Forex Scalping appears to be coming increasingly popular amongst retail traders. This type of trading usually involves opening a very short term position on a currency pair, often only lasting a few seconds or minutes. Scalpers will often make a very large number of trades per day, in excess of 50 is not uncommon. The goal of scalping the forex market is to earn pips on very small moves. The profits on these small moves can be compounded to generate a nice return on your money if a good consistent strategy is used.
Forex Scalping and Brokers
Choosing a broker is very important when scalping. As typically a scalper makes a large number of trades, this will inevitably mean paying large number of spreads to the broker, so it is very important to choose a broker with very low spreads, so they don’t eat into your profits too much. Due to the fact that scalping involves so many trades, the scalper needs to win well in excess of half their trades to break even (assuming a 1:1 risk/reward ratio), the wider the spreads the higher the win ratio will need to be. Many brokers are not keen on scalpers at all and will actually close your account if you start to make a consistent profit with scalping. ECN brokers tend to be better for scalpers as they do not trade against their clients. Spreads are often lower with ECN brokers too, but they usually charge commissions.
There are many different strategies employed by scalpers. A common one that I have tried with good results is to put an order at major support or resistance points and try and scalp a few pips from the “bounce”. Other traders like to scalp during the news to put up a few pips. Like other forms of forex trading, scalping requires discipline and patience until the right low risk setup arises.
