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Forex trading, especially the method called forex scalping (or simply ‘scalping’), may sound very simple and easy. You just place a trade, use high leverage, lock in a couple of pips, and rake the money into you cash vault. However, you would learn soon enough doing it that way would soon put you in a ditch.
So how do we use scalping effectively? The answer: no we don’t
You might not like it, but you have to set your sights lower and targets higher. To be brutally blunt, scalping is not a recommended trading strategy. The reason? Basically, traders who do scalping do not really have a solid reason for their trades. It then creates a kneejerk wave of trading that doesn’t really serve anyone’s benefits well.
Instead of considering scalping, traders would be better off as position traders. When you use position trading, you put multiple trades on in a pair, ending up with an average price. You will be the one to decide the type of position and the risk levels.
Handling Forex Risks
If it all comes to cases, forex trading is about controlling your emotions and managing the risks you find. That’s all there is to it.
There are many things you can do on your trades. But if you can’t and don’t control your emotions or try to manage the risks you are taking on, you’re up for a loss-making ride. If you’re still eager to use scalping, you can’t simply pick a random direction and put on a large trade.
If you must use scalping, remember the following rules:
Trade small. Even though it’s put on a large trade for quick money, it is also a shortcut to great ruins. You must keep your trades small and allow yourself some wiggle room in order for you to get out without being broke even if you stumble upon a mistake.
Use stop orders. Needless to say, scalping can easily get out of control. It’s not among those things that use a good risk-reward ratio. You must set a stop that’s your maximum loss and just leave it alone. Should you get stopped out, just grin and bear it and move on to better trades.
Learn to trade. As we have mentioned, scalping is not an advisable trading method. You can get creative and use it in conjunction with other trading methods, but it’s not a method that should be used all by itself. If you’re really going to use scalping, you should first learn how to really trade.
Try Other Methods
You don’t really have to look far; there are many other methods to choose from.
Day trading. Day trading is a short-term trading strategy. it uses technical indicators for the most part, but it also uses some amount of fundamental analysis.
Long-term trading. As the name suggests, this method is all about trading over longer timeframes. You view currency pairs over weeks and months on trends rather than small movements, which to this method are trivial.
Automated trading. You can perform automated trading in different ways, but practically all of them depend on signals that are given by the market. They can also simply run on “expert advisor” programs.
The key to success is awareness.
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