What Is Forex Scalping Strategy?

There are several useful approaches to Forex trading depending on whether you are simply hedging currency risk of speculating in the market. Scalping is an approach seen in day trading.

There are certainly long term trends in major and minor currency pairs but all in all there is more profit to be made when you learn to day trade Forex and profit from the ups and downs that occur in each and every trading day.

In day trading what is a scalping Forex strategy?

Forex Scalping

Scalping is the process of taking repeated small profits from up and down movements of the market during the trading day. Traders enter and leave positions time and again. Investopedia discusses scalping in Forex in an article for beginners.

Scalping, at least in trading, is a term used to denote the “skimming” of small profits on a regular basis, by going in and out of positions several times per day. Scalping is not unlike day trading in which a trader will open a position and then close it again during the current trading session; in other words never carrying a position into another trading period or holding a position overnight. Whereas a day trader may look to take a position once or twice, or even a few times a day, scalpers are much more frenetic and try to skim really small profits multiple times in a session.

Scalping takes advantage of the minute by minute and second by second inefficiencies in the market. But to make money with a Forex scalping strategy traders need a volatile currency pair and they need to stay glued to their trade station.

Why do traders scalp in Forex?

Scalping if you do it right is profitable but it is not for everyone. Scalpers love sitting at the computer and taking repetitive small profits. They fall into a groove of intense concentration and they are able to maintain that concentration for as long as they want to trade. Anyone who does not like this approach and cannot maintain that level of intense concentration should avoid using a Forex scalping strategy. For anyone who likes scalping as an approach to trading and who develops the skill set this can be a profitable strategy.

Not High Frequency Trading

Scalping has to do with getting into and out of a trade quickly, spotting trade momentum which you can take advantage of and not necessarily a lot of trades. Daily FX makes the point that you don’t need to always be a high frequency trader to use a scalping strategy.

There is a strong misconception that all scalpers are high frequency traders. So how many trades a day does it take to be considered a scalper? Even though high frequency traders ARE scalpers, in order for you to qualify as a scalper you only need to take 1 position a day! That is one of the benefits of scalping. You can trade as much or as little as you like within a giving trading period.

Scalping is about how you enter and leave trades and not about how many trades you make each day. A smart scalper enters the market when he or she sees the right conditions and avoids the market when those conditions do not exist.