Basically you can trade forex as a short term trader or a long term trader. In short term your time horizon will only be one day, most of the time you will trade intraday; opening and closing position within one day. In long term, you will open a trade for a few weeks or a few months.
Scalping is the love of day traders. Scalping is done when a position is opened and closed within minutes making a few pips per trade.
Scalping takes advantage of the fact that most of the time the market is ranging. Ranging means there is no significant price movements or volatility. The aim of a scalper is to make 2-5 pips per trade.
When the market is consolidating and ranging best suits the scalpers. For example between the close of the US market and the open of the European market, forex markets tend to be ranging for hours. This is the best time for scalpers.
If you are interested in scalping then you need to make more pips per trade than the pips spread offered by your broker. The spread is your cost of trading. So if the spread is 4 pips. You need to make more than 4 pips for each trade just in order to break even.
In order to become a successful scalper, you need to understand technical analysis well. You should have clear idea of over/under brought, support and resistance zones, trendlines, trading channels etc.
Most of the forex brokers dont like scalpers. Many will try to ban you if you are found scalping, since the brokers are most of the time trading against you, a successful scalper can take profits away from the brokers.
In order to make profit with scalping, you need to scalp many times in a day. At the end of the day, the pips made should be more than the pips lost.
Since scalping involves making a few pips per trade, you will have to use high leverage in order for those pips to make a decent profit for you. What about leverage?
Leverage can be dangerous. Leverage will work as long as you are beating the markets. But it will wipe you out if you ever get caught on the wrong side of the market. Understand leverage before you use it.
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