Is scalping a viable forex trading strategy?

By Ayton MacEachern AAA
A:

Scalping in the forex market involves trading currencies based on a set of real-time analysis. The purpose of scalping is to make a profit by buying or selling currencies and holding the position for a very short time and closing it for a small profit. Many trades are placed throughout the trading day and the system that is used by these traders is usually based on a set of signals derived from technical analysis charting tools, and is made up of a multitude of signals, that create a buy or sell decision when they point in the same direction. A forex scalper looks for a large number of trades for a small profit each time.

Forex Scalping System
A forex scalping system can be either manual, where the trader looks for signals and interprets whether to buy or sell; or automated, where the trader "teaches" the software what signals to look for and how to interpret them. The timely nature of technical analysis makes real-time charts the tool of choice for forex scalpers.

Forex Scalper
The forex market is large and liquid; it is thought that technical analysis is a viable strategy for trading in this market. It can also be assumed that scalping might be a viable strategy for the retail forex trader. It is important to note though, that the forex scalper usually requires a larger deposit, to be able to handle the amount leverage they must take on to make the short and small trades worthwhile.

For more, see our Forex Market Tutorial.

RELATED FAQS

  1. Why is the 200 Simple Moving Average (SMA) so common for traders and analysts?

    Learn about the 200 simple moving average (SMA), how it is utilized by traders and analysts, and why it is considered to ...
  2. How do I build a profitable strategy when spotting a Three White Soldiers pattern?

    Learn a simple trading strategy implemented based on the bullish market reversal signal given by the three white soldiers ...
  3. How are Three Black Crows patterns interpreted by analysts and traders?

    Understand the basics of the three black crows pattern and how analysts and traders interpret this bearish reversal pattern ...
  4. How effective is creating trade entries after spotting a Symmetrical Triangle pattern?

    Understand the symmetrical triangle pattern and the likely success of the most common breakout trading strategy implemented ...
RELATED TERMS
  1. Intraday Momentum Index (IMI)

    A technical indicator that combines aspects of candlestick analysis ...
  2. Forex Spread Betting

    A category of spread betting that involves taking a bet on the ...
  3. Mass Index

    A form of technical analysis that looks at the range between ...
  4. Money Flow Index - MFI

    A momentum indicator that uses a stock’s price and volume to ...
  5. On-Balance Volume (OBV)

    A momentum indicator that uses volume flow to predict changes ...
  6. Negative Volume Index - NVI

    A technical indicator that relies on changes in a security’s ...

You May Also Like

Related Articles
  1. Trading Strategies

    Spot Chances For Profits In The Three-Step ...

  2. Trading Strategies

    The 10 Worst Mistakes Beginner Traders ...

  3. Trading Strategies

    Rise and Shine With This Pre-Market ...

  4. Active Trading Fundamentals

    Minute-to-Minute Trade Signals for Today's ...

  5. Investing

    How to Short Alibaba

Trading Center