Forex scalping, also known as quick trading, has gained high popularity these days. It is perceived that it allows a trader to make small profits while exposing a trading account to a very limited risk.
However, true scalping involves as risks as with any other type of trading. For example, a tiny movement in the wrong direction would hit one’s stop loss. Further, some forex brokers spike the signal unlike the market when high amount of stop losses exist and thus hitting the stop losses and closing the trades.
A good forex scalping system is to do it correctly so that it will provide an additional degree of risk management. It is by holding trading positions for a very short period of time, constant monitoring of the price and collecting quick profits as they appear.
The forex scalping system refers to tiny price gaps created by the bid ask spread. The bid ask spread is the price quoted by a market marker for the immediate sale and purchase. The size of the spread is created by the size of the transaction cost itself.
Traders can use different scalping systems to scalp the market effectively within a short time. There are many indicators that help them determine the trends in the currency value. One method is to look for the important news to be released and choose the most influential ones that are expected to rock the market. Thus, a trader can find out which currency pair is going to be affected. This method helps producing large pip movements in either direction and traders are able to get in and out of the trade at almost zero risk in a short time.
Another system is one minute scalping with pivot points. The concept behind this is pivot points which are at excellent levels of support and resistance. The moment price comes and touches them it bounces off. This helps a trader to take away the profit available and close the trade within a minute. There are also other powerful winning strategies like trading by psychological level, Tops and Bottoms, etc.
However, all the systems have their own downfalls. So it is important that a scalper should be extremely careful as well as knowledgeable in order to actually succeed in the forex scalping system.