Scalping

The main idea behind the scalping strategy in FOREX trading is to take very small profits very quickly from very small movements of price, such as 2 to 10 pips. The trades normally are entered and exited within minutes or even seconds. Small profits add up because the number of daily trades can be very high, ranging from 20 to 100 trades on average.

Scalping is considered to be a risky trading style. However, this will depend on which times of the day and which types of markets are used. Although it is possible to scalp successfully in trending conditions, the best trading times are when the market is ranging inside consolidation patterns. Most of the time, this is so; thus there are plenty of times to choose from to implement this strategy. High volatility or news releases are not recommended because of a higher risk involved.

The strategy has to be very well determined in advance, as for any trading system, especially in terms of risk management. A fast reaction and decision time is paramount, getting out of bad trades as soon as possible with low pip losses. Since the trader will be taking many more trades throughout the session, it is better to take profits as they present themselves, small pips here and there, not aiming for more because the strategy is to sum up the overall quantity of trades. Scalping is usually performed on very short time frames; thus the average range available is also very small, and one shouldn't expect more than 5 to 10 pips on average.

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