generally associated with profit levels of less than 10 pips with average holding times of a minute. This undoubtedly will result in a high number of orders going back and forth between the forex scalper and his broker.
From a quick glance of this sort of trading, it may be not be every trader’s cup of tea. Those who are holding day jobs or at least have other responsibilities to tend to may not have the time to keep their eyes glued to the computer screen. Although there is undeniable excitement in seeing profits build up, housework and office work growing into mountains brings the part-time trader back to reality. Some brokers may not be advocates of forex scalping, employing an arsenal of tactics to foil the trader’s attempts at realizing gains via this method. Increasing the trader’s spread and holding time defeats this purpose of small and continuous gains.
Since the forex scalper is forced to cope with various sorts of obstacles thrown his way, a worthwhile strategy may be to trigger some counteractions once an increase of spread is detected. By making some quick adjustments, one is able to re-establish his position, none the wiser. If the situation is no longer favorable, it may be wiser to take whatever available profits or stop whatever further loss, and make a quick exit unscathed.
Short of gnawing one’s fingers to the stump, there is fortunately an avenue of escape in the form of automated scalping systems. These mechanisms function in similar fashion to the human scalper, following instructions to a tee. Rather than suffer the risk of rising blood pressure, many a human trader gladly relinquish routine tasks to the machine. It is also a good idea to retain decisions needing a human touch as the machine is simply following orders and not taking surrounding elements into consideration. This is where the forex scalper is expected to demonstrate his prowess in reading the tea leaves and deciding which currency pairs are worth his time and money. Albeit one cannot be right all the time, one is however determined to clock up more rights than wrongs.