Forex Trading Blog

A method of scalping is very popular among Forex traders. It is used by traders who have the profit from the rate fluctuations during one day. Usually the time between the position opening and closing is very short and may be only few minutes. As a result the profits achieved from these positions are low too, but the total income achieved by the big number of trades can be high enough. Some traders may open up to 200 positions a day.

Apparently not all of these positions are profitable, the aim is to reach the profit in total, that is quite possible. While making scalping the stop-loss order is set closer to the price of position opening in order to guarantee the reduction of losses if the market changes its direction.

All currency traders know about the volatility of the currency market. Even the price within one day moves on a certain cycle with its ups and downs. If during one day the average price change is about fifty points, the difference between the minimum and maximum prices will have much greater value. Once you capture a small fluctuation, you will have a chance to significantly increase your capital.

Newbie traders often get a false impression of the brilliant opportunity to enlarge their profit as there is an opportunity of reinvestment. Unfortunately this first opinion may be wrong as without any proven strategy, this tactic is doomed to failure. First of all you need to know on where you place the stop-loss orders. Because if you set it up too close to the rate of opening, it increases the risk of losses in the market during the volatility even if you can predict the direction of trend correctly. In order to avoid this risk, we recommend you to avoid placing the stop loss if you do scalping. But you must always be in front of the tading market and watch your trades. In case of a quick movement against you and there is no opportunity to roll back to initial levels in the next few hours, you must close the trades, otherwise you may lose all. More than that, if you have a high investment and trade without the stop loss, your total deposit may be lost and you will get a margin call.

The next reason of the newbies failure might be in the emotional side and the tension that arises when trading with real money. We recommend all newbeis to try scalping trading on a demo account first, since there is virtual money there is no fear of loss.

Every scalping trader must be careful while choosing a Forex broker to trade with. Not all Singapore brokers allow scalping. We recommend you to review the best Singapore Forex brokers list and join the one that meets the needs of your trading technique.