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Scalping in Forex usually refers to any high frequency trading technique that looks for short term opportunities to make relatively small gains. In my experience every broker has a different definition of what constitutes scalping so you need to confirm with your broker what their trading conditions allow in terms of minimum profit levels, and minimum trade duration. Many dealing desk traders have minimum trade durations from from a few seconds to several minutes. Thankfully with the advent of ECN and STP (Straight Through Processing) brokers, we are currently witnessing something of a renaissance in scalping for retail traders. ECN Brokers usually have far fewer if any regulations if any regarding the practice of scalping, and usually offset risk so they effectively make money from the commissions per trade rather than carry the risk and hoping the majority of clients lose. So, if you are looking to use scalping as a trading strategy, your first task to find a broker who does not have any issues with Scalpers, be sure to ask about their policy before you commence trading using any scalping technique. Some of the regulations I have seen in regards to scalping include monthly minimum average pips per trade, limits on the number and frequency of trades, limits on the duration of trades and others who arbitrarily close your account because they do not approve of your trading style. Recently a number of Forex robots have come under scrutiny by brokers because they use a scalping strategy. Brokers approaches vary from not allowing the Robots completely to changing your account to another server, where no doubt they offset the trades instead of carrying the risk. Scalpers, as a rule look for small but frequent opportunities to profit from the market. Their aim is to make these small profits so often that, by the end of the day, they end up with a significant amount of profit. Typically scalpers trade from a one minute chart using a combination of technical indicators and price action to determine entry and exit. Forex scalpers typically trade during times of low volatility, such as during the Asian trading session, on currency pairs that are more inclined to stay range bound for extended periods of time, such as the EURGBP and GBPCHF. Keep in mind also the need for small spreads if you are going to go for small profit targets you need to ensure that your chosen broker can offer competitve spreads. ECNs by definition offer spreads the same as the market, though some may add additonal pips to this it appears from my observations. Normally the spreads decrease as the volume and liquidity increases. A word of warning though for those that want to try forex scalping, it is very demanding and requires a lot of concentration, constant monitoring of the price and very quick decision making. Also, short time frames used in scalping strategies, require a exellent knowledge of the forex market and competent technical analysis skills. It is not a place where beginners will feel comfortable as it demands traders have a very sound trading skills.
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