Much has been hailed and hollered in the halls of the foreign exchange market regarding forex scalping strategies. Although some are gems of the forex trade and deserve a place in the trophy cabinet, others may best be avoided like a rattler in the Mojave Desert.
Scalping is greatly driven by numerous transactions, each hoping to draw a small but sure return. When things are too good to be true, the human nature has a tendency to kick in and pose questions to the trader already doing well. It whispers into the ear and tickles the mind to increase returns by investing more. However logical this may sound, it is often not an advisable move in the opinion of expert traders. By changing the size of one’s trade, it opens up opportunities for greater returns. On the flip side, it also increases the level of one’s risk.
Since the forex trade is about buying and selling into the unknown, a drastic change in the market barometer alters prices faster than the blink of an eye. One’s earnings and savings through scalping can easily be multiplied or wiped out by an unforeseeable financial tsunami, the latter being more often the case. As it is a fine balance between profitable trades covering for losing ones, traders are generally encouraged to maintain similar trading sizes.
Wherever one goes in life, basic math never fails to make an appearance. However complex these forex scalping strategies may sound, they rely on math to predict one’s chances of making a killing or otherwise. If one has deep enough pockets to cover his activities, a particular move may be worth venturing into. Although optimism is extolled, it does not hurt to inject a bit of pessimism in the name of realism. By calculating worse case scenarios, it helps one view the infamous glass of water in the right perspective.