Scalping in Currency Trading

The use of rapid momentum trades is commonly referred to as scalping in currency trading. When scalping in currency trading the trader seeks to profit from the difference between ask and bid prices. This strategy works as well or better in a flat market than other forms of Forex trading. When scalping in currency trading the trader watches the market carefully, trading Forex with candlesticks or other technical analysis tools. Although there is profit to be made in the gap between bid and ask price, the trader must be sure that the market remains flat or moves in a profitable direction for the duration of his trade. Scalping in currency trading involves many very short duration trades throughout the trading day.

Always in a Hurry

Scalping in currency trading is fast. The scalper looks for other traders who always take the bid or ask price for a currency pair. If the trader limits himself to these trades and exits as soon as he has a profit, he can make small profits throughout the trading day. As the virtually all technical trading, the scalper sets his trading stops as he enters the trade. Certainly, if the market moves in a favorable direction, he may reset his stops to gain more profit but someone who only engages in scalping in currency trading does not seek to read market sentiment or profit from his or her knowledge of fundamentals as in Forex trend trading. Rather he limits himself to a profit as defined by the bid and ask price of a currency pair.

Bid, Ask, and Profit

Bid and ask prices are common to all trading markets. A trader who expects to see a large move in the Forex market often wants to get into the trade as soon as he can. Thus he takes the ask price. A trader who has made a nice profit or who wants to limit mounting losses often takes the bid price to exit his position. These are the situations that one looks for when scalping in day trading. When the market is sufficiently balanced, this strategy works well in the hands of a skilled trader. A good way to learn Forex trading for the conservative trader is scalping in currency trading.

Profiting in Up and Down Trends and Corrections

Any trader knows that when a Forex pair moves up or down it does so in a seemingly haphazard manner. While the Euro may end up significantly higher versus the Yen after a day of trading, the amount of ups and downs in trading may amount to two and three times the total trading range for the day. It is in these ups and downs as well as flat periods that scalping in currency trading leads to profits. The scalper waits patiently for the right set up, enters his trade, and quickly exits with a profit. He may not have one great trade for the day but someone skilled at scalping in currency trading can ring up profits day after day far in excess of many other Forex traders. By limiting his expectations the trader finds the best Forex trading opportunities all day long instead of just every so often.